Free lounge access, movie tickets and more: Credit cards offer benefits but don't miss the caveats
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The benefits offered on credit cards sound tempting. You can get access to lounges at airports, book free golf sessions, avail of free air tickets and so on. But, when you go beyond the sales pitch, you realise each benefit comes with terms and conditions.
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Nagpur-based Rohan Trivedi opted for a card that offered “free film tickets worth Rs 6,000". After using the card, he realised the underlying arithmetic. On purchase of a movie ticket, the card offered another one free. But, this came with restrictions: He could avail of it only twice a month, with a restriction of Rs 250 for each free ticket. This translates into a benefit of Rs 500 a month or Rs 6,000 a year.
“While credit cards do save cost through the benefits and discounts they offer, a person should first understand the terms and conditions of each individual feature before enrolling," says Navin Chandani, chief business development officer at BankBazaar.com.
Understanding the offer is essential also because there are times when an issuer might appear to offer the same benefit across cards but when you read the fine print, you will realise that the terms and conditions are different for each card category. There will be fewer restrictions on a premium card while a regular free card may come with many.
Free airport lounge access: This is usually offered with platinum cards or categories above it. Very few offer this in free cards and if they do, the customer needs to pay to access the lounge. For platinum card holders, there’s usually a restriction of two visits each quarter (eight in a year) and it’s restricted to domestic routes within the country. This means, you may not be able to access a lounge that is part of an international terminal. Once you cross the limit, you need to shell out between Rs 750 and Rs 1,000 for the access.
For the service, banks tie-up with Visa or MasterCard, which in turn have partnerships with airport lounges. There’s another service provider called Priority Pass, which offers three-tier membership in India. Standard membership costs $99 and a member has to pay around $27 for each visit. The fee is charged in dollars and the lounge levies the applicable conversion fee depending on the dollar rate on the particular day. Standard Plus plan ($249) offers 10 free visits and there’s unrestricted access in the Prestige plan ($399).
When you are signing up with a card company, check the service provider, network of lounges and number of times you can visit. The Standard Plus and Prestige plan are offered only in exclusive cards that are by invitation only.
Free golf games: These are typically restricted to one per quarter. It gives you access to a golf club without being its member. This is called as Green Fees. But the cardholder needs to pay for the caddy, cart fee and any charges applicable at the golf course. Sometimes, this offer is linked to spending. The bank may offer one round of golf every month, provided the cardholder spends Rs 1 lakh or more in the preceding month. “These may also come with restrictions such as booking your visit 15-30 days in advance," says Naveen Kukreja, chief executive officer and co-founder, Paisabazaar.com.
Free tickets: These are usually offered in a co-branded card. The customer receives one free ticket on signing up and then every year, on renewal of membership. But it covers only the base price of the tickets. All taxes, surcharges and fees need to be borne by the cardholder. The customer also gets to convert purchases into air miles. But, it is not easy. To travel between Mumbai and Delhi one way, you would need around 8,000 miles or minimum spends of Rs 2 lakh in a year. Besides, these expire at the end of the year and can only be carried forward by paying a fee.
Similarly, cards that offer waiver of fuel surcharge only do so for a restricted amount each month. Free membership offered could be conditional — if you spend beyond a particular threshold every year.
Features you need
Cards that offer such high-end benefits come with an annual fee. “These can vary from Rs 3,000 to Rs 12,000. If you sign getting lured by benefits that cannot be fully used, the money will be wasted," says Kukreja.
An individual, therefore, needs to analyse where he spends the most before signing up for a card. Take a card that offers benefits based on your spending. “The card you take up shouldn’t force you to change your habits, rather should complement these," says Chandani.
Do you travel frequently and need access to an airport lounge? Do you prefer travelling by a particular airline? Do you run up a huge shopping bill? First shortlist cards those offer you features ‘aligned’ to your spending. Check if you can earn higher reward points for the area where you spend the most. Then, look at the benefits offered. Calculate the maximum benefit you can get by enrolling with an issuer.