Cash back vs. points rewards

Credit card issuers offer rewards in several different currencies—cash back and points are among them. If you’re considering a new credit card, learning more about how the two work—and how you might use them—can help you figure out which card to apply for.

What you’ll learn:

• Both cash back and points credit cardholders earn rewards based on how they use their cards.

• Rewards redemption options vary by issuer. 

• Beyond rewards, comparing annual percentage rates, annual fees and broader card benefits could inform what kind of card is right for you.

Cash back credit cards and points credit cards may function similarly in many ways. But ultimately, cash back and points are different rewards currencies. And how cardholders earn and redeem rewards depends on the individual card and issuer.

In general, cash back and points credit cards fall into three different rewards categories:

1. Flat or fixed rates: The cash back percentage or points you earn on purchases is generally the same on most transactions. For example, eligible Capital One Quicksilver cardholders can earn unlimited 1.5% cash back on all purchases. 

2. Tiered rates: Sometimes called bonus-category cards, tiered card rewards can change based on the type of purchase. For example, eligible Capital One Savor cardholders earn unlimited 3% cash back at grocery stores and on dining, entertainment and popular streaming services, plus 1% cash back on all other purchases.

3. Rotating rates: Rotating rewards cards function much like tiered cards, with bonus categories that change periodically while other purchases earn a flat rate. During one part of the year, purchases from home improvement stores might earn higher-than-normal rates. During other parts of the year, that could shift to drug stores or utilities.

The right card for you is one that’s tailored to your spending habits. Whether you’re a globe-trotting adventurer, an avid foodie or someone who wants to earn cash back on everyday purchases, Capital One has a rewards card to fit your lifestyle.

• See if you’ll be approved for Capital One credit cards with no risk to your credit scores. 

• Explore travel rewards cards with unlimited miles you can actually use if you’re approved. 

• Earn unlimited 1.5% cash back on every purchase, every day, with an eligible cash back rewards card. 

• Earn unlimited cash back on food and fun with a dining and entertainment rewards card.