Every few months, a bank updates its credit card rewards terms. A category cap appears. A multiplier is reduced. Lounge visits get capped. This is not a glitch in the system. It is how the system works. Here is the full economics — and what a programme built to last would actually look like.
Follow the money
A credit card generates revenue through multiple channels, and each one shapes how rewards are designed. Understanding this is the first step to understanding why every card eventually disappoints.
Interchange is the cleanest funding source for rewards. On Visa and Mastercard premium cards in India, it typically runs 1.5 to 2 percent per transaction. If a user spends Rs. 10,000 and the issuer earns Rs. 150 to Rs. 200 in interchange, returning part of that as cashback is economically reasonable.
Rupay credit cards and UPI-linked credit transactions operate in a zero-MDR or near-zero environment for many transaction types. When interchange is absent, the economics cannot support the same reward structure. Any serious discussion of sustainable credit card rewards in India is therefore a Visa and Mastercard discussion, not a universal one. This distinction is rarely made explicit in card marketing.
Revolver interest is the most uncomfortable part of the model. Cardholders who carry balances pay annualised rates of 36 to 42 percent. A small number of revolvers can generate more revenue than a large pool of full-pay users. The rewards enjoyed by disciplined transactors are, in practice, partly subsidised by users who are carrying expensive debt. This is widely understood in the industry and rarely acknowledged in card marketing.
EMI conversion is another major profit driver. Banks actively push instalment plans through app prompts, post-purchase nudges, and "no-cost EMI" messaging that often obscures the underlying economics. Even subsidised offers support the broader card relationship value. Cross-sell revenue matters too: for many issuers, the card is primarily an acquisition tool. A cardholder who later takes a personal loan or buys insurance can generate far more lifetime value than interchange alone would suggest.
The other side of the ledger
Public discussion of rewards focuses on earn rates and redemption values. The cost structure underneath every programme gets almost no attention — which is why devaluations keep coming as a surprise.
Lounge access deserves special mention because it has most visibly broken trust across the category. Banks do not own airport lounges. They pay per-visit fees to aggregators such as DreamFolks or Priority Pass. For a while, many issuers marketed lounge access as a mass-premium benefit with weak usage controls. Cardholders responded rationally and used it heavily. Issuers then responded in the only way the economics allowed: visit caps, quarterly thresholds, and spend-based conditions.
From the bank's perspective, this was cost control. From the cardholder's perspective, it felt like a promise being quietly withdrawn. The benefit was not necessarily mispriced in bad faith — but it was clearly not designed with long-term sustainability in mind. The lounge pattern is now the default lifecycle of most premium benefits.
Why this keeps happening
Once you put the revenue and cost sides together, the pattern becomes obvious.
A new credit card relationship is often unprofitable in its early months. Acquisition cost, onboarding, welcome benefits, physical card issuance, and the funding cost of the free credit period all arrive before the issuer has built a profitable long-term relationship. That is especially true for premium cards with strong marketing and low upfront fees.
This is why headline rewards look generous at launch and weaker later. Issuers are competing for acquisition. In a fast-growing market, it makes sense to win the customer first and optimise the economics later. Seen this way, devaluation is not an accident — it is a recurring feature of a model that prioritises acquisition economics over long-term transparency.
Generous launch benefits attract sign-ups. Usage grows faster than projected. Costs (lounge visits, reward redemptions, processing) accumulate. Terms are updated: caps appear, categories are excluded, thresholds are added. Users who built spending habits around the original benefits earn significantly less — often with little notice and no explanation.
A better model
A sustainable credit card would be less exciting on paper than today's most aggressively marketed products. But it would be more reliable, easier to understand, and less likely to disappoint users over time.
Back to OneCard
The site you are on covers OneCard specifically, so it is worth being direct about how this framework applies. The short answer: OneCard is more devaluation-resistant than most cards, but for structural reasons that also make it unexciting on rewards.
OneCard has been more stable than HDFC Regalia, SBI Cashback, or Axis Magnus precisely because it never over-promised. That is a form of sustainability — it just does not make for exciting marketing. If your primary concern is which card will still be roughly as good in three years, OneCard's track record matters. If your primary concern is maximum rewards today, the honest case against OneCard is worth reading alongside this one.
