Points vs. cash back: Which is right for you?

Whether you’re earning cash back or points on the purchases you make, a rewards credit card can offer perks to take advantage of. And while credit cards with points or cash back rewards have similarities, they aren’t always created or handled equally.

Learn about some of the differences between cash back and points—and how to find the right rewards card for you.

Key takeaways

  • Cash back credit cards help you earn cash as you spend.

  • Cash back and points rewards can usually be redeemed in several ways—like a check, statement credit, gift card or travel purchase.

  • Points and cash back cards might come with different interest rates, annual fees and redemption options.

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Cash back credit cards

When you use a cash back credit card, you earn back a percentage of what you spend on it. For example, if you earn 2% back on certain purchases, that’s $2 for every $100 you spend. The amount you could earn varies by card and how much you’re spending. 

Some cards offer flat-rate cash back, like the Quicksilver card that earns 1.5% on all purchases. Others have a tiered system, like the Savor card that earns 4% cash on dining, entertainment and popular streaming services, 3% at grocery stores and 1% on all other purchases.1

Other cash back cards may offer bonus rewards for rotating categories. These categories typically change every few months, depending on the card.

How to redeem credit card cash back rewards

Cash back rewards can add up over time. When you’re ready, you might be able to redeem your rewards in a few different ways:

  • Paper check or direct deposit: This arrives in the mail or in your checking or savings account. Then you can use it however you’d like. Keep in mind that you may need to have an account with the card issuer for a direct deposit.

  • Statement credit: You could apply your cash back rewards directly to your credit card account as a statement credit to lower the balance.

  • Gift cards: Some card issuers let you redeem your cash back rewards in the form of gift cards at popular stores, restaurants and more.

  • Online shopping: You may be able to put your rewards toward online purchases. Capital One lets you use your rewards to shop online with PayPal and at Amazon.com.

  • Covering a purchase: Some card issuers may give you other cash back redemption options, like using your rewards to cover all or part of a past purchase, typically in the form of a statement credit.

  • Experiences: Capital One cardholders can redeem their rewards for music, sports, dining and more event tickets on Capital One Entertainment.

  • Travel: Capital One cash back rewards can be used on Capital One Travel to purchase flights, hotels and rental cars.

How you cash in your rewards depends on your needs and what your card offers. 

Are cash back credit cards worth it?

Cash back credit cards can have many of the same advantages as other cards—like protection against unauthorized charges and digital tools to help you keep track of your finances. And over time, if you use your credit card responsibly, you can build your credit and improve your credit scores.

Earning cash back rewards can be a nice perk. And some cash back credit cards offer an early spending bonus. That means if you spend a certain amount in a specific time frame, you could earn an extra cash bonus—on top of the card’s standard cash back rewards.

Some cash back cards may even offer low or 0% introductory annual percentage rates (APRs). This can be helpful if you want to make a big purchase, since you’ll have more time to pay it off with minimal—or no—interest.

You can also find cash back card options that have no annual fees.

Points rewards credit cards

Like cash back cards, credit cards with points offer rewards based on how much you spend. But instead of earning cash back, you earn points. How you earn or redeem points depends on the card’s terms and conditions. Some may be similar to a miles card, while others may be more like a cash back card.

Depending on the card, points may be redeemed for cash back or other perks, like gift cards, travel purchases or credit toward your account balance.

Some points cards have a fixed point system where you earn the same amount of points for all purchases. Other cards might offer rotating bonus categories that allow you to earn even more points with certain purchases.

Cash back vs. points: Which is better?

If you’re not sure which rewards credit card to choose, you might want to think about where you already use your credit card the most. The right rewards card could help you earn rewards for things you already buy.

Here are some other things to consider:

  • How you can maximize rewards with the card

  • Options to redeem rewards

  • What the APR is

  • If there’s an annual fee or any other fees

  • If there’s a bonus for new cardholders

  • If or when rewards expire

  • If it offers exclusive event access, travel upgrades, insurance or other perks

  • Additional benefits, such as $0 liability for unauthorized charges, fraud alerts, card lock or the ability to monitor your credit scores2

Points vs. cash back in a nutshell

The right card for you is one that’s tailored to your spending habits. No matter what credit card you choose, you can get the most out of your rewards by using your card responsibly and doing things like paying your balance on time each month.

If you’re interested in a Capital One credit card, get pre-approved today without harming your credit scores.

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