Now, IDFC First Bank cuts credit card benefits; what it means for cardholders

Banks and credit card companies have lately been taking a hard look at benefits offered to cardholders. Now, IDFC First Bank has reduced such facilities on its credit cards, as per emails that its cardholders got on April 1. All cards have been affected, except its super premium IDFC First Private Credit Card.

This comes on the heels of Axis Bank, ICICI Bank and Yes Bank devaluing their own card benefits recently.

IDFC First Bank has cut reward points on online spending, set higher spending-based criteria for airport lounge access, and updated terms for utility and rent payments made through its cards. The changes will be effective from May 1, 2024.

Revised reward points system

The reward points on online spends up to Rs 20,000 in a statement cycle will be cut to three times (3X) effective May 1. At present, it is six times (6X). Cardholders will continue to earn 10 times (10X) reward points on incremental spends above Rs 20,000 per month.

The reward points on education, wallet load, and government service transactions will be revised to 3X. These transactions will no longer be part of the 10X threshold calculations by the bank. The 3X reward points are equivalent to Rs 150 spent.

Surcharge introduced

IDFC First Bank said it will levy a surcharge of 1 percent plus GST when the aggregate of utility bill payments made with a credit card crosses Rs 20,000. So, if all utility bill transactions (gas, electricity and internet) amount to Rs 20,000 or less in a statement cycle, there is no surcharge. If they exceed Rs 20,000, then the surcharge will be applicable.

If an IDFC First Bank credit card user pays utility bills of Rs 10,000 in a statement cycle, it will not attract a surcharge because it is below the threshold. If Rs 30,000 is spent on utility bills in a statement cycle, a fee of Rs 300 (1 percent fee) plus GST will be applicable.

The utility surcharge is not applicable on FIRST Private Credit Card, LIC Classic Credit Card, and LIC Select Credit Card.

“There are business spends in utility transactions using personal credit cards and credit card users are earning rewards on them,” said Sumanta Mandal, founder of TechnoFino, a platform that reviews debit and credit cards. So, the bank seems to have introduced surcharges on utility transactions to discourage misuse.

Airport lounge access

On IDFC First Select Credit Cards, the number of free domestic airport lounge visits has been reduced from four each quarter to two starting May 1. On First Wealth Credit Cards, the card holder will be able to access both domestic and international airport lounges twice per quarter, down from the previous limit of four visits.

The credit cardholders must spend at least Rs 20,000 in a calendar month, an increase from Rs 5,000 per month (till April), to avail of complimentary airport lounge access in the following month. For complimentary lounge access in June, you need to spend a minimum of Rs 20,000 in May.

Club Vistara IDFC FIRST credit card holders also need to spend at least Rs 20,000 a month to activate airport lounge and spa access the following month. Other banks that introduced spending criterion on airport lounge access recently include ICICI Bank, HDFC Bank and SBI Card.

Hiked charges for rental transactions

While IDFC First Bank levied a 1 percent plus 18 percent GST charge on rent transactions, the bank has hiked this to Rs 249 per transaction or 1 percent plus 18 percent GST, whichever is higher.

Value of buy-one-get-one offer reduced

On IDFC First Select credit cards, the buy one and get one offer on Paytm movies has been revised from Rs 250 to Rs 125 twice per month. With IDFC First Wealth credit cards, the value of the buy one and get one offer on Paytm movies has been reduced from Rs 500 to Rs 250 twice a month.

Revised benefits on co-branded fuel credit cards

IDFC First Bank has co-branded fuel credit cards in association with Hindustan Petroleum (HPCL).

On First Power credit cards, the bank will offer 21 times (21X) reward points on HPCL fuel up to 700 reward points (Rs 175) in a statement cycle from May 1. The bank is now offering 15 times (15X) reward points on HPCL fuel.

On First Power Plus credit cards, its offers 30 times (30X) reward points on HPCL fuel up to 2,400 reward points (Rs 600) in a statement cycle from May 1. The bank is now offering 24 times (24X) reward points on HPCL fuel.

Further, there is a fuel charge waiver 1 percent up to Rs 100 per statement cycle on FIRST Power credit card and 1 percent up to Rs 200 per statement cycle on FIRST Power Plus credit card. But from May 1, it has been removed as equivalent reward points are included in the new fuel rewards category.

Impact on credit card holders

IDFC First Bank offers some lifetime-free reward credit cards including First Classic credit card, First Millennia credit card, First Select credit card, First Wealth credit card, and First Wow credit card. There is not much disappointment among these credit card users as they did not pay any annual or renewal fees on some of the cards on which the terms and rewards system have been revised.

“However, there is a significant reduction in the rewards system for IDFC First Bank Select and Wealth credit card holders,” said Mandal. He added that these cardholders will earn the same rewards as a Millennia or Classic cardholder.

Earlier, IDFC First Wealth card offered the highest rewards, followed by IDFC First Select. However, after May 1, all IDFC First Bank’s lifetime free credit cards will earn the same rewards.

“This is a somewhat harsh step... Premium cards should earn more rewards than the bank's basic cards - that should be the standard rule,” Mandal added.

After an analysis, it can be said that IDFC First Bank credit card holders will not be affected by the 1 percent charge on utility payments.

“This is because those who are not using their cards for commercial purposes will have utility spends around the threshold of Rs 20,000,” said Ankur Mittal, co-founder of Card Insider, a platform that tracks the credit card business. “Many users consider some of these changes to be righteous as the bank is curbing business/commercial spending using personal credit cards,” he added.