🎁 Reward redemption fee
Short answer
A reward redemption fee is what some issuers charge you to use the points you already earned — often around ₹99 plus GST per redemption (indicative, as of 2026). It quietly reduces your real reward rate, and it is the charge most often left out when people compare cards.
What it is
A per-transaction fee charged when you convert reward points into something useful — a voucher, a catalogue item, or in some cases a statement credit.
Why it matters more than it looks
A ₹99 fee sounds trivial until you set it against what you are redeeming. Redeem 2,000 points worth ₹500 and the fee is roughly 20% of the value. Redeem monthly and you pay it twelve times a year.
How much it is (indicative, as of 2026)
| Redemption route | Typical fee |
|---|---|
| Catalogue / voucher | ~₹99 + GST per redemption |
| Airline / partner transfer | Varies; sometimes higher |
| Statement credit / auto-cashback | Often none |
Your card's fee is listed in its schedule of charges and in the reward programme terms, which are usually a separate document.
How to make it ₹0 (or close)
Three more notes:
- Prefer fee-free routes. Where your issuer offers statement credit or direct cashback, it usually carries no redemption fee.
- Watch expiry. Batching redemptions saves fees, but points that expire save nothing. Note your programme's expiry rule.
- Flat cashback cards sidestep this entirely. If redemption admin is not something you enjoy, that is a legitimate reason to prefer them.
The bigger point
Reward economics only work for people who never pay interest. A 2% reward rate, minus redemption fees, is a rounding error against a single month of finance charges at 3–4%. Get charges to ₹0 first; then optimise rewards.
All figures on this page are indicative and dated. Rates and fees differ by bank and change over time. Always verify with your bank's official schedule of charges.
Frequently asked questions
Why do banks charge a fee to redeem reward points?
Issuers describe it as covering handling and fulfilment costs for catalogue and voucher redemptions. Whatever the rationale, it is a real cost to you, so it belongs in any calculation of what a card's rewards are actually worth.
How do I avoid reward redemption fees?
Redeem in fewer, larger batches rather than every month, and prefer redemption routes that carry no fee — statement credit or direct cashback where your issuer offers it. Check the fee before you start accumulating points for a specific redemption.
Sources
The regulation and official pages this page is checked against. If one of them disagrees with us, it wins.
- Master Direction — Credit Card and Debit Card (Issuance and Conduct) Directions, 2022 — Reserve Bank of India
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Written and checked by the CardSamajh editorial desk · Last reviewed: · How we check this