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Cash Back vs Reward Points

- by editor

If you use your credit cards for every day purchases, you might want to use cards that gives you cash back or rewards points. Cash back and reward cards work in similar ways – you earn cash or points for everything you purchases.

Through reward programs, cardholders can typically earn 1 point for every dollar they spent. They can even earn more at drugstores and supermarkets. You can redeem those points for gift cards, electronics, travels, and more. However, there is usually a limit on points you can earn each year and the points will expire after a few years if you don’t redeem them. The Simplicity(sm) credit card issued by Citibank is one of the great reward card offers today. There point limit is 75,000 per year and you can earn 10,000 points after your first purchase which you can use to redeem for a $100 gift card. You can earn 5 points at gas station, supermarket, and drugstores, and 1 point elsewhere.

For cash back credit cards, you can typically earn 1 percent of the total purchase. And you can earn 5% percent of your purchases at designated type of retailers such as supermarket or drug stores. So, for every dollar you spent, you may earn up to 5 pennies. This may sound insignificant. But you when you pay everything, I mean everything – breakfast, lunch, train tickets, and phone bills with your cash back credit card, you can see how much it can add up to. Similar to credit cards with reward points, there is a limit on how much you can earn each year. And you can only request the cash back check when you have enough money earned – typically $50. Citi® Dividend Platinum Select® Card one of the best credit cards for cash back reward.

Although it may appear that credit card with reward points are more favorable, especially those that offer you bonus point. We believe cash back is a better deal. With reward points, you can only redeem for stuff that is available in the reward program’s catalog. Certain type of items such electronics depreciate faster than others. 10,000 points may allow you to redeem a digital music player today. But by the time you earn 10,000 points, the very same digital music player will be worth much less than before. Why should you choose cash back over reward points, or the other way around? As with cash back credit cards, the $100 you earn after spending $10,000 with you credit card purchase can still buy you a $100 worth of goods.

Both types of credit cards offer you great benefits while cash back credit cards gives you more flexibility. Choose ones that best fit you purchasing habits and start earning cash back or reward points.


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