Cashback or Reward Points: Which Feature Should I Look for in My Credit Card?

Updated on: 22 Dec 2023 // 5 min read // Credit Cards
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When it comes to Credit Cards in India, the competition between the banks and Credit Card companies is immense. Each one is trying to outwit the other by incorporating some exclusive feature in their offering.

Well, without a doubt, swiping Credit Cards cuts down the cost of transactions, and you enjoy a series of benefits such as cashback, reward points, instant discounts, etc.

One conundrum that you might face while comparing the Best Credit Cards is to make a choice between cash back or reward points. Citi Rewards Credit Card and HDFC Moneyback Credit Card are two good examples in the segment. Both Credit Cards are great to save and earn with your everyday purchases. However, which of the two is better or more suitable Credit Card for you.

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Let’s explore below how Credit Card features as Cashback and Reward Points work.

What are Reward Points?

Every Credit Card has a bundled rewards program that provides you interesting discounts and benefits on specific transactions. Bonus reward points are also awarded at the time of signing-up for the card, on transactions at specific merchants, on payment of renewal fee, and various other instances. When sufficient reward points have been accumulated, you can redeem them to purchase more products, services, or vouchers available in the catalogue under the reward program.

Some banks also provide you the choice of converting reward points into Air Miles as well. Redeeming reward points is quite easy and can be done through the internet banking account. For instance, if you are using any of the SBI Credit Cards, you can redeem the reward points for almost 587 items in the catalogue through the mobile app or website of the bank.

What is Cashback Offers?

Some of the best Credit Cards in India now come with a cashback program. Herein, you earn a certain percentage of cash back on eligible transactions with your Credit Card. The cashback is credited to your account instantly, or at the end of the billing cycle, according to the Credit Card you are using. It must be noted that not all transactions are eligible for cashback, i.e., this benefit is available with select merchants and brands only.

There is no need to wait in this case as the cashback is calculated on per transaction basis and will be credited to your Credit Card in the next billing cycle. Moreover, it is easier to calculate the benefits you will be earning with cashback cards as the percentage is already specified at the time of issuance of the card.

Cashback vs. Reward Points: Which one should you choose? 

S. No.ParameterReward PointsCash Back



On most of the transactions completed with the card

On select transactions at partner outlets



Vary according to the transaction

Consistent cashback on each approved transaction



Most reward points have an expiry of two/three years

No expiry



Can be used only to purchase items/ services mentioned in the catalogue

Cashback is credited to the account and can be used for any purpose by the holder


Minimum Requirements

Minimum transaction amounts are specified to be eligible for reward points

No minimum transaction amount. Cashback is available on all eligible transactions



Not easy to understand as different transactions earn different reward points

Very easy to understand as the percentage of cashback is intimated periodically.



Many opportunities to earn bonus points and additional privileges

No bonus features available

Here is a comparative analysis of these two factors, along with various parameters for your perusal:

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  • Eligibility: The best part about reward points is that you have the chance to earn reward points on every transaction with the Credit Card. In case of cash back, you have the opportunity to earn cashback on specific transactions at particular merchants only. Moreover, there is no capping on the maximum Reward Points you earn in a month, but maximum cashback is usually limited for each transaction and each billing cycle.
  • Calculation: Reward points system varies as per the ongoing offer. Some transactions might offer you 1x reward points, while others might fetch 5x reward points. The value of points is then redeemed in the form of gifts, discounts, or cash back. However, in the case of cashback Credit Cards, you are awarded a percentage of the transaction as cashback, and the same is intimidated to you before availing the card.
  • Expiry: In most cases, reward points have an expiry date, i.e., you need to redeem them within that period, or they will lapse/ forfeited. Though, in the case of cash back, there is no need to worry about the expiry date. The cashback is credited to your Credit Card and can be used as and when you desire.
  • Redemption: Reward points can only be used to purchase products or services offered in the catalogue or, in some cases, can be converted to Air Miles. But most of the items in the catalogue are over-priced, so you end up burning more points. This is not the case with cashback. You earn the fixed percentage of cashback on completing transactions at any of the partner outlets.
  • Minimum requirements: There is a minimum transaction amount specified to be eligible to earn reward points. This can lead you to overspend and purchasing useless stuff. But in the case of cashback cards, there is no minimum transaction amount, and you will earn the cashback for every transaction.
  • User-friendliness: Understanding and maximizing the benefits of reward point programs is not that easy. It requires an experienced Credit Card user to make the most of the opportunity. In the case of cashback, even a new user can use the Credit Card as the cashback program is self-explanatory.
  • Bonus:You can earn a lot of bonus reward points on specific transactions on a particular day or at a particular merchant. You also earn bonus points at the time of signing-up. But there is no opportunity of any bonus with Cashback Cards; you can only earn cashback on eligible transactions.

In all, both reward points and cashback are two of the popular parameters for selecting the best Credit Card. You should only opt for the Credit Card that fits your lifestyle and usage patterns. Besides, also look for features such as annual fee, add on cards, annual benefits & additional benefits. Compare different cards and choose the one that best matches with your requirements.

Also Read: Choosing the Best Credit Card: Annual Fee, Reward points, Cashback, etc

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