Credit cards are one of the best tools in the modern era. This plastic currency is not only convenient and secure to carry, but it also provides the holder with several other benefits like cashback and rewards points to its holders. As the number of credit card service providers has increased, the consumers have started analyzing the various credit cards based on the add-on benefits that each has to offer and then choose the one that suits them the most. While the best cashback credit card provides good cashback options, the other provides plenty of reward points. There are multiple factors that the credit card veterans need to study before choosing which credit card suits them the best. Before pouncing on these factors, it is important to first understand the difference between cashback and reward points.
Reward Points:
Reward points, which are the oldest benefit of credit cards, can be redeemed by the cardholder while booking flight tickets, hotel rooms, purchasing products, etc. Gold, platinum, and privilege cardholders earn more reward points as compared to those with normal credit cards.
Cashback:
This is a recent addition to the privileges of credit cards. Cashback credit cards provide the users with cash in their bank account or their credit statements. This cash amount is given to the customer after they make any purchase using their best cashback credit card. These cards provide the holder the flexibility of using the cashback amount in any purchase they want. Read more about the best cashback credit card available, to maximize your earnings.
Both types of credit cards have their benefits. However, the card one chooses entirely depends on the user. One user may prefer a cashback credit card while the other may opt for a reward points scheme. Thus there is no right or wrong in choosing a credit card, but one must be prudent to choose a card that suits their expenses and requirements.
Below are some factors that one should consider while choosing the best cashback credit card:
Cashback credit cards reward users with a fixed percentage of cash back based on their expenses. Most of the cashback credit card allows the users to redeem the cashback points for any purchase or even transfer the cashback amount in their bank deposit for their future use. However, some provide the cashback in the form of gift cards, travel, and other such options.
Merits of Cashback Credit Cards:
- Zero annual fees: Generally, there is no annual fee charged for cashback credit cards
- Simple Rewards: Users can redeem the cashback rewards by either taking a direct bank deposit or as statement credits
- Flexible: This cashback scheme provides complete flexibility to the holder since they can spend the amount anywhere without any restrictions, unlike reward points
- Big Spends: Cashbacks are generally more favorable for users who make big amounts of transactions. This is because there is no cap on the maximum monthly spends in cash back credit cards
- Easy to Understand: One fundamental advantage of cashback credit cards is that it is easy to understand. There are no technicalities on the usage and credit of the amount in these cards. While in reward credit cards, the cardholders need to understand the various terms and conditions and the know-how on the redemption of the reward points, there is no such thing associated with cashback credit card
Reward Credit cards provide reward points instead of cashback to their users. These reward points can be redeemed at the prespecified places/ websites such as airlines, hotel bookings, etc. These also come with complimentary benefits of lounge access and others.
Merits of Reward Credit Cards:
- Redemption Bonus: Many reward credit cards provide the cardholder with the benefit of free travel when they redeem points through their portals.
- Transfer options: Several flexible reward credit cards allow the cardholder to transfer their rewards to various hotel and airline partners. Users can benefit by searching for deals withing the partner programs
- Perks: Several travel reward cards provide travel perks such as airport lounge membership, rental coverage, etc.
- Multiple Spending Options: Another very important feature of reward credit card is that these rewards can help the cardholder make payment in full or partial using the points earned
- Savings: Earning around 1300 reward points can help the cardholder get an Arrow gift voucher of INR 500. Similarly, one can earn a Lifestyle gift voucher worth INR 500 by using 1500 points. These gift vouchers act like savings which can help you gift yourself a new product for free
Above were some of the pros and cons of cashback credit cards and reward credit cards. You must have noticed that neither of the two types can be preferred over the other. The simple reason behind this is that both provide different benefits. While reward points can be advantageous for one person, the other might prefer cashback. If you are someone who travels frequently, then read credit cards should be your choice as these provide immense bonuses for each booking. However, if you are somebody who does not travel frequently, and may not take advantage of the perks this card provides, then you should opt for the best cashback credit card available.
