The Pressure Is Structural, Not Cyclical
Indian credit card reward rates have been declining since 2022, and this is not a cycle that will reverse when the economy improves. The underlying economics of the credit card reward system depend on interchange income (MDR), and that income base is shrinking as a share of total digital payments because UPI's zero-MDR model now handles the majority of digital transaction volume in India.
In 2019, before UPI's mass adoption, credit card swipes represented a meaningful slice of all digital payments. By 2025, UPI handles over 14 billion transactions per month while credit card monthly swipes remain in the 300-400 million range. The math is straightforward: less interchange income means less money to fund rewards, and banks are cutting rewards because the revenue pool that funded them is contracting.
Which Rewards Will Survive
Not all reward types are equally exposed. The key variable is how tightly the reward is coupled to bank interchange income versus to third-party economics that the bank does not fully control.
Airline miles earned directly on airline purchases are the most defensible. When you earn IndiGo BluChip miles or Air India Flying Returns through a co-branded card, the value of those miles is set by the airline's program. The bank pays the airline for the miles at a negotiated rate, but the airline controls redemption value. As long as you redeem before the airline devalues, your value is locked. Direct airline miles have outlasted multiple bank reward restructurings. See our piece on reward points vs cashback for a deeper look at the mechanics.
The Devaluation Pattern Is Predictable Now
Looking at the last four years of Indian card devaluations, a pattern emerges. Banks announce changes 3 to 6 weeks in advance via email notifications that most cardholders miss. The changes hit the highest-earning categories first: partner-specific accelerated rates, lounge access, flagship reward rates. The changes are rarely reversed.
Axis Magnus's 2024 restructuring was the most significant in recent memory: the EDGE Miles earn rate on most categories was cut by approximately 35%, and flight redemption was restricted to specific booking windows and partners. Cardholders who had accumulated large unredeemed balances saw the rupee value of their points fall substantially. The lesson is not to avoid Axis Magnus, but to never hold large unredeemed balances in any single loyalty program. We wrote about why reward rates are dropping across Indian cards for the full context.
The Lounge Problem
Lounge access has become the rewards feature most visibly under pressure. In 2022, unlimited domestic lounge access was available on cards costing ₹2,500 per year. By May 2026, HDFC and Axis both tightened their lounge policies to require monthly spend thresholds before visits unlock. This is not a coincidence.
Airport lounge utilisation per cardholder roughly tripled between 2022 and 2025 as post-COVID travel rebounded and credit card issuance expanded. Lounges charge banks per visit. Banks whose lounge costs scale with usage while MDR income contracts have only one lever: gate the access behind spend that generates enough interchange to cover the cost. Cards that currently offer unlimited lounge access without spend requirements will either add gates or raise fees within 18 months.
The ONDC Wildcard
ONDC (Open Network for Digital Commerce) is a government initiative that enables any buyer app to connect with any seller, removing the need for vertically integrated platforms like Swiggy, Zomato, or Amazon. It is still in early stages but growing in restaurant and grocery categories.
The credit card implication is significant and under-discussed. Co-branded cards like the HDFC Swiggy card or the Amazon Pay ICICI card earn their core value from partner-specific accelerated rewards. If consumers shift even 30% of food orders from Swiggy to an ONDC buyer app, the Swiggy card's primary value proposition collapses. A card whose value depends entirely on a single partner app is a fragile card in an ONDC world. Also read our piece on why the cashback rate is a lie for related dynamics on how partner economics distort card marketing.
RuPay Credit on UPI: Real Opportunity or Hype?
The possibility that has the most potential to change the rewards picture in a positive direction is RuPay credit cards on UPI. If consumers can link a RuPay credit card to Google Pay or PhonePe and earn credit card rewards on UPI transactions, the zero-MDR limitation on UPI rewards disappears, because the transaction is processed as a credit card transaction even through a UPI rail.
The problem is the MDR question is unresolved. RBI has not set a consistent MDR framework for credit card transactions via UPI. Some banks are offering limited reward promotions on RuPay credit UPI payments, but these are marketing experiments, not sustainable programs built on interchange economics. Watch this space through 2026 and 2027. If RBI establishes a small MDR on credit card UPI transactions, the reward implications are meaningful. If not, the zero-MDR constraint remains binding.
The Honest Forecast
The most honest statement about the next five years of Indian credit card rewards: treat them as a bonus on spending you would do anyway, not as an income source or financial strategy anchor. The structural pressures outlined in this piece are real, documented, and moving in one direction.
This does not mean rewards are worthless right now. A well-chosen two or three card stack, used correctly, can still return ₹15,000 to ₹35,000 per year for a high-spending household. But that number will decline over time. The strategy of maximising now, burning points actively, and not building financial plans around reward income is the right one for this environment.
