As credit card benefits decline, leverage offers to earn more rewards

The best way to optimise benefits is to keep multiple cards and use the one offering highest rewards for each spending category

Credit card perks in India are steadily shrinking, with banks cutting cashbacks, capping rewards, and trimming benefits across categories.

 

“While minor tweaks were routine, sharp devaluations are recent, emerging from 2023 and accelerating into 2025–26, with more frequent and aggressive changes,” says Harsh Vira, chief financial planner and founder, FinPro Wealth.

 

According to Adhil Shetty, chief executive officer (CEO), BankBazaar, credit card benefits have been gradually rationalised over the past 12–18 months, with early signs in 2025 such as tighter lounge access, capped fuel perks, and spend exclusions.

 

“In 2026, issuers are undertaking a broader reset, moving from isolated tweaks to linking rewards more closely with meaningful spends and usage,” says Shetty. He adds that rewards are shifting from broad perks to conditional value with caps and restrictions, making it essential for users to reassess whether their card still fits their spending.

Has the trend intensified recently?

Experts say there is a clear acceleration in 2026. “Incremental changes have turned into a structured reset, with issuers redesigning how rewards are earned and unlocked,” says Shetty.

 

Changes are now more visible, with benefits tied to higher spends, specific categories, and usage patterns. “The shift isn’t just cost control, it’s aligning rewards with profitable use, leaving less room for passive benefits and requiring more active, consistent spending to extract value,” says Shetty.

Which segments are most affected?

The trend is most visible in mid-to-premium cards, where earlier benefits were generous and are now being tightened. “Even premium cards are not immune. Entry-level cards already had limited benefits, so the impact there is less noticeable,” says Vira.

 

Premium cards have seen the sharpest cuts, especially in travel perks, lounge access, reward transfers, and milestones. “These were historically the most generous features, so any changes here tend to stand out,” says Shetty.

 

He adds that mid-tier cards are witnessing a more measured tightening, with lower cashback caps, more exclusions across spend categories, and higher thresholds to unlock benefits. “Rewards are being aligned more closely with usage, but how that plays out depends on the segment. The higher the starting benefit, the sharper the visible adjustment,” says Shetty.

Manifestations of cuts  

The shift is playing out across multiple levers. “Cashback caps have been cut, reward rates reduced, and key spends like rent, utilities, and wallets excluded, while lounge access is now tied to minimum spend thresholds,” says Shetty.

 

According to Vira, lounge access is now tied to a minimum spend, and rewards have been removed from categories such as fuel or government payments.

 

Not just benefits, even their structure is changing. “Rewards are becoming more conditional with caps, exclusions, and spend thresholds, increasing the effort to unlock value and lowering actual returns,” says Shetty.

Why are issuers reducing benefits?

This is a structural reset, not a short-term shift. “Reward programmes have become costlier, while issuers face higher funding costs, tighter regulation and evolving risk pressures,” says Shetty.

 

Also, there is a clear shift in consumer payment behaviour. “With UPI eating into low-ticket spends, card revenues are under pressure, prompting issuers to align rewards with profitability and meaningful usage over broad incentives,” says Shetty.

Should you upgrade?

Experts explain that moving to premium cards can be a good strategy for individuals with high annual spending. “Most of these cards offer better perks like unlimited lounge access, hotel privileges, milestone benefits, and better reward redemption value,” says Santosh Agarwal, CEO, Paisabazaar. However, she warns that they carry high fees and strict eligibility; if underused, costs can outweigh value.

 

“An upgrade is not always suitable as premium cards have high fees, stricter eligibility, and spend milestones. Missing them sharply reduces returns,” says Rashid Ali, managing director, Ezeepay. He adds that high spenders, frequent travellers, and users with predictable high-value transactions can opt for premium cards.

Review your spend mix

Adopt a proactive review instead of outdated usage. “Reassess your spend mix and whether your card still adds value; judge by effective rewards, caps, exclusions, and redemption flexibility, not just headline perks,” says Agarwal.

 

When terms change to lower cashback, tighter redemption limits, and higher thresholds, check whether the card still fits your spending. “If cashback caps drop and you were maxing them, reassess usage. Consider adding another card if it offers better value,” says Agarwal.  

 

According to Agarwal, heavy spenders should track changes and adjust usage or switch cards to maximise value. She adds that one can use multiple cards by category, consider co-branded options for stronger perks, and leverage issuer and merchant offers for better savings.

What should new users do?  

According to Agarwal, prospective users should match cards to their spending shopping, fuel, travel, and dining to maximise value. “They should also carefully review cashback caps, exclusions, annual fee waiver conditions, reward redemption rules, and lounge access thresholds. In addition to this, it is also important to review statements regularly, track reward point expiry, and reassess cards at least once a year,” says Ali.

 

Key Dos and Don’ts

Dos

• Match cards to your spending: groceries, fuel, travel, online
• Calculate net rewards after caps, fees, and thresholds
• Choose stable, reputable cards over short-term offers
• Read the fine print such as exclusions, expiry, redemption rules
• Review benefits regularly and track changes
• Use strategically to unlock waivers and milestones
• Maintain a balanced portfolio of no more than 2–3 cards  

 

Don’ts

• Don’t chase headline rewards without real usage fit
• Don’t overpay annual fees for unused perks
• Don’t rely on one card for all spending