Reward points are worth it only when the rupees you actually get for them, per ₹100 spent, beat the annual fee and any spending the card adds. At ₹1,00,000 a month, 2 points per ₹100 worth 50 paise each come to ₹12,000 a year, ₹2,000 more than a ₹10,000 fee; at 25 paise a point, the card loses ₹4,000. The table below shows where a ₹10,000 fee breaks even at each point value, and when a no-fee cashback card does better.

What is a reward point actually worth?

A point is worth what you get when you redeem it. Illustrative values published in June 2026 put a point at about 10 to 20 paise through a merchandise catalogue, 20 to 30 paise as vouchers or a statement credit, 30 to 50 paise or more on flight bookings, and 50 paise or more in good cases through hotel bookings or hotel partner transfers, varying by card. So 10,000 points might be a ₹2,500 statement credit or ₹3,000 to ₹5,000 of flights.

Your reward redemption rate is what the option you actually use pays per point, after any redemption fee; times the points earned per ₹100, it gives the reward points value per ₹100 spent. Two points at 50 paise is ₹1 per ₹100, a 1% return on spending; at 25 paise it is 0.5%.

What do Tushar's points earn against a ₹10,000 fee?

Tushar earns ₹38 lakh CTC, about ₹2,19,600 a month in hand under the new regime for FY 2026-27, on the structure in CTC vs in hand salary. He puts ₹1,00,000 a month on a card with a ₹10,000 credit card annual fee, GST included, that earns 2 points per ₹100.

₹1,00,000 x 12 is ₹12,00,000 of spending a year, which earns 24,000 points. At 50 paise a point, they are worth ₹12,000; less the ₹10,000 fee, the card leaves him ₹2,000.

At 25 paise, they are worth ₹6,000, and the card costs him ₹4,000 a year. His fee breaks even at about 42 paise a point (₹10,000 ÷ 24,000 points); below that, the card costs him money.

Card fees carry 18% GST (2026), so if the card says ₹10,000 plus GST, the fee is ₹11,800, the margin at 50 paise shrinks to ₹200 and the break-even moves to about 49 paise.

How much spending makes the fee pay off?

Divide the fee by the value per ₹100. At 50 paise a point (₹1 per ₹100), a ₹10,000 fee needs ₹10,00,000 a year, about ₹83,300 a month. At 25 paise a point (50 paise per ₹100), it needs ₹20,00,000 a year, about ₹1,66,700 a month.

Monthly card spend Points a year After the fee, at 50 paise a point After the fee, at 25 paise a point
₹50,000 12,000 ₹4,000 behind ₹7,000 behind
₹1,00,000 24,000 ₹2,000 ahead ₹4,000 behind
₹1,50,000 36,000 ₹8,000 ahead ₹1,000 behind
₹2,00,000 48,000 ₹14,000 ahead ₹2,000 ahead

At ₹25 lakh CTC, about ₹1,56,700 a month in hand, the break-even at 50 paise a point is about 53% of take home; for Tushar it is about 38%. At 25 paise a point, the break-even is more than the whole take home at ₹25 lakh.

Cashback vs reward points: which is worth more?

Cashback is a fixed rupee rate per ₹100, with no redemption rate to lose value in, though some cards credit it as points that expire if not redeemed. Some also cap it or exclude categories.

The fair test is his fee card against a card with no fee. Suppose a no-fee card pays an assumed 0.5% cashback: on ₹12,00,000 that is ₹6,000, ₹4,000 more than his fee card leaves at 50 paise a point. The fee card pulls ahead only above ₹20,00,000 a year, where its extra 0.5% covers the ₹10,000. At 25 paise a point its rate equals the cashback, so the fee is lost every year. Some cards also pay less on UPI payments; UPI or credit card for daily spending shows the gap.

What wipes the points out?

Extra spending. ₹1,000 a month of purchases Tushar would not otherwise make is ₹12,000 a year, the whole value of his points.

Chasing a fee waiver. Some cards waive next year's fee above a set spend; if his card's threshold were ₹15,00,000 a year, he would be ₹3,00,000 short. Moving payments he already makes to the card would save the ₹10,000 fee and add 6,000 points, worth ₹3,000, if they count: some cards leave rent, government and education payments out of the waiver spend. Buying ₹3,00,000 of unneeded things to get ₹13,000 back is a loss.

Carrying a balance. Card balances cost about 36% to 48% a year in 2026, varying by issuer (beginner's financial planning guide), and interest then runs from each purchase date, on new purchases too. At an assumed 42% a year with a 5% minimum due (formulas vary by issuer), one carried month of Tushar's ₹1,00,000 bill costs about ₹13,400 with GST, more than the year's ₹12,000 of points; paying only the minimum due shows how it grows.

EMI conversions. Whether they earn points is in the card's terms; how no cost EMIs are priced shows their cost.

Dhi looks at the whole picture, your cash flow, net worth, protection and goals, and answers from your own numbers whether a card's fee and points pay off at your spending. Dhi earns no commissions on any card and never mis-sells.

Frequently asked questions

On many cards they do, typically 12 to 36 months after they are earned (2025), varying by card, and points left on a card you close are usually lost. The expiry period is in the reward terms the card-issuer publishes, so check it before you count points as money, and redeem before you close or change the card.
If the points, at the rate you actually redeem them, stay below the fee at your real spending, the card costs you money every year it stays open. RBI's card directions of November 2025 require a closure request to be completed within seven working days once all dues are paid, or the card-issuer pays you ₹500 for each day of delay. Redeem the points first, and keep in mind that closing a card lowers your total credit limit, which raises the share of limit in use on your other cards.
Not always. A card's reward terms can give fewer or no points on some kinds of payment, such as rent, fuel or wallet loads, and the list varies by card and changes over time. Count only the spending that earns points under the published terms before you work out the break-even.

This is general information for salaried individuals in India, not personalised financial advice.