Mumbai, 25 October 2025:
Credit card rewards are often seen as an enticing perk, allowing users to accumulate points for various purchases that could lead to vouchers, airline miles, or cashback. However, a recent incident has revealed just how quickly these rewards can turn into unexpected debt, leaving some users facing negative balances and repayment demands. In this article, we’ll explore how this loophole came to light and how to protect yourself from similar traps in the future.
The Mechanics Behind Negative Reward Points
While the concept of negative reward points may seem far-fetched, it’s a reality that many consumers are unaware of. Negative reward points occur when you earn points from a transaction, only for that transaction to be canceled later. Ideally, the system should reverse both the purchase and the points earned. However, if there’s a delay or a glitch in the system, consumers may redeem these points before the error is corrected, leading to a negative balance.
This system flaw has not been something the financial industry widely discusses, making it all the more crucial for consumers to stay informed.
How a Rewards Glitch Affected Thousands
A notable incident that made headlines in 2024 involved a banking institution’s credit card rewards system encountering a debilitating glitch. The flaw meant that points from canceled transactions were not reversed for several months. Savvy customers capitalized on this loophole, employing what’s colloquially known in India as “jugaad.” They would make significant purchases, collect reward points, and then cancel those transactions, ultimately fooling the system.
However, when the bank eventually corrected the glitch, many users found themselves in a precarious situation. Those who had redeemed their points suddenly saw their rewards accounts dipping into the negatives, while some customers, particularly those who had closed their credit cards, received demands for cash repayments, which could range from thousands to several lakhs.
The Aftermath of the Incident
The fallout from this glitch has been significant, with affected customers expressing a mix of shock and anger. Many argued that they operated under the assumption that the system functioned as it should, having no knowledge of the underlying glitch. “We were just using what was available to us. This glitch was not our fault,” one frustrated user expressed.
On the flip side, the bank defended its actions by citing the terms and conditions that clearly state that negative reward point balances constitute money owed. Interestingly, some advocates pointed out that this clause was introduced after some of the affected accounts were closed, raising ethical questions about fairness and policy retroactivity.
Essential Steps to Safeguard Yourself
This situation serves as a cautionary tale for credit card users. Regardless of your stance on the debate, it’s evident that glitches can occur—and they can lead to unexpected responsibilities. Here are several proactive measures you can take to protect yourself:
- **Pause Before Redeeming Points**: Don’t rush to redeem newfound points right after a big purchase. Wait to ensure the transaction is secure and not subject to cancellation.
- **Review Terms and Conditions**: Regularly check your bank’s rewards program updates. Understanding the fine print can save you from potential pitfalls.
- **Monitor Your Statements**: Keep a close eye on your credit card statements, especially after making adjustments or canceling transactions. This vigilance can help you catch errors early.
- **Avoid “Hacks” for Extra Value**: Resist the urge to exploit loopholes or “hacks” to gain added value. While they may seem tempting, they could lead to violations of terms and conditions.
Ultimately, credit card points should be viewed as a supplemental benefit, enriching your spending experience rather than a liability that can backfire. The recent glitch reminds us of the importance of staying informed and cautious to navigate the rewards landscape effectively.
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Original source: blog.bankbazaar.com
