Why Banks Offer Rewards equal to Joining Fee instead of No Joining Fee!

[Saiv]

Almost every big bank that issues Paid Cards gives us Equivalent Reward Points to Joining Fee We pay, excluding GST.
Isn’t this kinda unethical, making us Pay GST unnecessarily!. Or they divert this GST for something else like Foreign mobile companies using money earned from Indian operations to pay chipmakers for the processors they use in markets outside of India Under The disguise of “just paying for Network Bands”. Just FYF will alienate unnecessary transactions, 1st you pay 1000+GST then we give you rewards after 20-50 days, then you redeem against vouchers or use in Petrol bunks if it’s a fuel card.
Why!

 

[vadixit]

Almost every big bank that issues Paid Cards gives us Equivalent Reward Points to Joining Fee We pay, excluding GST.
Isn’t this kinda unethical, making us Pay GST unnecessarily!. Or they divert this GST for something else like Foreign mobile companies using money earned from Indian operations to pay chipmakers for the processors they use in markets outside of India Under The disguise of “just paying for Network Bands”. Just FYF will alienate unnecessary transactions, 1st you pay 1000+GST then we give you rewards after 20-50 days, then you redeem against vouchers or use in Petrol bunks if it’s a fuel card.
Why!

You are right about the hassle but I guess they do it for commitment from your side. With rewards you are stuck with them for the time being till you utilize the rewards. With no fees, you can close the card the very next day.
Also rewards are mostly with their partners and might cost a bit less to the banks.

 

[Wealth is my birth right!]

Simple logic if they waive joining fee its a revenue loss in their p&l
Thats why they give rewards like i heard from a top head that in axis they buy 1crore kind of points from companies like vistara accor and so for 10p to 25p max not more than that which they give to us in a value of 1rupee
On backend account they show points purchase cost as operating expenses and the mdr we generate is their profit 👍

 

[Saiv]

You are right about the hassle but I guess they do it for commitment from your side. With rewards you are stuck with them for the time being till you utilize the rewards. With no fees, you can close the card the very next day.
Also rewards are mostly with their partners and might cost a bit less to the banks.

Of course all the vouchers & Products they have listed on their rewards site will be get them margins. in case of gift cards/vouchers they’ll get it for some discount & for the products they may get commission or listings fee or both.

 

[Saiv]

I

Simple logic if they waive joining fee its a revenue loss in their p&l
Thats why they give rewards like i heard from a top head that in axis they buy 1crore kind of points from companies like vistara accor and so for 10p to 25p max not more than that which they give to us in a value of 1rupee
On backend account they show points purchase cost as operating expenses and the mdr we generate is their profit 👍

I expected the same but 10P -25P is too much, so literally they looting us legally + as you said MDR

 

[Wealth is my birth right!]

I

I expected the same but 10P -25P is too much, so literally they looting us legally + as you said MDR

Big bees
Their market cap increases every year
Money makes money finally 😊