Credit Card Reward Points Or Credit Card Cash Backs: The Ideal Option

credit card reward

The benefits of a credit card are well-documented. Best reward credit cards in India offer enough benefits to enhance the user experience. Benefits are offered either n the form of reward points or cashback. A common mistake most credit card users or prospective users make is that they use these terms interchangeably. Understanding the difference between both is essential to select the most suitable credit card type.


Reward Points and Cashback: Key Differences

Below are some notable differences between credit card reward points and cashback:

Mode of Transaction

Borrowers making credit card payments through their credit cards are entitled to reward points and cashback. The fundamental difference here lies in the place of transaction. Credit card users get cashback when they pay at an outlet of a specific brand affiliated with the credit card provider.

On the other hand, reward points are offered for every transaction, irrespective of the partnership between the shop and the card provider. If they have a tie-up, reward points increase significantly.

Validity and Usage

Another difference between cashback and reward points is their period of validity. Cashback has no limitations. Once credited to accounts, the card user can use the cash back at any time in the future as per their wish. The purpose can be anything, from purchasing any product to any meal they eat at an outlet.

On the contrary, reward points have a certain validity. Usually, it is for 2-3 years. The validity can also vary depending on the card provider’s terms. Within the stipulated time, the card user must use the points, or they will no longer be available or redeemable. Using the best rewards credit card in India, card users can only buy the items available on the credit card issuer’s website.

Calculation of the Value

The reward points and cashback show a difference in terms of their calculation. It is straightforward to calculate cashback. The credit card offers a fixed cashback because of the cashback percentage mentioned on the offer.

On the other hand, calculating reward points can be very difficult. You get different points on different transactions. You will receive one reward point for dining. If you are booking travel tickets, it increases to five. The calculator can get tricky at times.

Extra Bonus Offered

There are no bonuses for cashback. No additional amount is given to the card user apart from the set amount once credited. You cannot earn a bonus in case of cashback.

The best rewards credit card in India offers a bonus when you complete a milestone in terms of the transaction amount or the number of transactions. All credit card providers may not give this opportunity. Only a few do.

Frequency of the Offers

Another difference is the time limit. Card users get cashback and points in their accounts. Some credit cards offer immediate cashback, while some take around 90 days. On the contrary, lenders immediately transfer reward points to the account, and you can see the points immediately after the transaction.


Both cashback and reward points available with credit cards have advantages and disadvantages. Cashback is immediately adjusted on the total amount, whereas reward points need to be redeemed later.

Cashback on credit cards is a good choice if you spend more on a specific sector. Reward points are best for someone who spends more on different categories. Card users must align their card choice with their spending habits and the purpose of having a credit card. Both can catch you in an intense debt trap without responsible use.

Leave a Reply

Your email address will not be published. Required fields are marked *