Aligning rewards with spending habits
Ashish Lath, Founder and CEO of SaveSage, states that the success of a travel credit card is primarily determined by how well its rewards system aligns with an individual’s spending habits.
“The most crucial aspect is the compatibility between a consumer’s existing spending and the card’s accelerated reward offerings,” he explains.
He recommends that consumers evaluate earn rates on categories such as flights, hotels, and frequent purchases like groceries, fuel, education, and online shopping.
Additionally, Lath emphasizes the importance of verifying whether reward points can be transferred to airline and hotel loyalty programs that a consumer utilizes, whether the redemption ratios are fair, and if the card offers flexibility through travel portals or options for pooling points.
Redemption timelines
According to Lath, there isn’t a standard timeframe for accumulating free flights or hotel stays, as this varies based on monthly expenditures, card selection, and optimization strategies.
As a general guideline:
- Domestic economy tickets typically require 8,000–15,000 points
- International tickets may range from 30,000–80,000 points
Lath notes that consumers spending ₹75,000 or more each month and optimizing their category spending could see substantial redemptions within six to twelve months. Strategically allocating expenses across several cards can enhance earnings by 40–50%. Those with lower spending may depend more on welcome bonuses or milestone perks to accumulate points more rapidly.
Assessing the value of points
Lath suggests a straightforward way to evaluate value: divide the ticket or stay market price by the number of points required.
He advises aiming for a value of ₹1–₹1.5 per point to justify annual fees and the effort in optimization. If the value drops below ₹0.50 per point, cashback or other redemption options might be more financially advantageous.
Moreover, he recommends comparing the redemption value against the option of paying cash and saving points for future use.
Fees and expense considerations
Annual fees for premium travel credit cards typically range from ₹5,000 to ₹30,000 or more, often tied to spend-based milestone thresholds.
Lath mentions that various benefits such as airport lounge access, concierge services, higher earn rates, and travel insurance are integrated into these fee structures. For individuals spending ₹2 lakh or more monthly, he suggests that enhanced earnings and higher-value redemptions can justify such expenses.
Prepaid travel and forex cards
On a different note, T C Guruprasad, CEO and Managing Director – Payments Solutions at EbixCash, elaborates on the advantages of prepaid travel and forex cards for overseas expenditures.
He explains that these tools enable users to load foreign currency at competitive rates prior to travel, helping to mitigate currency fluctuations and avoid exchange markups, while effectively separating travel budgets from credit lines.
When considering these cards, Guruprasad recommends examining:
- Support for multiple currencies
- Issuance and reload charges
- ATM withdrawal fees
- Costs for cross-currency transactions
- Charges for dynamic currency conversion
- Safety features like real-time alerts, instant blocking, and spending controls
He also adds that regulated, network-supported prepaid options can improve transaction security and transparency while traveling internationally.
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