Banks keep announcing changes to their credit card reward points program from time to time. Some of the reasons they do it include ensuring fair usage, preventing the use of personal cards for commercial/business transactions, maintaining profitability, reward points sustainability, etc. HDFC Bank has announced some changes to its credit card reward points program effective 1st September 2024. Let us understand these changes.
There will be a cap on reward points that can be earned on utility transactions. The limit will be 2,000 reward points per calendar month. The utility transactions will be tracked through Merchant Category Code (MCC) 4900. The change will be effective from 1st September 2024.
Before this change, HDFC Bank had made another change in the utility transactions category. Effective 1st August 2024, the bank has started charging its consumer credit cardholders a 1% fee on the utilities if the amount exceeds Rs. 50,000 per transaction.
Similarly, the 1% fee on utilities is applicable for business cards if the amount exceeds Rs. 75,000 per transaction. The 1% fee will be capped at Rs. 3,000 per transaction. The measure will prevent the usage of consumer credit cards for commercial/business utility transactions where the amount can go above Rs. 50,000/transaction.
Individual customers need not worry about the 1% utility transaction fee as their utility bills are usually below Rs. 50,000. The bank has mentioned that insurance transactions will not be considered utility transactions, and hence, no charge will be applicable.
There will be a limit on reward points that can be earned on telecom and cable transactions. In this category also, there will be a cap of 2,000 reward points per calendar month. The transactions in this category will be tracked through MCCs 4812, 4814, and 4899. The change will be effective from 1st September 2024.
The reward points limits mentioned in the above points 1 and 2 will ensure fair usage of credit cards. There have been instances where some people have used personal credit cards to pay utility bills for their business or pay bills for other people to earn reward points, achieve milestones, complete spend-based offers, etc. All these are against the fair usage policy. The above reward point limits will help address the misuse of credit cards for earning reward points and other benefits for transactions that are against the fair usage policy.
Education payments made through third-party apps like CRED, Cheq, MobiKwik, and others will not earn reward points. However, if a credit card holder makes an education payment directly through the college/school website or their POS machine, they will earn reward points.
The transactions in this category will be tracked through MCCs 8211, 8220, 8241, 8244, 8249, 8299. The change will be effective from 1st September 2024.
Before this change, HDFC Bank had made another change in the educational transactions category. Effective 1st August 2024, the bank has started charging its credit cardholders a 1% fee on education payments made through third-party apps like CRED, PayTM, Cheq, MobiKwik, and others. The 1% fee is capped at Rs. 3,000 per transaction.
There is no fee for education payments through the college/school websites or their POS machines.
The Infinia credit cardholders can redeem their reward points for Apple products through the HDFC SmartBuy platform. Right now, there is no limitation on the number of Apple products for which you can redeem your points.
However, from 1st October 2024, Infinia credit cardholders can redeem their reward points for only 1 Apple product in every calendar quarter. The calendar quarters in a year will be as follows: April to June, July to September, October to December, and January to March.
HDFC Bank will limit the number of reward points that Infinia credit cardholders can redeem against Tanishq vouchers on the HDFC SmartBuy platform. The redemption limit will be 50,000 reward points in a calendar quarter. The limit will be effective from 1st October 2024. The calendar quarters in a year will be as follows: April to June, July to September, October to December, and January to March.
The merchant category code is a 4-digit number assigned by a card network (Visa, Mastercard, Rupay, Diners, etc.) to a merchant to categorise its business. These codes are standard across the globe for ease of classification of businesses/merchants. For example, all utility services are classified under MCCs 4,800 – 4,999.
Effective 1st August 2024, HDFC Bank levies a 1% fee on utility payments through consumer credit cards if the amount spent is more than Rs. 50,000 per transaction. Effective 1st September 2024, the reward points earned on utility transactions will be capped at 2,000 reward points per calendar month.
Similarly, effective 1st August 2024, the education payments made through third-party apps are charged a 1% fee. Effective 1st September 2024, the bank has excluded education payments made through third-party apps from earning reward points.
With all these changes, HDFC Bank is taking steps to ensure there is fair usage of its credit cards. The steps will deter the usage of consumer credit cards for business/commercial transactions. The fee on specific transactions and limits on reward points will ensure the cards are not misused, and the reward program is sustainable and continues for the long term.
Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached at LinkedIn.
