The changes, ranging from tighter cashback caps and revised fee thresholds to reduced airport lounge access, signal what industry experts describe as a “reset” rather than a rollback of benefits.
Why issuers are cutting rewards
According to Adhil Shetty, CEO, Bankbazaar, the shift reflects changing unit economics in the credit card business.
“Reward payouts have risen, while a larger share of transactions now comes from lower-yield, high-frequency spends,” Shetty said.
At the same time, alternative payment modes like UPI are taking away a portion of high-value card usage.
This combination is pushing issuers to recalibrate.
“The direction is clear. Rewards are becoming more conditional, with caps, exclusions and spend thresholds defining how much value a user can actually extract,” he added.
In effect, lenders are prioritising profitability and nudging users toward higher-value or more targeted spending behaviour.
What is changing structurally
Industry experts say the latest revisions follow a consistent pattern:
- Lower or dynamic cashback caps instead of fixed limits
- Higher spending thresholds to unlock benefits
- Restrictions on categories like utilities or wallet spends
- Shift from direct cashback to partner-linked rewards
- Reduced or conditional lounge access
Rohit Chhibbar, Chief Business Officer, Credit Cards, Paisabazaar, noted that such revisions typically involve “tighter capping and increased spending thresholds,” which can materially change the effective value users derive.
How users should respond
Experts say cardholders need to move from passive usage to active optimisation.
Recalculate your actual returns
Shetty advises users to “look at what you spend, where you spend, and what you actually get back.”
With caps and exclusions, the effective reward rate can drop sharply if spending patterns don’t align.
Reassess card relevance
If a card no longer offsets its annual fee or delivers clear value post changes, switching may be the more practical option.
Chhibbar added that users who regularly hit cashback caps may need to “add another cashback card to their stack” or shift to alternatives better suited to their lifestyle.
Use multiple cards strategically
“One card is rarely enough now,” Shetty said, suggesting users split spends across cards based on categories like travel, utilities or dining.
Avoid low-reward or fee-heavy categories
Transactions that attract charges or no longer earn rewards, such as certain utility or wallet spends, should be minimised or routed differently.
Redeem rewards regularly
With issuers tweaking redemption rules, holding on to points for too long may dilute value.
A more disciplined rewards era
The broader takeaway: credit card rewards are becoming less automatic and more usage-driven.
“Rewards are no longer automatic. They have to be earned through consistent and disciplined usage,” Shetty said.
For consumers, that means tracking benefit changes closely and periodically recalibrating their card mix, turning what was once a set-and-forget product into a more actively managed financial tool.