There has been a lot of buzz lately about changes to HDFC Bank’s credit card reward points program that took effect in July. For most cardholders these are minor adjustments aimed at preventing certain abuses of the system. Below are the specific changes announced by HDFC:
- EasyEMI and e-wallet loading transactions will no longer earn reward points.
- Reward points already credited will be reversed if a retail transaction is converted into SmartEMI.
- Reward points for insurance transactions will be capped at a maximum of 2,000 points per transaction.
Here’s a clear explanation of why these changes are happening and what they mean for cardholders.
Changes to HDFC Reward Points Program from July 2017
#1 E-Wallet Loading Transactions
Many users were exploiting wallet loading to generate large volumes of card spending—so-called manufactured spend. For example, loading Paytm wallets from a credit card allowed some people to move large sums and then transfer them back to a bank account, effectively circulating funds while earning reward points or meeting annual spend milestones. This practice reduces the bank’s net earnings and also causes losses for the wallet provider, which absorbs fees when users load funds.
Because of this, HDFC has stopped awarding reward points for wallet loading transactions. Note that this applies specifically to “wallet loading” transactions. Payments made through a wallet’s merchant gateway (for example, using Paytm to pay a bill or merchant) should still earn rewards as before. For most users who only top up small amounts for occasional recharges or emergencies, the impact will be minimal.
#2 EMI Transactions
HDFC will reverse reward points if a retail transaction is converted into SmartEMI. The underlying issue is that converting high-reward purchases into EMI could, in some cases, offset the interest cost and even result in a net gain for cardholders who exploited promotional reward multipliers. That made this a target for abuse.
Practically speaking, most customers who take EMIs are not trying to game the rewards system. Still, the bank’s move prevents cases where reward rates combined with EMI conversion were being used to revolve credit profitably. If you prefer to keep earning points and need financing, an alternative some users use is taking an Insta Loan or Insta Jumbo Loan instead of SmartEMI/EasyEMI, though availability depends on whether those loan features are enabled on your card.
#3 Insurance Transactions
Insurance premiums are typically large-ticket transactions. When banks offer generous reward rates on such payments, it can produce a substantial payout in points that the bank may not be able to sustain. To limit exposure, HDFC has capped reward points on insurance transactions at 2,000 points per transaction. This prevents disproportionately large rewards on single high-value payments while still allowing cardholders to earn some points for insurance purchases.
All three changes address the same basic mechanics: very large or repeatable merchant volumes reduce the merchant’s take and the bank’s margins, so banks restrict reward accrual on those categories to protect profitability. Given these adjustments by HDFC, other banks may adopt similar rules over time.
If these updates affect you, consider adjusting how you use your card: avoid using credit cards to load wallets purely for rewards, be mindful before converting purchases to SmartEMI, and expect lower rewards on large insurance payments. For most everyday users who use cards for regular purchases and occasional bill payments, the practical impact should be limited.
Are you affected by the changes to HDFC credit card reward points? Share your experience in the comments.