1. A high reward rate can stop at a monthly cap

A card may offer 5% cashback but limit that cashback to ₹500 per month. Once the cap is reached, additional spending may earn a lower rate or nothing under that offer. If you spend ₹50,000 expecting 5% but the cap is ₹500, the capped cashback is only 1% of that total spend.

Tip: Convert the cap into the maximum rupee benefit you can actually receive.

2. Some merchant categories are excluded

Issuers can exclude or reduce rewards for categories such as rent, fuel, government payments, education, utilities, wallets or other merchant types depending on the card. These rules are often implemented using Merchant Category Codes, or MCCs, assigned through the payment ecosystem.

Note: A business name does not guarantee the transaction was coded into the reward category you expected.

3. Points can expire or lose value

Reward points can have an expiry date or become unusable after account closure under programme terms. Issuers can also change redemption catalogues or values prospectively under applicable notice rules. Large unused point balances are therefore not the same as cash in a bank account.

Tip: Track expiry and redeem intentionally rather than hoarding points forever.

4. Read reward terms before changing spending

Do not spend extra merely to reach a cap, milestone or waiver unless the purchase was already planned. A ₹2,000 unnecessary purchase to earn ₹200 of rewards still leaves you ₹1,800 worse off. Rewards should improve the economics of spending you would make anyway.

Tip: Good rewards reduce the cost of planned spending. They should not create new spending.

5. Quick check

A card advertises 5% cashback capped at ₹500 per month. You spend ₹50,000 in eligible transactions. What is the maximum cashback?