Should You Get a Rewards Card or a Cash Back Card? Complete Guide

When selecting reward credit cards, you may often find it difficult to choose credit card points or cash-back cards. There are many advantages and disadvantages of both cards. Credit card points are more valuable than cashback during the redemption of these points for traveling. If you do not travel usually then it is better for you to choose a cash-back card as it will help you to spend your money on any product you want to buy.

Below we will shed light on should you get a rewards card or a cash back card!

Reward Credit Cards Pros and Cons

Rewards credit cards offer more advantages to users as compared to cashback cards, but these points are not suitable for every user. These points offer more value to its users by offering them the best-traveling services. It also offers valuable returns in specific areas where you spend your money the most by offering more redemption options and welcome bonuses. The pros and cons of reward credit cards are described below:

Pros of Reward Credit Cards

  • Reward Credit Cards offer various redemption options that help you to exchange your earnings with cashback, gift cards, traveling, shopping, and more.
  • Credit card points are also used to exchange high-valued services like business class flights, and dining in five-star hotels. These high-valued services are gained by transferring your reward points to the bank’s loyal partners.
  • Many credit cards provide various advantages free of cost. These advantages may include annual credit points, exclusive airport lounge access, mobile protection, robust security, and more.
  • Credit cards also provide a huge number of welcome bonuses in the form of points. These points may be worth 500$ or more.

Cons of Reward Credit Cards

  • If you do not know how to exchange your credit card reward points and also don’t know how to obtain these points, then this credit card is useless for you.
  • The credit card points value varies with the program you choose. It is difficult to identify the best redemption option. Some cardholder’s points are worth more than yours as it depends on the type of credit card you choose.
  • Reward credit cards have higher annual fees than other cards. It is exceedingly difficult for users to identify the advantages properly.

Cashback Credit Cards Pros and Cons

Cash-back credit cards provide complete ease to their users as cash can be used anywhere in the world to buy anything. Here are the Pros and Cons of cashback credit cards:

Pros of Cashback Credit Cards

  • There are no restrictions on the cashback that you have gained, and you can spend it anywhere for anything as the cashback is the money present in your bank account.
  • These credit cards have extremely low annual fees while some cards offer no annual fees.
  • These cards provide simple exchange options for cashback. The cashback can be exchanged simply via statement credits, bank deposits, or a check.
  • Cashback credit cards offer a fixed value of each cashback point which is 1 cent for each cashback point.

Cons of Cashback Credit Cards

  • With its fixed value, cardholders cannot exchange it for a high-valued product.
  • These cards offer fewer benefits than reward credit cards but provide some most important benefits like purchase protection, extended warranty, etc.
  • These credit cards do not offer welcome bonuses and offer other bonuses that are not worthy enough.

Difference between Reward Cards and Cashback Cards

As you have read the pros and cons of both credit cards above, now it is time to explain the key differences between them:

  • Reward Cards provide various redemption options like cashback, traveling, gift cards, and transferring to loyalty programs while cashback credit cards offer other redemption options which are statement credit, bank deposits, and checks.
  • Reward cards charge annual fees which start from $0 and up to $500 while cashback cards usually have no annual fees.
  • Reward cards offer reward points between 1 and 5 points for a 1 dollar spending. The average value of 1 point is 2 cents. Cashback cards offer cashback from 1% to 5% for each dollar and their value is fixed as 1 percent of a dollar is 1 cent.
  • Reward cards offer more additional benefits which include exclusive airport lounge access, fine dining, travel protections, annual credit points, and more while cashback cards offer limited benefits which are purchase protection and extended warranty.

When do Reward Card Points Have More Value?

Credit card points are the reward points that you gain by spending money using a credit card. There are various redemption options available to exchange your reward points for getting remarkable discounts. These reward points offer more value to the users by offering services like traveling in business class, staying in a luxury hotel, etc. Reward points vary based on the type of credit card you hold, and their value is also based on the type chosen by the user.

When do Cashback Cards Have More Value?

Cashback cards offer straightforward cashback which allows its users to use it easily whenever they want. Many small businesses prefer these cards as they help them earn some cashback from various business payments. It helps them manage their business expenses easily. Some cards offer up to 75% cashback reward on every transaction based on the relationship and your investment balance in the bank. These help users boost their credit card rewards effectively.

Reward cards have limited redemption options and vary their point values. In most cases, 1 point is worth less than 1 cent as compared to cashback cards. Cashback cards have a fixed value and offer stable redemption options from which these are redeemed easily.

How to Choose the Best Credit Card Option?

Choosing the best credit card option depends on your spending and lifestyle based on how you will redeem your rewards. If you love travelling then reward cards suit you best. Cash-back credit cards offer you complete authority to spend the cash anywhere you want. Although credit card points offer higher values than cashback credit cards. The values vary based on the type of credit card you hold. Sometimes the same credit card points have low value and the other card holders have higher values.

The decision to choose the credit card is based on your traveling activities. If you travel a lot then you can earn maximum reward points from a reward credit card but if you know that cashback cards do not charge annual fees or want straight cashback then you can choose a cashback credit card.

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