Meet India's credit card nerds earning free foreign trips worth 25 lakh

credit cards,shot in house,20th july 2009 ramesh pathania
credit cards,shot in house,20th july 2009 ramesh pathania


In a world where overseas trips may remain an unaffordable dream for most, a group of credit card aficionados are defying the odds

In a world where overseas trips may remain an unaffordable dream, a group of credit card aficionados, are defying the odds. Through strategic point accumulation, the individuals have amassed enough rewards to embark on globe-trotting adventures without spending a single penny on flight tickets or hotel stays. Among them is Kashif Ansari, 29, who is gearing up for an exhilarating two-month world tour this year-end.

Yet another is Ankush Dixit, 33. Over time, he has snagged 15 business class flight tickets between Delhi and Dublin (Ireland) for his trips with family almost completely for free. “The flight tickets would have cost me around 25 lakh," said the Gurgaon-based entrepreneur.

Dixit and Ansari are not alone. There is a growing group of individuals, who sign up for several credit cards to amass enough reward points that would fund a major chunk of their travel budgets, including flights and hotel stays. Cashbacks and vouchers for buying gadgets, shopping on e-commerce sites, watching movies and dining out are some of the other perks that credit cards users can enjoy. These self-proclaimed credit card enthusiasts do one simple thing to achieve this–funding all their expenses through credit cards.

“I use credit cards for all my regular expenses, from rent, groceries, to shopping and dining out, and each transaction earns me rewards. Even for small expenses, like rickshaws or paying vegetable vendors, I use credit cards," said Ansari, a finance professor at OP Jindal University. “It’s a myth that you need to spend extra to earn rewards on cards. Your daily expenses will do the job."

If you run a business, you could have sweeter deals, because along with your personal expenses, you can also fund business expenses using the plastic.

Take the case of Murshidabad-based entrepreneur Sumanta Mandal, whose monthly spending through credit cards average 2 lakh. “My personal expenses are limited, but as a business owner, I use many business credit cards to cover my expenses, such as vendor payment, advertising costs, software subscription and hosting cost," he added.

However, the rewards points game is not as simple as it sounds so far.

The CC geeks

Wringing out maximum benefits out of one’s spending depends on a host of factors. For one, spending capacity may play a key role in the kind of perks you could earn. Dixit’s 15 free business class flight tickets worth 25 lakh came for over 10 lakh air-miles (equal to about 16 lakh reward points). It got accumulated by spending about 80 lakh. “In the last one year, I put two major expenses: my wedding and home renovation. However, this is an exception. On an average, my annual spends on credit cards are 30-40 lakh," he added. Dixit paid 3.5 lakh in taxes on these tickets out of his pocket.

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Boopathy Arumugam, a businessman from Erode, Tamil Nadu, who has annual expenses of over 1 crore, takes advantage of his high spending power by charging all his expenses via credit cards to earn enough reward points to fund his international family vacations every year. “For my trip to Greece and Austria, I booked business class tickets for my family and hotel stays using my credit card points," said Arumugam, 47. All the free perks combined were worth 14.75 lakh. “I spent 480,000 miles for four business class air tickets, and for hotels, I spent 190,000 points."

A majority of these credit card nerds have annual spends of over 8 lakh. But even those who do not spend as much, have a few tricks up their sleeves to fund luxury vacations using rewards. Gurgaon-based Ankush Sethia is a case in point. He uses Axis Magnus card that offers additional 25,000 points worth 5,000 on spending 1 lakh per month. If he cannot spend 1 lakh for his regular expenses, Sethia buys vouchers and sells them to friends at a discount to complete the milestone.

During sales on e-commerce platforms, he shops for his family and friends on e-commerce platforms using discounts available on his card. It’s a win-win for both as the shoppers get a discount, and Sethia earns rewards on the purchases without actually spending his own money.

The rewards depend on the type of payments on credit cards. For instance, some cashback cards exclude common expenses such as utilities and groceries from its benefits, and may not be useful to someone if those are key spending areas. However, there are workarounds like buying an Amazon Pay voucher or topping up the Paytm wallet to pay for these items. This method may attract fees of 0.5-2%, but if your card gives you a 5% cashback, you will still pocket a sweet 4.5-3%.

Note, that no two credit cards would offer the same value, and rewards programmes on different types of cards are complex. For instance, reward cards that allow transferring rewards to airmiles or hotel loyalty programmes will require you to evaluate the conversion rates on two levels: One, reward earned on each purchase and two, conversion ratio of rewards to loyalty points.

Sounds complex? Well it maybe for a beginner. But the points nerds have mastered the art. In fact, some have turned the passion for credit cards into their profession. Dixit and Setia are co-founders of a credit card comparison platform called Multiply, while Mandal runs a portal for credit card recommendations and personal finance advice called TechnoFino.

They believe in optimising spends to the hilt, which means that all of them own at least 10 credit cards (see graphic). For instance, Ansari uses Axis Airtel Credit Card just to pay his and family’s phone bills. “All of us use an Airtel sim card and the only purpose of this card is to recharge mobile. Each recharge with this card gives me 25% cashback."

Mandal has 51 active credit cards. “I strategically choose cards based on my needs and preferences. For instance, when I plan to purchase gadgets, I use a credit card that offers reward points redeemable for vouchers at Croma or any other electronic stores. Simultaneously, I am also accumulating air miles for future travels within the next five years," he added.

The 20% TCS on international transactions done with a credit card is not a deterrent for these CC geeks as banks offer 2X rewards on spends done overseas. Dixit has already exhausted his 7 lakh limit, beyond which TCS will kick in after 1 July but he is prepared for it. “To get 30% reward that my card offers, I’m fine with maintaining the extra 20% extra cash flow. Also, if not credit, I will use a debit card, which too attracts TCS so better to use the credit cards which at least earns rewards," he added.

Mandal concurred. “As the 7 lakh limit is not applicable to forex cards and cash, credit cards are a better option."

Is it for everyone

Most rewarding cards are premium products and involve high annual charges ranging from 10,000-1 lakh (see graphic). Chasing rewards also runs the risk of overspending. A 2021 study by Massachusetts Institute of Technology said credit cards motivate spending by exploiting reward networks. People Mint spoke with, said they don’t make extra purchases just to snag rewards. Besides credit cards carry the highest interest rates if one defaults on bill payments by the due date. Hence, the rule of thumb is to assess your cash flows before spending on credit cards, and settle all dues in full and on time. Besides, award tickets (flight tickets bought through airmiles) are limited, so one needs to book them in advance. Ansari intends to finalise all bookings for his world tour by June. “Earning rewards is not the tough part, the tough part is ensuring that you get a good deal on dates you’re available. I will build my itinerary, check all the deals and then start transferring the rewards, as once transferred, I will be bound to those airlines," he said.

Paying on time is even more crucial when you own multiple cards. Arumugam has missed due dates a few times when he was travelling overseas, but he was lucky as the banks waived off the fees in view of his timely payments history. Ansari has also missed a payment. “The bill amount was small so the interest did not pinch me, but my cibil came down from 790 to 750. It is not a massive downgrade as I have a long history of on-time payments. Even one default can bring down cibil scores by 80-90 points," Ansari said.

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