Why Reward Points Are Kinda a Scam

[damo]

I recently crunched some numbers on credit card reward points — and honestly, the results made me question if they’re really worth the hype.

Take this example: I used to buy Amazon Pay gift cards through the SmartBuy portal using my DBC card to pay my electricity bills. DBC gives 3X reward points on such spends, which looks like a sweet 9.99% return.

But then you factor in the 3.5% processing fee + GST on the Gyftr portal, and that effective return drops to around 5.8%.

Still seems decent, right? But here’s where it gets tricky — that 5.8% is not actual cashback, it’s in the form of reward points. I usually use those points for flight bookings, where DBC offers 5X rewards again. Sounds like a loop of free gains? Not quite.

When booking flights, you only earn reward points on the actual amount paid — that is, the total amount minus any reward points you use. So, your effective return on the new transaction gets reduced.

Now, some might argue: “Well, you’re still paying less, so it’s a win.” But I’ve already associated those reward points with my previous transaction — so at this point, RP is just like my money. And when I use it, I’m not only reducing the value of future rewards but also spending something I partially paid to earn (thanks to that 3.5% fee).

This cycle keeps repeating, and with every transaction, the true value of those points keeps shrinking.

Moral of the story: reward points look shiny on the surface, but dig a little deeper, and you’ll see the value isn’t quite what it seems.

 

[taskmaster]

I think the whole reward point game is to help you afford luxury that you otherwise won't be able to book. Lets say you book a luxury mariott property that was otherwise too expensive.

For other cases i feel cashback cards are a better option. Although most of them will be limited to 5% cashback whereas you can get better reward rate with points card

 

[technoswan]

yeh! reward points are there to lead you to leisure spending of their choice. It gives enticement value to move towards higher priced options. Its like once you fly private, even business class feels like let down. Its like dealer gives you unaffordable drugs for free until you are hooked😀. Its tool to step up your spending in directed way. They are easing you to step up your spending game, like first time using escalator.

 

[Adith]

I don't get sudden inflow of these new posts from tf buzz and tf neo's of how everything is a scam window dressed in better words.

3.5 % convenience fee is a recent devaluation . It was gradually raised. So according to you , people who earned RP earlier , redeemed it well we're actually dumb or dint know what they were doing ?

You do realise there is something called historical data and devaluations right ? If RP is actually to make you spend more or is just crap packaged with beautiful wrapping , people won't be chasing Infinia or EPM .

Also, buying apay vouchers is not the goal of travel cards or RP focussed cards. It's an advantage to also cover excluded categories in the returns you earn . They are travel focussed, apay and flipkart aren't the only vouchers available.

These sort of one goal focussed " number crunching" ignoring important aspects and conveniently only including convenience fee is dumb and wrong.

If your only use case is to buy apay vouchers, taking DCB instead of SBI cashback is more of an optimization issue from your side.

 

[oceantattoos]

Reward points may seem like free perks, but they often encourage overspending, offer low redemption value, and come with hidden terms. Many expire quickly or require extra fees. In the end, you're spending more to “earn” something that’s worth far less than you think.

 

[Adith]

Reward points may seem like free perks, but they often encourage overspending, offer low redemption value, and come with hidden terms. Many expire quickly or require extra fees. In the end, you're spending more to “earn” something that’s worth far less than you think.

Again, another TF Neo with how everything sucks message.

I have the times black card , which I use for apay ( insurance and gold schemes ) , flipkart ( grocery ) , Swiggy ( grocery and food ) , while also using the card for offline gold purchase ( investing purpose) as well as for my travels. The points are worth 1rs each when I redeem them for my flight tickets or I just buy tanisq voucher for again investing in gold . These are spends that I do anyhow , irrespective of having a cc or not and I'm easily getting 10% returns . Tell me where the overspending or lower returns come from ?

If so many of you TF neo or TF buzz are having overspending issues or unable to find propr returns for the RP then either yall lack discipline or don't know how to optimise/ redeem strategically.

This message is just like OP's original message calling DCB Metal bad while only talking about apay voucher . It lacks research , optimization and is again conveniently stitched together.