For the full picture on what OneCard actually earns across different spend patterns, see the rewards maximiser guide — it covers all five value levers including Around You stacking and the 5X unlock in detail. The 5X rewards explainer covers the unlock mechanics and eligible categories specifically.
Why honest cards stay rare
If a more transparent model is better for users, why do so few issuers follow it? Because the Indian credit card market is still playing an acquisition game. In a fast-growth environment, flashy rewards attract attention and generate sign-ups. The long-term trust cost is real but deferred — and for a growing issuer, that is an acceptable short-term trade-off.
That calculus changes as the market matures. RBI scrutiny of unsecured lending and product disclosures has increased. Retention matters more than it did five years ago. The question of whether transparency becomes a competitive advantage — rather than a marketing disadvantage — will define the next phase of the Indian credit card market.
The choice is not between generous cards and stingy cards. It is between promises that are easy to market and benefits that are built to last. Today's reward programmes mostly optimise for the first. A better card would optimise for the second — and in a maturing market, that may eventually prove to be the more commercially durable position too.
Interchange is the fee paid by the merchant's bank to the cardholder's bank on each transaction. On Visa and Mastercard premium cards in India, it is typically around 1.5 to 2 percent of the transaction value. It is the primary source of funding for credit card rewards. Rupay credit cards and UPI-linked credit usage operate in a zero or near-zero MDR environment for many transactions, which means interchange is absent and the reward economics are fundamentally different.
Credit card devaluations happen because reward programmes are often designed to win customers first and optimise economics later. New cards offer generous launch benefits to attract sign-ups. Once the portfolio matures, issuers apply category caps, reduce multipliers, or add spend thresholds to bring costs in line. This is not fraud — it is the predictable outcome of a model that prioritises acquisition over long-term transparency. Lounge access is the clearest example: banks pay per-visit fees to aggregators, marketed mass access at launch, and then retreated behind spend caps when usage made the costs unmanageable.
Credit card rewards are funded from multiple sources: interchange fees from merchants (typically 1.5–2% on Visa/Mastercard premium cards), interest income from cardholders who revolve balances at 36–42% per annum, EMI conversion revenue, late payment and forex fees, and cross-sell income from loans and insurance sold to cardholders. Disciplined users who pay in full each month are partly subsidised by revolvers who carry expensive debt.
Generally yes, for a structural reason. Rupay credit cards and UPI-linked credit payments operate in a zero-MDR or near-zero environment for many transaction types. Without interchange income, the economics of funding meaningful ongoing rewards are fundamentally different. Most serious reward programmes in India are built on Visa or Mastercard rails, not Rupay. Any comparison of sustainable rewards must account for this.
Banks do not own airport lounges. They pay per-visit fees to aggregators like DreamFolks or Priority Pass. When lounge access was marketed broadly without usage controls, cardholders used it heavily — which was economically rational. Issuers responded with quarterly visit caps and spend thresholds. The benefit was not necessarily designed in bad faith, but it was never built for long-term mass-market sustainability. The pattern repeats: generous launch, heavy usage, cost controls.
A sustainable programme would fund rewards primarily from interchange, not revolvers or EMI profits. It would have a simple, flat earn rate (perhaps 0.5–0.75% cashback equivalent), no hidden exclusions or rotating categories, points that behave like cash at a fixed value, no arbitrary expiry, and benefits priced honestly from the start. If economics change, the issuer would explain the change transparently rather than burying it in a terms update.
OneCard's design has some features of a more sustainable model: it has never over-promised lounge access or other high-cost benefits, it relies on its app and offline discovery (Around You) rather than heavy acquisition spending, and its FD-backed card reduces credit risk. However, the 5X unlock mechanic still creates complexity that makes it harder for users to understand what they will actually earn. The base 1X rate (0.2% value) is the lowest in the market. OneCard has been more devaluation-resistant than most cards simply by not over-promising — which is a form of sustainability, even if it does not make for exciting marketing.
Yes, to a significant degree. Cardholders who revolve their balance pay annualised interest of 36–42%. For the issuer, a small number of revolvers can generate more revenue than a large pool of full-pay users. Rewards enjoyed by disciplined transactors are therefore partly cross-subsidised by users carrying expensive debt. This is widely understood in the industry but rarely acknowledged in card marketing.
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