Cash Back vs. Points: Which Type of Rewards Card is Best?

A cash-back credit card and a credit card that offers points are two of the most popular kinds of credit cards. Cash-back credit cards offer certain cashback on purchases and are extremely appealing. However, the point system of credit cards offers numerous rewards that can help you plan cheap travel or get discounts at your favorite shop and restaurant. It can be hard to decide which card suits you the best. So, to make your work less hard, here is a quick look at the benefits of both cards to make the selection process easier. 

Benefits of Cash-back Credit Cards

Here is a quick look at the benefits of a cash-back credit card:

Cash-backs and Similar Earnings 

Using the cash-back credit card, you can earn certain cash-backs on your purchases, travel, and hotel bookings. There are a couple of credit cards that offer a flat rate on all purchases, like the SBI credit card that offers 5% off online shopping, the Amazon ICICI credit card that offers discounts on purchases made off Amazon, and the Axis Bank Ace credit card that offers discounts up to 5% on online retail platforms. Moreover, through its credit card app, a credit card company can also offer a lucrative sign-up bonus or an introductory discount to their new customers. 

Easy Cash Redemption 

Cash-back credit cards offer numerous ways in which you can redeem your cashback offers. You can do so by requesting a statement credit to offset your card balance or having some funds deposited in an additional bank account through your credit card app. Moreover, cashback is simple and comes with no complications compared to the point system. You do not need to keep track of your points, transfer them anywhere or undertake any other hassle. 

Low or No Annual Fee

A cash-back credit card and its corresponding credit card app can have extremely low annual fees. Sometimes, credit cards do not have any fees at all. This feature makes the cashback credit card affordable and accessible to individuals who do not have a lot of assets or financial stability. 

Benefits of Points Credit Cards 

Here is a quick look at the benefits of a credit card that use the point system. 

Earning Points on Your Credit Card Use

If you use your credit card wisely by paying off your dues on time and not crossing your credit limit, you can collect points on your credit cards. These points offer higher rewards and benefits than cash-back credit cards. You can take a look at your points through your credit card app. These rewards can range from flight ticket discounts to seat upgradation and much more. 

Redeeming the Points on Your Credit Card

You can easily redeem points on your credit card and through numerous ways. The ways include, but are not limited to, booking flight tickets, discounts on certain shops or items, and discounts on hotel and restaurant bookings. 

Additional Perks and Benefits 

Apart from discounted prices, points on your credit card can fetch additional perks like business class upgradation on flights, free night stays at a hotel, free airline baggage, access to airport lounges, and much more. These additional perks come in extremely handy when planning a trip abroad or being a frequent traveler. 

Cash Back Credit Cards or Points Credit Cards

So, which credit card should you opt for?

  • Point credit cards are perfect for individuals who travel very often due to the many travel and hotel perks offered on these cards. 
  • However, the only drawback of the point credit card is the fact that it is slightly more expensive than the cashback credit card. The annual fee on the cashback credit card is nominal. Some banks and financial institutions do not charge a fee on cashback credit cards. Thus, the cashback credit card is less affordable than the point credit card.
  • If you are a frequent traveler and would not mind spending slightly more money on your annual credit card fee, you should opt for a point credit card. 
  • However, if you do not travel frequently and want a no-fee reward card, the cashback credit card will suit you the best. 
  • However, there are a couple of credit cards that offer both facilities. They allow you to withdraw your points as cash and provide the benefits of both cashback and point credit cards. Some of these cards are SBI Prime Credit Card, Standard Charter Platinum Rewards Credit Card, and HDFC Regalia Credit Card. However, the annual fee, as well as the credit score requirement on these cards, might be high. 


You should opt for a credit card that suits your needs the most. If you are a frequent traveler, choose the points credit card due to the large number of travel and hotel benefits offered by them. On the other hand, cashback credit cards help you to access cashback offers at low annual fees.

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