Credit Card Devaluation: If the cashback and rewards you receive from your credit card have decreased, learn what 'Credit Card Devaluation' is and how it might affect you.
Credit Card Devaluation: Credit card usage has become commonplace in almost every middle-class family today. But have you noticed that the same card which offered you fantastic rewards and cashback two years ago is now providing fewer benefits? In financial terms, this is known as 'Credit Card Devaluation.' Simply put, banks quietly reduce the value of your card while your spending remains the same.
What is Credit Card Devaluation?
Credit Card Devaluation means that the benefits offered on a card are gradually reduced, even though your spending habits remain unchanged.
Banks may implement various changes, such as:
Lowering cashback limits
Restricting airport lounge access
Reducing the value of reward points
Adding new fees or terms and conditions
In short: the same card, but with fewer benefits than before.
Which cards have seen changes recently?
The terms and conditions for several popular credit cards have been altered in recent months.
| Card | What Was Available Earlier | What Has Changed Now |
|---|---|---|
| SBI Cashback Card | Higher cashback benefits were available | Cashback is now capped at ₹4,000 per statement cycle |
| HDFC Infinia | Certain premium benefits were easily accessible | Many benefits now require a minimum spending threshold or a banking relationship |
Additionally, rewards or cashback have been capped for certain spending categories, such as bill payments and government transactions.
Why are banks doing this?
Credit card companies and banks take such measures to control costs and boost profits.
According to experts:
The cost of running reward programs is rising.
Providing uniform benefits to all customers is becoming expensive.
Banks are now focusing on high-spending customers.
This is why many benefits are now being restricted to customers who meet specific spending thresholds.
What should cardholders do?
If you want to get the most out of your credit card, keep the following points in mind:
Review the card's benefits and fees at least once a year.
Redeem accumulated reward points periodically.
Carefully read emails and SMS messages from the bank.
Do not choose a card based solely on the brand or name; consider its actual benefits instead.
Should you close the card?
Not necessarily. If the card continues to meet your needs despite any changes, you can keep using it. However, if the annual fee is high and the benefits are consistently declining, it would be wise to consider other options.
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