Credit Card Rewards in India Are Getting Tighter: What Is Changing

Over the past year, many credit card users in India have started noticing a clear shift. The rewards and benefits they once enjoyed are slowly being reduced.

Well-established and popular banks like HDFC Bank Ltd, ICICI Bank Ltd, Axis Bank Ltd, State Bank of India (SBI) Ltd, and American Express are all making similar changes. They are quietly cutting back on credit card benefits. These banks together control around 90% of India’s 117.7 million credit cards, so even small changes have an impact on millions of users.

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And now, for many users, it feels like the “extra perks” are slowly disappearing.

What's Different?

The amount of cashback has been cut down for various cards. For instance, State Bank of India Limited has capped its monthly cashback at ₹4,000 from ₹5,000.

Airport lounge access has also become restricted. Free entry is no longer guaranteed on many cards, and you may even need to make transactions worth ₹60,000 per quarter to qualify.

Reward points and vouchers have been devalued as well. American Express has revised its reward structure, where a ₹4 lakh annual spend earlier earned around 25,000 points and a ₹10,000 Taj Hotels voucher. The same spend now earns only about 10,000 points, and the voucher requires a minimum annual spend of ₹7 lakh.

ICICI Bank Ltd has also reduced extra reward earnings on certain categories of spending. Axis Bank has removed popular travel and hotel partners like Qatar Airways, Accor, and Marriott from some of its cards, often without prior notice to customers.

Banks are also placing limits on how many points can be used each month and increasing the number of points required to redeem specific awards.

Why Are Banks Cutting Down on Credit Card Rewards?

These changes are mostly due to three economic reasons:

1. Reward programmes are expensive to maintain, and banks have largely been footing the bill themselves. The current math is no longer sustainable for them.
2. More people are not paying their bills on time or defaulting on their credit cards, which is costing banks more money.
3. Overall credit card spending is going down. In February, it fell by almost 11% month-on-month to ₹1.78 lakh crore.

With This, What Are Banks Trying to Achieve?

The direction is quite clear. Banks are moving toward reward systems that are more selective, so that not all cardholders get the same benefits. Instead, the banks are now focusing on customers who spend more and bring in more value. In short, people who spend more will keep getting better rewards, and people who spend less will get fewer rewards over time. This method helps banks keep reward costs from going up and stop losing money on accounts that aren't very profitable or are mostly used for benefits instead of spending.

In general, the banks have been readjusting their credit card schemes with an emphasis on the concept of real loyalty. This means that the more money one spends, the more he or she is rewarded, while other users slowly lose the benefits.

How Do These Changes Affect Users?

Customers like you and me will have to play an active role in credit card management due to the aforementioned changes. It would make sense for us to keep checking our card features periodically since rewards and benefits structures are changing more frequently without sufficient prior notice.

We should also consider making use of the points we accumulate from using our credit cards before their value becomes affected by the changes being experienced in the credit industry. There could be situations where certain users will need to change their cards due to new developments.

A Simple Way to Look at It

Earlier, many people chose credit cards mainly for the rewards. The perks often came first in the decision, and actual spending habits were considered later.

Now that approach is slowly changing. It makes more sense to start with your spending pattern and then pick a card that matches it. For example, someone who mostly uses a card for groceries, fuel, and small monthly bills may not benefit much from a travel-heavy card with lounge access and hotel vouchers. In that case, a simple cashback card would likely give better real value. It comes down to understanding what you actually use, not what looks good on paper.

This is why it helps to ask a few basic questions. How much do I spend in a typical month? Which benefits do I actually use, and how often? And most importantly, is this card still worth it after all the recent changes in rewards and limits?

Conclusion

There are no signs that credit card reward programmes are going away anytime soon in India. However, they may be getting stricter and more selective as banks change their offerings according to rising expenses and growing risk. 

For customers, the main takeaway is simple. Do not assume older benefits will remain the same. It is worth reviewing your credit card from time to time to make sure it still fits your real spending pattern.