With 2022 in the final few weeks, many of us would try to indulge in online shopping to end the year on a high. With credit cards offering great deals, discounts, cashback and reward points on online spending these days, customers are spoiled for choice. However, choosing the best credit card for online shopping is based on personal priorities given the different features and costs. We have reviewed various credit cards from the largest issuers such as HDFC Bank, SBI Card, ICICI Bank and Axis Bank. Here’s a guide to finding the best credit card for online shopping.
Reach your destination with bonus points
Reward Points (RP) are points or credits earned on your behalf for a specified frequency or volume of credit card transactions. Regular online shoppers can build up many RPs. Once you’ve earned RP, it’s important to redeem them, otherwise they could expire within a year or two.
The RP system is mentioned in the map features. For example, HDFC Bank’s Moneyback credit card gives two RP for every £150 spent and 2x RP for online purchases. In this case, RP is redeemed as cashback for credit card fees, exclusive gifts or airline miles. Note that RP redeemed for the statement balance will be at a specific ratio; for example 1 RP = ₹0.20/0.30/0.5/1.
With the SimplyCLICK SBI Card, one can get 10x rewards for online spending with exclusive partners and 5x rewards for all other online spending (excluding utility bill payments). But there may be a cap on RPs per month. For example, Amazon has a cap of 10,000 RP per calendar month for accumulating x10 RP, with ₹1 RP for every ₹100 spent there. There are 5X RP limits for online spend that is not made on exclusive partner brands. Note that specific RPs are often not applicable when there is a site-wide joint offering program.
If you choose a credit card because it brings good RPs, keep the following in mind. First, redeeming for travel benefits like flight and hotel bookings through RP is allowed on some cards, but you can redeem up to a maximum of 50 percent of the booking value through RP. Second, if you choose to redeem points in the card issuer’s rewards portal, the value of 1 RP may be higher, but an award redemption fee will apply. Thankfully, there is no reward redemption fee when redeeming RP for cashback. Third, some cards do not accrue reward points for gold and EMI purchases. This is a setback for many.
Upfront on cashbacks
Cashback credit cards offer you an opportunity to earn on the money you spend. It does this by giving you a percentage of your spending back. EMI transactions do not give cashbacks. Depending on the card, cashbacks are only activated above a certain transaction limit.
Typically, co-branded cards, where an e-commerce platform partners with a card company, offer attractive features. For example, the Amazon Pay ICICI Bank credit card allows you to earn 5% cashback on your spend on Amazon India (3% if you are not a Prime member). When you use the card with Amazon Pay, you also get 2 percent cashback on payments to partner merchants. Earn 1 percent cashback on other expenses such as purchases, meals, insurance payments, travel expenses, etc. Note that earnings are automatically converted into Amazon Pay credits at the end of each billing cycle.
In comparison, the Flipkart Axis Bank credit card offers 5% cashback on Flipkart and Myntra, 4% cashback on preferred merchants, and 1.5% on all other categories. You do not receive cashback on gift card purchases, nor do wallet top-up transactions. The good thing is that there is no cap on cashback earnings on the credit card
Cashbacks are often rounded down for each individual transaction. For example, if the customer is entitled to a 1.5% cashback – ₹16.5 – for a transaction of ₹1,100, only ₹16 will be credited.
Some cards appear to offer good cashback but have monthly caps. For example, the HDFC Bank Millenia credit card offers 5 percent CashBack at 10 online merchants viz. Amazon, BookMyShow, Cult.fit, Flipkart, Myntra, Sony LIV, Swiggy, Tata CLiQ, Uber and Zomato. However, the maximum cashback per cycle is ₹1,000. Interestingly, this card allows you to redeem CashBack against outstanding balances. Check whether the card of your choice allows this flexibility.
Welcome bonus, card fees
Many cards marketed as the best for online shopping sweeten the customer with the lure of a welcome/renewal benefit. You need to understand how “benefit” works. For example, the Flipkart Axis Bank card promises a welcome benefit of ₹1,100 divided into ₹500 Flipkart vouchers (for the first transaction with card), 15 percent cashback up to ₹500 (for the first transaction) on Myntra with Card and 50 percent instant discount of up to ₹100 on the first Swiggy order with a code. Some cards like HDFC Bank Millennia offer a welcome benefit of 1,000 Cashpoints when the joining fee is paid. Note that there are no ATMs for paying the renewal membership fee.
Card costs matter if you are sensitive to membership/renewal fees. Annual fees for HDFC Millennia and HDFC Bank Moneyback are ₹1,000 and ₹500 respectively. There are 1st year or next year annual fee waiver conditions that have either annual/quarterly/monthly spend targets. There is no joining fee and no annual fee for the Amazon Pay ICICI Bank credit card. The Flipkart Axis Bank card has an entry fee of ₹500 and an annual fee (from Year 2) of ₹500, but the annual fee is waived for annual spends over ₹2,000. In the case of the SimplyCLICK SBI card, if you spend 1 lact ₹, you will be reimbursed an annual fee of ₹ 499 in the following year.
Given the propensity for online shopping on Amazon, the Amazon Pay ICICI Bank credit card offers the maximum clout and value. For those who swear by Flipkart, the Axis Bank card is a good one. The SimplyCLICK SBI Card is a solid alternative for those who want a choice of online shopping on more than one platform. Don’t be swayed by features like free airport lounge access if online shopping is your main goal.