Cashback Credit Cards vs Reward Points: Which One Saves You More?

When choosing a credit card, the most common dilemma is whether to go for cashback or reward points. Both options offer savings, but the better choice depends on your spending habits and preferences. In this post, we’ll break down the pros and cons of each, compare their value, and help you decide which card type can save you more.

1. What Are Cashback Credit Cards?

Cashback credit cards return a percentage of your spending as cash. For example, if your card offers 2% cashback and you spend ₹10,000, you’ll get ₹200 as cashback.
• Benefits of Cashback Cards:
• Instant and tangible savings.
• Simple and straightforward reward system.
• Ideal for frequent spenders who want to save on everyday expenses like groceries, fuel, and online shopping.

2. What Are Reward Points Credit Cards?

Reward points credit cards offer points for every rupee you spend. These points can be redeemed for gifts, discounts, air miles, or even statement credits. For instance, you might earn 2 points for every ₹100 spent, which can later be exchanged for products or services.
• Benefits of Reward Points Cards:
• Flexible redemption options.
• Great for travelers and lifestyle spenders who want premium benefits.
• Ideal for long-term users who plan to accumulate points over time.

3. Key Differences Between Cashback and Reward Points Cards

Feature Cashback Cards Reward Points Cards
Savings Instant savings in the form of cash Indirect savings through redemption
Ease of Use Simple – cashback directly credited Requires tracking and redeeming points
Best for Everyday spenders Travelers and lifestyle enthusiasts
Redemption Value Fixed (₹1 cashback = ₹1 saved) Varies based on the redemption option
Expiry Cashback may not expire Points often come with an expiration date
Categories Specific categories (e.g., fuel, groceries) Broader categories, including travel and dining

4. When Should You Choose a Cashback Credit Card?

Go for a cashback credit card if:
• You prefer immediate savings.
• Your spending is focused on essentials like groceries, fuel, or utility bills.
• You don’t want to deal with the hassle of redeeming points or keeping track of their expiry.

Pro Tip: Check out our guide to the Best Cashback Credit Cards in India 2025 for top recommendations.

5. When Should You Choose a Reward Points Credit Card?

Opt for a reward points card if:
• You travel frequently and want access to air miles or travel perks.
• You enjoy premium benefits like lounge access, discounts on luxury brands, or exclusive events.
• You’re okay with tracking and redeeming points to maximize their value.

6. How to Compare the Two and Save More
   • Analyze Your Spending Patterns: Look at your monthly expenses. If you spend mostly on basics, cashback cards might save you more. For travel and luxury spending, reward points are likely the better option.
   • Consider Redemption Options: Evaluate the ease and value of cashback versus the flexibility of reward points.
   • Factor in Annual Fees: Some reward points cards come with higher annual fees but offer perks that outweigh the cost. Cashback cards generally have lower fees.
   
7. Our Recommendation

For most users, cashback cards are simpler and provide immediate savings, making them a great choice for everyday spending. However, if you’re a frequent traveler or someone who enjoys premium perks, reward points cards can offer greater long-term value.

Conclusion

Both cashback and reward points credit cards have their own advantages. The right choice depends on your spending habits and financial goals. Start by reviewing your expenses and decide what kind of rewards matter most to you. And if you’re leaning toward cashback, don’t forget to check out our comprehensive guide on the Best Cashback Credit Cards in India 2025.