Rewards or cashback? Choose credit card wisely Premium

Choose between cashback and rewards credit cards based on spending habits and lifestyle for maximum value-back benefits.

For a many consumers deciding between a cashback and a rewards credit card can be confusing. While cashback credit cards are attractive due to their straightforward benefit structure, rewards credit cards can enable you to accumulate points that can be redeemed against free flights, hotel stays, products or vouchers.

Both offer value-back on your spends, but the right choice depends on your spending habits and lifestyle. So, how do you choose between the two?

Let us first understand how cashback and rewards credit cards differ.

With cashback credit cards, you get a fixed percentage of the amount spent as value-back, which is usually credited to your statement or a linked wallet, or as points redeemable in 1:1 ratio.

However, there may be certain terms and conditions. There may be a minimum transaction amount to qualify for the cashback or a cap on the cashback earning. For instance, Cashback SBI Card offers 5% cashback on all online spends and 1% cashback on offline spends, with a combined total cap of ₹5,000 per month.

On the other hand, rewards credit cards offer value-back as reward points, loyalty points, miles, etc., which can be redeemed for travel bookings, vouchers, merchandise, or statement of credit.

For example, HDFC MoneyBack+ Credit Card offers 20 reward points for every ₹150 spent on popular platforms such as Flipkart, Amazon, and Swiggy. These points can be redeemed for cashback, flight and hotel bookings, air miles, and more.