Reward Point Expiry: The Hidden Revenue Model

The Hourglass Economy

Imagine if the cash in your wallet had an expiry date. If you didn't spend that ₹500 note by Tuesday, it would turn into dust. Sounds illegal?

This is exactly how Reward Points work.

In the banking world, this concept is called "Breakage".
Breakage is the percentage of reward points that are issued but never redeemed. For banks, Breakage is pure profit.

Chapter 1: The Scale of the Scam

When a bank gives you 10,000 points worth ₹2,500, they have to record a "Liability" of ₹2,500 on their balance sheet. They hate this liability.

They want you to forget. They want the points to expire.
Industry Stats: Nearly $3 Billion worth of loyalty points expire unredeemed globally every year. That is free money for corporations.

Chapter 2: Hard vs Soft Expiry

Not all expiries are created equal.

• Hard Expiry (HDFC/Axis): Points expire exactly 2 or 3 years from the date they were earned.
  Example: Points earned on March 1, 2024 will expire on March 1, 2026. No excuses.
• Activity-Based Expiry (Air India/Marriott): Points expire only if there is "No Activity" for 18-24 months.
  Hack: Keep the account active by earning just 1 point or redeeming 1 point, and the expiry resets for ALL points.

Chapter 3: The Devaluation Tactics

Apart from expiry, banks use "Devaluation" to shrink your wealth.

• The Goalpost Move: On Jan 1st, 1 Point = ₹1. On June 1st, 1 Point = ₹0.50. Your "Savings" halved overnight. (Examples: Axis Magnus, HDFC Regalia).
• The Redemption Cap: "You can only redeem 50,000 points per month." This forces you to hold points longer, increasing the chance you will forget or they will expire.
• The "T&C Apply" Trap: Excluding Rent, Utilities, and Insurance from earning points, but not telling you clearly.

Chapter 4: How to fight back?

You need to treat Reward Points like perishable food, not gold.

1. Burn, Don't Earn: Don't hoard points for 5 years for a "Dream Holiday". Devaluation creates inflation in points.
   A flight that costs 20k points today will cost 40k points in 3 years. Redeem frequently.
2. The Spreadsheet Method: Maintain a simple sheet: Card Name | Point Balance | Expiry Date.
   Check it once a quarter.
3. Cash is King: If a card offers "Statement Credit" (Cashback) vs "Vouchers", choose Cashback.
   ₹100 in the bank > ₹150 Amazon Voucher > 200 JPMiles.

Chapter 5: Checking Expiry (Bank Wise Guide)

• HDFC: Netbanking > Cards > Enquire > Redeem Reward Points. Shows expiry bucket (Points expiring in 60 days).
• Axis: Edge Rewards Portal > My Account. Shows detailed expiry timeline.
• SBI: SBI Card App > Dashboard. Usually valid for 2 years from earning.
• Amex: Points NEVER EXPIRE. (This is why Amex charges high fees. They respect your asset and don't count on breakage).

Conclusion

Reward points are an unsecured currency issued by a private central bank (your issuer) that can be devalued or destroyed at will.

Spend them. Before they turn to dust.