What to Do Right Now
Four concrete actions worth taking this week. First: log into every loyalty program where you have unredeemed points and check balances and expiry dates. Redeem anything expiring within 90 days immediately, even for something imperfect. Second: run your current card stack through Smart Swipe and identify whether your cards still match your spend pattern after recent devaluations. Third: if you hold any co-branded card tied to a single app, evaluate whether the partner-specific reward is still your top earner or whether an uncapped general cashback card would now do better.
Fourth: build your card stack around two or three ecosystems, not one. Airline miles on one carrier plus uncapped general cashback plus optionally one category-specific card. Use the Stack Builder to model this. Diversification across ecosystems is the only hedge against a devaluation wiping out your entire reward position. Read our piece on points vs cashback to understand which ecosystem fits your spend pattern before committing to a rebuild.
FAQ
Will credit card rewards in India get better or worse over the next five years?
Worse, by most structural indicators. The combination of UPI volume growth reducing card swipe frequency, MDR compression pressure from regulators, overcrowded lounges forcing banks to add spend gates, and ONDC risk to co-branded partner rewards all point in the same direction. Rewards will continue to compress. Some specific cards or ecosystems, especially direct airline miles, will hold value longer than others, but the overall trend is downward.
Which type of credit card reward is most likely to survive devaluations?
Airline miles earned directly are most defensible. Airline loyalty programs are tied to airline economics, not bank MDR, giving banks less reason to unilaterally cut them. The risk is airline-side devaluation rather than bank-side. Hotel points are next most defensible. General cashback and partner-specific app rewards are most vulnerable.
What is ONDC and how could it affect credit card rewards?
ONDC (Open Network for Digital Commerce) is a government-backed open commerce network that allows buyers and sellers to transact without branded apps like Swiggy, Zomato, or Amazon. If consumers shift food orders from Swiggy to an ONDC buyer app, the HDFC Swiggy co-branded card's 5% Swiggy reward becomes worthless. Co-branded cards tied to specific apps are the most exposed to ONDC disruption, and that disruption is already underway at small scale.
Should I transfer my reward points to an airline now or wait?
Burn them, do not stockpile them. The risk of devaluation increases the longer points sit unredeemed. If you have HDFC reward points, convert to Air India Flying Returns or InterMiles rather than waiting. If you have Axis EDGE Miles, use them for flight redemptions rather than accumulating. The only exception is if your points have no expiry and you are within 2-3 months of a specific high-value redemption target.
What is RuPay credit card on UPI and does it change the rewards picture?
RuPay credit cards can be linked to UPI apps and used to pay from a credit line via UPI. Some banks offer reward points on these transactions, but the economics are fragile: UPI MDR is currently zero, so there is no interchange pool to fund rewards. Banks offering RuPay credit rewards on UPI are doing so as a promotional lever, not a sustainable structure. If RBI sets a small MDR on credit card UPI transactions, this changes. Until then, RuPay credit rewards on UPI are likely to be limited or rolled back.
How many credit cards should I hold for reward optimisation?
Two to three cards is the right number for most people. One card for travel rewards earning airline miles directly, one for everyday spend with uncapped cashback or general points, and optionally one for a high-spend category like fuel or groceries. More than three creates complexity that often leads to missing benefits or paying fees you do not recover. Concentrating on one card leaves you vulnerable to a single devaluation destroying your entire reward strategy.
Why is lounge access being restricted to high spenders?
Airport lounge utilisation per cardholder in India roughly doubled between 2022 and 2025 as credit card issuance expanded and travel recovered post-COVID. Lounges charge banks per visit. Banks whose lounge costs scale with usage while their MDR income contracts have only one lever: gate access behind a monthly spend threshold so that only cardholders generating sufficient interchange revenue qualify. Expect every premium card's lounge policy to tighten through 2027.
Which credit cards have no expiry on reward points in India?
As of June 2026, Axis Bank EDGE Miles have a lifetime validity option on select cards. American Express Membership Rewards points do not expire as long as your account is active. SBI Card points expire in 2 years on most cards. HDFC reward points expire in 2 years from the date of earning. Always check current terms, as banks change expiry policies without prominent notification.
Is it still worth getting a new credit card in 2026 given declining rewards?
Yes, but with realistic expectations. A well-chosen card still returns ₹10,000 to ₹30,000 per year for a household spending ₹80,000 to ₹1,50,000 per month. That is meaningful money. The mistake is over-engineering a rewards strategy around current rates assuming they will hold. Get the card that works today, extract value actively, and be prepared to reassess when the next devaluation hits.
Related: Why reward rates are dropping across Indian cards · Reward points vs cashback: which is worth more · Why the cashback rate is almost always a lie · Smart Swipe · Card Stack Builder