I’ve tracked credit card reward programs from major Indian banks for the past three years, and the pattern is unmistakable. The headline benefits look similar to what they offered in 2023, but the actual value has eroded significantly through dozens of small changes that most cardholders never notice.

This isn’t conspiracy theory stuff. It’s documented in the terms and conditions updates that banks send out quarterly. The problem is that nobody reads those updates, and the changes are designed to be invisible until you try to actually use your rewards.

The Points Devaluation Tactic

Most premium credit cards in India earn reward points at rates like “4 points per 100 rupees spent” or similar. That number usually stays constant. What changes is the redemption value.

Three years ago, major bank reward programs typically valued points at around 25-30 paise per point when redeeming for popular options like flight bookings or hotel stays. Today, that same point is worth 18-22 paise for the same redemptions.

The erosion happens gradually. A bank might reduce redemption rates by 5% one quarter, then add a “processing fee” for certain redemption categories the next quarter, then exclude specific merchant categories from bonus earning rates the quarter after that.

Individually, each change seems minor. Collectively, they reduce the actual value of the card by 20-30% over two years.

Category Exclusions Multiply

When you signed up for a card offering “5% cashback on all online spending,” that probably sounded straightforward. But the excluded categories keep expanding.

Utility bill payments—excluded. Insurance premium payments—excluded. Government services—excluded. Wallet loads—excluded. Education fees—excluded. Fuel surcharge waiver limited to specific petrol stations and capped at low amounts.

I recently analyzed the merchant category code exclusions for a popular cashback card. The list ran to three pages and excluded roughly 40% of typical online spending categories.

The card technically still offers the advertised cashback rate. You’ll just find that many of your actual purchases don’t qualify.

Annual Fee Waivers Get Harder

Banks heavily market credit cards with “annual fee waived on spending of X amount” provisions. These thresholds have been quietly increasing.

A card that waived its 5,000 rupee annual fee on 2 lakh spending in 2023 might now require 3 lakh spending for the same waiver. Or it maintains the 2 lakh threshold but excludes more spending categories from counting toward that threshold.

Some banks now require spending in specific categories to qualify for fee waivers. One premium card I looked at requires 30% of the qualifying spend to come from dining and travel categories. If you spend 3 lakh but only 20% is in those categories, you don’t get the waiver despite exceeding the nominal spending threshold.

Redemption Restrictions Tighten

Award travel bookings through bank portals typically offered flexibility—book any airline, any route, any time, and use points for the booking. That flexibility has decreased substantially.

Many programs now have blackout dates during peak travel seasons. They limit redemptions to specific airline partners or exclude low-cost carriers. They add fuel surcharges that must be paid separately. They impose minimum redemption amounts that require accumulating large point balances.

I tried to book a simple domestic flight using rewards from a supposedly premium card last month. The flight cost 6,500 rupees if I booked directly. Through the card’s reward portal, the same flight required points equivalent to 8,200 rupees plus 1,500 rupees in taxes and fees.

The Accelerated Points Expiry

Reward points used to be fairly permanent—they might expire after two or three years of inactivity, but active cardholders could accumulate points over time.

Now I’m seeing programs with 12-month expiry periods, or programs where points expire at the end of the calendar year regardless of when they were earned. Some programs implement “sliding expiry” where the oldest points expire first, making it difficult to maintain large balances even with regular earning.

The effect is to force faster redemption at potentially less favorable rates rather than allowing cardholders to accumulate points for more valuable redemptions.

Lounge Access Degradation

Airport lounge access used to be unlimited for premium cards. Now it’s typically capped at 4-6 visits per quarter, with additional visits charged at 300-500 rupees each.

The lounges themselves have become overcrowded as more cards offer access to the same limited lounge network. Wait times have increased, amenities have decreased, and the actual value of lounge access has diminished even where it remains technically unlimited.

Some banks have moved to partner-specific lounges that are located in less convenient parts of airports or have restricted operating hours. The benefit exists on paper but becomes less useful in practice.

Welcome Benefits and Milestone Rewards

Banks heavily market welcome benefits—“Spend 50,000 in first 90 days and get 10,000 bonus points!” These headline numbers attract new customers, but the ongoing earning rates and benefits matter more for long-term value.

I’ve noticed welcome benefits improving while baseline benefits erode. This makes sense from the bank’s perspective—attract new customers with flashy welcome offers, then reduce the ongoing value once they’re locked in.

Milestone rewards follow similar patterns. A card might offer 10,000 bonus points for spending 5 lakh in a year. But if the base earning rate decreased from 4 points per 100 to 3 points per 100, you’re earning 50,000 fewer points on that 5 lakh spending. The 10,000 milestone bonus doesn’t compensate.

Insurance and Protection Benefits

Premium cards often include travel insurance, purchase protection, extended warranties, and other insurance benefits. These sound valuable but rarely get used, which is exactly why banks are comfortable offering them.

When people do try to claim, they discover extensive exclusions, documentation requirements that are difficult to meet, and claim processes that discourage follow-through. I’ve spoken to several cardholders who attempted to use purchase protection or travel insurance and gave up after weeks of back-and-forth with claim processors.

Some banks have reduced coverage amounts, increased deductibles, or added co-pay requirements that make the insurance less valuable even if technically still available.

What You Should Do

Don’t choose credit cards based on headline benefits alone. Read the actual terms and conditions, paying particular attention to exclusions, caps, and restrictions. Calculate the realistic value based on your actual spending patterns.

Review your existing cards annually. If a card that once provided good value has had its benefits eroded through progressive changes, consider switching to a different card before paying another annual fee.

Watch for terms and conditions updates from your bank. They’re boring to read, but those notices tell you exactly how your benefits are changing. Set a calendar reminder to review them quarterly.

Consider multiple cards for different categories rather than relying on a single “do everything” premium card. A no-fee cashback card for everyday spending plus a specific travel card for flight bookings might deliver better total value than an expensive premium card that claims to do both.

The credit card market in India remains competitive, which means good options still exist. But the trend toward benefit devaluation affects most programs. You need to actively manage your card portfolio rather than passively collecting points in programs that steadily reduce their value.