Royal Bank of Canada Bets on Richer Card Rewards: What Indian Cardholders Can Learn

Royal Bank of Canada wants customers to swipe its cards more. As reported by Simply Wall St, richer card rewards are how it plans to do that.

It's a Canadian story, but the lesson reaches India. Banks here play the same game. Rewards can help you, but only if you pay your full bill every month.

Key takeaways

• A big bank is offering richer card rewards to lift how often customers use its cards.
• Indian banks run the same game with points, cashback and vouchers.
• Rewards only pay off if you clear the full bill each month.
• Card interest in India is often 3% to 3.75% a month, which can wipe out rewards.
• Always check the annual fee before you chase a bigger reward rate.

How credit card rewards work in simple terms

When you pay with a card, the shop pays a small fee. This is called the interchange fee. The bank keeps most of it and shares a slice with you as points or cashback.

Why would a bank do this? It wants your card to be the first one you pull out. More spending means more fees. Some customers also borrow on the card, and that's where banks earn the most.

The Simply Wall St piece also asks if the bank's stock looks cheap. That's a question for investors. It doesn't change anything in your wallet. We only know the headline, so we won't guess the details of the new rewards.

Points are not all equal. One bank may give you a rupee for each point. Another may give you only a few paise. Always find out what a point is worth.

What richer card rewards mean for your wallet

A higher reward rate sounds great. Let's check it with simple maths. Say you spend ₹30,000 a month on your card.

Card type	Reward rate	Monthly reward	Yearly reward (net of fee)
Basic card	0.5%	₹150	₹1,800
Mid-level card	1%	₹300	₹3,600
Rich rewards card, no fee	2%	₹600	₹7,200
Rich rewards card, ₹2,500 fee	2%	₹600	₹4,700

Now the catch. Say you miss the due date and carry ₹30,000 for a month. At 3.5% a month, the interest is ₹1,050. That's far more than the ₹600 reward. One slip can cost you almost two months of rewards.

You can see how loan costs add up with our EMI calculators. Use them before you turn a big purchase into EMIs.

Who is affected by bigger card rewards

People who pay the full bill on time gain the most. They get the rewards and pay no interest. Heavy spenders on fuel, travel or online shopping can gain even more.

Light spenders gain less. A small reward on a small spend may not beat the annual fee.

People who carry a balance are worse off. The interest eats the rewards. If that's you, compare your card's rate with a personal loan. Personal loans often cost 11% to 24% a year, which can be lower than card interest. Our interest rate tables show current ranges.

What to do now: a quick rewards checklist

1. Add up what you spend on the card in a year.
2. Multiply it by the reward rate, then subtract the annual fee.
3. Read the fine print for caps and exclusions. Fuel, rent and wallet top-ups are often left out.
4. Set auto-pay for the full bill so you never pay interest.
5. Don't spend more just to earn points.

If you already carry card debt, pay that down first. No reward rate is worth a 40% yearly interest bill. For more stories like this, visit our news hub.

Frequently asked questions

Does this news change my Indian credit card rewards?

No. This is about Royal Bank of Canada and its own customers. Your card's rewards depend on your own bank's terms.

Are credit card rewards really worth it?

They are if you pay the full bill on time. If you carry a balance, interest usually costs more than you earn.

How do I compare two rewards cards?

Work out your yearly reward on your own spend. Subtract the annual fee and check the caps. The card with the higher net number wins.