Credit Cards

Choosing A Credit Card Rewards Program

Choosing Credit Card RewardsWith so many types of credit cards offering different rewards, sometimes it becomes extremely difficult for customers to figure out which one is the best. Currently, the two highly popular credit card rewards programs are reward points and cash back. “When you opt for a credit card offering reward or cash back scheme, it means you have an opportunity to achieve higher discounts,” said Anna Cohn of “You are also allowed to donate any points which you earn from these credit cards to any school or charity, which is another nice offering.” Additionally, most of the credit card companies also allow customers to invest their cash back earnings into their savings account.

However, each one of these credit cards has its own benefits and drawbacks which a user must take into consideration while making a selection. So before making any conclusion, let’s try to comprehend how these options work –

  • Reward Points – It is one of the oldest forms of benefits offered on credit card transactions to customers. Depending on the type of credit card, points are allocated on each Dollar spent. Platinum, Gold or any other form of privileged cards offer more reward points per purchase when compared to normal cards.
  • Cash Back Scheme – It is most recent phenomenon, in which user gets cash back on his each purchase. A cash back credit card offers direct benefits to customers unlike reward points on which user achieves benefits much later. Credit cards with cash back scheme are extremely popular because they don’t have the same limitations other credit cards have.


A credit card with cash back features normally pays between 1 to 2% on every credit purchase. A customer can obtain cash rewards in different forms like an immediate discount on a purchase or cash back in the credit card account. For credit cards with reward points, customers can earn reward points when they make purchases through any store. After rewards points to a certain limit, customers can redeem their points in the form of cash. So an individual may have to wait until the pre-defined limit for reward points is achieved in order to redeem them.

Most of the cash back credit cards don’t have any annual fees attached to them. So a user won’t be losing any benefit in the form of cash back or discounts on purchases. On the other hand, most of the reward point credit cards come with excessive annual fees, which may eat up your entire advantage.

The amount of benefits a user can obtain through cash back credit cards mainly depends upon the seller or service provider. On the other hand, the benefits offered by reward point credit cards mainly depend upon the deal a user has. So, if you are a lavish spender and shopaholic then reward point credit card can be preferred choice for you.

Credit cards which offer reward points may offer benefits of higher value as compared to cash back credit cards, especially for purchases done at supermarkets, gas stations and merchant network stores.

Selection of credit cards also largely depends upon the amount of expenditure you incur. If you fill fuel at multiples outlets or if you are a frequent flyer then a reward point credit card is beneficial over the cash back credit card.


Before making a choice between reward point or cash back credit card, you have to weigh the advantages and disadvantages of both of these credit card types. If you use your credit card on rare occasions then you can opt for cash back credit card to avail immediate discount on your purchase. But if you are frequent user of credit card then you can opt for credit card with a reward point scheme as you can accumulate reward points quickly in multiple purchases. Therefore, an individual must make the selection on the basis of his spending habits in order to enjoy the benefits offered by these credit cards.

No matter which type of credit card you select, it should be utilized with the utmost caution and your expenses must be within your budget. Before making a final decision, you can do a cost benefit analysis on the basis of your current expenditure and enroll once complete.

This is a guest post created by Richard Cox.

Image courtesy of sixninepixels /

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  1. Fehmeen
    November 8, 2013 at 7:11 am — Reply

    Reward programs are an added incentive for credit cards but they’re not always useful. We recently had a few points added to our card and after going through the accredited retail outlets where we could redeem our points, we ended up buying something we simply didn’t need at the time (a very expensive leather pouch). Perhaps this feature is more suited to highly developed economies where options are vast.

    • November 8, 2013 at 10:44 am — Reply

      They can be very useful, but you have to use the credit card responsibly. If you are going to use it to buy things you don’t need, then it won’t be of any help.

  2. November 8, 2013 at 8:20 am — Reply

    I’m not a fan of the reward point cards. I have both and my cashback card is definitely a better deal, and that’s even with me using it for pretty much any purchase I can.

