Credit card rewards are changing: Here's how travellers and reward seekers can maximise points and miles

If you’ve been using credit cards for a while, you probably noticed how dramatically the landscape has changed. Ten years ago, a credit card was often your first formal credit product. Today, for many consumers, it is just one of several ways to borrow money.

A new TransUnion CIBIL whitepaper, ‘Beyond the Swipe’, captures this evolution well. While India’s credit card ecosystem has expanded rapidly—with outstanding balances growing from Rs.0.4 lakh crore to Rs.3.1 lakh crore and the number of cardholders up from 1.4 crore to 5.2 crore over the past decade— the more interesting story is how Indians are actually using their cards today. For those who obsess over airline miles, hotel points and cashback, these trends matter because banks are increasingly designing products around changing consumer behaviour.

Issuers fight to be ‘top-of-wallet’

The report points out that the credit card business is no longer primarily about issuing cards to first-time users. Instead, issuers are fighting to become the “top-of-wallet” card for customers who already own multiple cards. In fact, 22% of consumers now hold three or more credit cards—almost double the number a decade ago. At the same time, nearly one-third of cardholders also carry other unsecured borrowing, such as personal loans or consumer durable loans.


This explains why almost every premium card launched over the past few years has focused heavily on travel. Lounge access, airline miles, hotel elite status, airport transfers and accelerated rewards are no longer fringe benefits. They are tools banks use to convince customers to choose one card over another for their everyday spending.

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For travellers, this has created unprecedented opportunity. A decade ago, earning enough miles for a premium cabin redemption often required significant business travel. Today, regular household spending, insurance payments, online shopping and even utility bills can translate into airline and hotel rewards if routed through the right card ecosystem.

However, the report also highlights a less obvious trend. Credit cards are increasingly competing with small-ticket personal loans and consumer financing products rather than simply replacing cash. In other words, cards are becoming financing instruments as much as payment instruments. That’s an important distinction.

If you’re using your card primarily to maximise rewards while paying your bill in full every month, you’re effectively being subsidised by the issuer’s broader lending business. But if you start revolving balances or converting routine expenses into long-term equated monthly instalments (EMIs) simply to earn a few extra reward points, the maths quickly works against you.

The report identifies a growing segment of “card-centric users” who rely on credit cards for short-term liquidity and financing, as well as another group with high utilisation across multiple unsecured products. While these consumers naturally generate more revenue for banks, they also carry higher credit risk.

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For financially disciplined consumers, there is another takeaway. Now, banks increasingly reward engagement rather than ownership. Simply holding a premium card is rarely enough: issuers want it to become your preferred spending instrument, because that determines whether they earn interchange income, interest or merchant partnerships. That’s one reason why targeted offers, bonus reward campaigns and accelerated earning opportunities exist throughout the year.

Interestingly, despite all the growth, India remains remarkably under-penetrated. Only about one in four credit-active consumers has a credit card, far below mature markets such as the United States, Canada or the United Kingdom. That suggests the industry’s growth story is far from over.

For travellers, this is likely to translate into even stronger competition among banks over the next few years. More cobranded airline cards, richer hotel partnerships, flexible reward currencies and premium travel benefits are likely, as issuers compete for affluent customers who already have multiple cards in their wallets.

Mastering strategic usage

The challenge for consumers is to avoid confusing better rewards with better financial decisions. A free business-class ticket earned by planned spending is genuinely valuable. Paying interest at 40% per year to earn the same miles is not. The smartest card user of the next decade won’t necessarily be the one having the most plastic. It’ll be the one who understands that the real value lies in using credit strategically, paying every bill in full, and letting rewards do the work—not the other way around.

The Author is Founder and Editor, Liveformalounge.com