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Points or Cash: A Breakdown of Credit Card Rewards

Written by: Dan

2 min read | Published: December 13, 2023

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If you’re considering getting a new credit card but don’t know whether to choose cash back or a points rewards program, you’re not alone. The advantages and disadvantages of each kind of credit card can be confusing, especially if you are new to credit. Read on to learn the advantages and disadvantages of each kind of card.

Cash-Back Rewards:


  • Cash back is simple. You will get a percentage of each qualifying purchase back. For example, if your card earns 2% cash back on everything, you will get $2 for every $100 spent. Typically, the money can be deposited directly into your account making it simple to use.
  • Cash back is flexible. When you receive cash back, your rewards can be easily used for whatever you want.
  • Many cards have higher rates of return for different types of purchases. Depending on the card, you could get as much as 6% back on things like travel or supermarkets. This way you maximize your rewards based on your spending habits.
  • Many of the best cash back cards do not have annual fees.


  • Compared to points, the value of your cash-back reward is usually much less than the value of the points you earn using a points card.
  • Earning can be capped. If you earn too much in rewards, you could be blocked from earning more.
  • You may not have the same travel and purchase protections you get with a points rewards program.

Points Rewards:


  • The welcome bonuses you earn through a points rewards program can be massive. Some cards offer as many as 80,000 points as a welcome bonus. The welcome bonuses can be worth anywhere from $0 to $1,500.
  • When you have points reward cards, you can become part of specialized groups that have travel protections.
  • The ratio of money spent to rewards value for points cards can be greater on average than the value for cash back.


  • Most point-reward-based cards have annual fees. Some can have fees of as much as $395 per year.
  • It can be complicated to use or redeem your earned points. There is a learning curve for how to maximize their use.
  • Even though your points don’t usually expire, they can devalue over time. This encourages you to use your points quickly.
  • You need to spend money to save money. The bar to receive the welcome bonuses and earn enough points to offset the cost of the annual fee means you need to spend a lot of money — often thousands of dollars — to recoup your costs.
  • Cash-back rewards and point rewards have value. Cash back is a simple way to get value out of card use. Cards with point rewards have more specialized use, often geared toward travel benefits. The main factor to consider when deciding to get one of these cards is your spending habits. If you tend to travel a lot — and spend a lot while you do — a card with point rewards may be more valuable to you. If you’re just looking for a no-fee, quick way to get some cash back, a card with cash rewards is probably better.


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