The Devaluation Effect: Are Credit Card Rewards Losing Their Luster?
Banks are devaluing credit card rewards, leaving consumers with less value. Meanwhile, Air India's revamped Maharaja Club raises questions about its appeal to frequent flyers.
Over the past few years, banks launched a multitude of new credit cards to cater to all sorts of customers offering benefits that did not financially make sense.
Almost every credit card came with lounge access, for instance, something banks have now realised was a bad idea considering the long queues at airports. Zomato, in partnership with RBL Bank, launched a free Zomato Edition card, which provided some rather insane benefits, including a 10% cashback on all spends on your birthday. Not long after, the partnership died and the card was cancelled.
Similarly, in the past few months, many banks have announced rather significant devaluations to their cards, except for American Express. Axis Bank, in fact, announced another slew of devaluations on some of their cards just yesterday.
Many consumers take on multiple credit cards with very specific use cases in mind, and when banks decide to implement such devaluations, cancelling these cards has a negative effect on users’ credit scores, especially when users have to cancel more than one card in a year considering the multiple devaluations.
Do consider this while either taking on a new credit card which may seem to have benefits that seem to be too good to be true or canceling a card that recently got devalued.
Is the Maharaja Club worth it?
With the demise of Club Vistara and the revamp of the Maharaja Club by Air India, there is still uncertainty over w...
Over the past few years, banks launched a multitude of new credit cards to cater to all sorts of customers offering benefits that did not financially make sense.
Almost every credit card came with lounge access, for instance, something banks have now realised was a bad idea considering the long queues at airports. Zomato, in partnership with RBL Bank, launched a free Zomato Edition card, which provided some rather insane benefits, including a 10% cashback on all spends on your birthday. Not long after, the partnership died and the card was cancelled.
Similarly, in the past few months, many banks have announced rather significant devaluations to their cards, except for American Express. Axis Bank, in fact, announced another slew of devaluations on some of their cards just yesterday.
Many consumers take on multiple credit cards with very specific use cases in mind, and when banks decide to implement such devaluations, cancelling these cards has a negative effect on users’ credit scores, especially when users have to cancel more than one card in a year considering the multiple devaluations.
Do consider this while either taking on a new credit card which may seem to have benefits that seem to be too good to be true or canceling a card that recently got devalued.
Is the Maharaja Club worth it?
With the demise of Club Vistara and the revamp of the Maharaja Club by Air India, there is still uncertainty over whether the revamped frequent flyer programme by Air India may be the favourite of Indian passengers. While many have managed to score gold status through the transfer programme that recently concluded, a cursory glance at their programme tells me Air India doesn’t plan to be very generous. It would seem both earning and burning miles with AI may end up being a lot more difficult. Besides, with considerably old aircraft on many international routes, Air India may also not be the first option for most.
That said, considering Air India is part of Star Alliance, one could enjoy all of these benefits even while being elite members of other airlines in the alliance. So, does staying on the Air India programme still make sense for the discerning Indian passenger?
While it is too early to make a detailed study considering Air India continues to make changes as it integrates with Club Vistara, going forward, this column will definitely be looking at various different programmes. So stay tuned.
