Credit Card Rewards: Cash Back Or Points?
When it comes to choosing credit card rewards it is often hard to tell what kind of card will provide the most benefits.
Comparing reward cards is a good place to start, but there are so many different kinds of reward programs out there that deciding between them may need to be done before deciding on individual cards.
Some points programs will limit the kinds of items and benefits that can be redeemed, which is why many people assume that cash back offers will make a better deal. Neither of these things are completely true, but the comparison of these two rewards options below will help you decide which option is better for you.
Cash Back Credit Cards
A lot of the time credit card benefits will cost us money in the form of interest or annual fees, but cash back rewards provide an opportunity to save some money as well.
These cards will usually offer a fixed percentage of cash back for eligible purchases and may range from less that 1% up to 5% depending on the credit card. Cash back offers used to be more popular, until many people found that the amount of cash returned could end up being less than what they paid for the card.
For cardholders who do not charge everything to credit, taking advantage of a cash back offer might not be the way to go, unless the rewards are focused on a particular reward partnership or everyday expense. A good example is the Citibank BP credit card, which offers 5% off fuel and everything else bought at BP service stations.
Like other rewards cards, sometimes the fees for these credit cards are quite high, so it is worth trying to estimate savings before choosing cash back options. With a cash back offer that is focused on everyday essentials, like petrol, it should be a lot easier to see whether this kind of card is going to be worth it.
Reward Point Credit Cards
Most reward credit cards now run on a points system, giving cardholders a certain amount of points per dollar spent. Some, like the Citibank Platinum, Commonwealth Bank Awards or ANZ Rewards cards, are part of a provider’s own rewards program.
There are also a number of popular rewards cards linked to airline frequent flyer programs so that cardholders can save up points for airfares.
The main benefit to point rewards is that they are easy to keep track of and give cardholders more choice when redeeming offers. On the other hand, they may also limit what can be done with the points, leaving some people with a lot of points and not enough redemption offers.
No matter what kind of rewards program is being considered, it is always a good idea to compare a few different options and read the fine print. Then rewards will help you save money while you spend, adding even more value to your credit card.