    • November 14, 2013 at 10:28 am — Reply

      I like the cash back card as well, but it depends on what you like doing.

  3. November 8, 2013 at 9:14 am — Reply

    I like rewards cards for travel/hotels only. I don’t like rewards points for “buying” things from the credit cards online store with the points. I don’t need those things in the first place so it’s no draw for me.

    Cash back cards are something I’ve never really used but my brother does have pretty good luck with one so I might look into one next.

    • November 14, 2013 at 10:29 am — Reply

      Yeah, I am not a fan of the credit card stores that just sell stuff I don’t need. All I need is a way to get statement credit and I am good.

  4. November 8, 2013 at 9:22 am — Reply

    I think the rewards cards can be good, you just have to know how they work and make sure it’s worth the time and effort. That said, if anyone is going to give me something for free (especially money) for something I’d already be doing anyway then count me in!

  5. November 8, 2013 at 9:53 am — Reply

    I like cash back for the simplicity. Unless the rewards are for something I use regularly and there aren’t any restrictions, I’m not going to bother.

  6. November 8, 2013 at 10:23 am — Reply

    I use a cash back card and apply all the cash back to my credit card bill. I love it.

    • November 14, 2013 at 10:29 am — Reply

      That is the main reason why I love my cash back card as well!

  7. Richard Jonas @
    November 8, 2013 at 11:52 am — Reply

    My wife and I both have travel rewards cards, since we fly to Asia on a regular basis. We pay the vast majority of our monthly expenses with the cards and pay them off in full every billing cycle. We’re able to rack up some serious travel points without incurring any interest at all.

    • November 14, 2013 at 10:30 am — Reply

      That makes sense. If you travel often, then a travel rewards card will make the most sense.

  8. November 8, 2013 at 1:15 pm — Reply

    Nice overview of rewards programs. It’s also worth it to search for good bonuses with cash back cards. For example, the Discover It is a decent cash back card but if you go directly through Discover’s website, there is no cash back bonus. But if you google around, I’ve found a link for a $150 cash back bonus. It’s worth it to at least check.

    • November 14, 2013 at 10:32 am — Reply

      Thanks for the info Syed. They do promos often that they don’t really put on their website, but give to their affiliates to promote the card.

  9. November 8, 2013 at 3:58 pm — Reply

    I generally prefer travel rewards over cash back. If you use them wisely, you can travel in luxury for not much cost. It does take some patience to sort through the best programs, but it’s kind of like a game at this point.

    • November 14, 2013 at 10:32 am — Reply

      My wife has a travel rewards card and I have a cash back card. I like having both.

  10. November 9, 2013 at 11:55 am — Reply

    We are definitely in the cash back cards camp. However, with our current cash back card (Citibank) I do not think we have the option to apply the dividend directly to our bill as some do. I may have to look into that!

    • November 14, 2013 at 10:33 am — Reply

      That is the only reason why I like my Amex Blue Cash card. I can just put the cash back balance to my statement.

  11. November 10, 2013 at 10:18 pm — Reply

    I have a card that doesn’t charge fees for overseas ATM withdrawal, that is the best card for me as it easily saves me $500 a year or so. Most shops around here don’t accept credit cards anyway so I wouldn’t rack up too many miles.

    • November 14, 2013 at 10:33 am — Reply

      Wow, that is important if you spend time overseas, which I know you do.

  12. November 13, 2013 at 8:46 pm — Reply

    Looking at the comments above I think it’s interesting that there’s a 50/50 split between those that prefer cashback over travel rewards. Wonder why that is?

    • November 14, 2013 at 10:33 am — Reply

      I think it all comes down to priorities. It depends on what people want to do.

  13. ubank
    November 15, 2013 at 8:23 am — Reply

    Rewards programs are good, but most of this offers they require a minimum spend that is too high in order to quality for the bonuses and rewards.

    • November 17, 2013 at 6:20 pm — Reply

      Most cards don’t require a minimum to earn the actual rewards. You earn points or cash back with every dollar you spend or local currency. Actually getting the bonuses can take more money though.

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