Cash Back vs Rewards Points: How to choose the right credit card

January 23, 2019

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While credit card benefits benefits are many, the cashback and reward points that the modern cards offer are very popular among users. In fact, people now select cards based on such add-on benefits. However, with so many banks offering so many different cards with several features and benefits, the decision gets a little confusing even for most of the Credit Card veterans.

So, what is the difference between cashback and reward points and how to select the best? Here are some crucial details:

Browse through the card options on the internet, and you'll see that cashback and rewards Credit Cards are now prevalent among users. As the name suggests, cashback allows you to build cash balance when you use the card for purchases.

There are many different ways in which a card can offer this cashback. Some of them offer cashback through bank deposits while many others offer them in credit statement.

Reward points on the other hand are points that can be redeemed as per the rewards programme of the card provider. The points can help you get discounts on travel bookings, hotel bookings, ticket bookings, product purchases, and more.

Benefits of cashback and reward points Credit Card:

Now that you’ve got the basic idea about these two types of credit cards; let us have a look at the benefits they offer.

Benefits of cash back cards

If this is the first time that you are planning to get a Credit Card, a cashback card can be a better option as it is easy to understand. Just shop the way you want and you'll receive the cashback for the purchases. Moreover, with a cashback card there is a constant value of the cashback you receive which is not applicable to a reward points card.

Benefits of reward point cards

If you have been using a credit card for some time, it shouldn’t be difficult for you to understand the points structure and working of credit card reward points. Many of these cards come with great sign-up bonuses and additional offers like travel benefits and lifestyle benefits. Moreover, the card provider can also increase the value of the reward points in the future to help you get higher discounts.

Who should choose a cash back card?

If you are looking for a Credit Card that can offer benefits for all of your different spends, cashback Credit Cards can be a better option. Moreover, as the cards are easier to understand, they are a preferred option for someone who is new to using Credit Cards.

Who should choose a reward points card?

A reward points card is ideal for people looking for benefits on a particular type of spending such as travel or lifestyle. For instance, if you are a frequent traveller, a Credit Card that offers handsome reward points on travel spends can be the right choice.

Making the right Credit Card selection

To select the right Credit Card between these two types of Credit Cards, it is essential for you to understand your spending habits first. The right card for you is the one that offers maximum benefits for the type of spending you'd be doing with the Credit Card.

So while selecting, make sure that you thoroughly check the Credit Card offers, benefits, and features along with the terms and conditions of the card to make the right decision.

 

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