Cashback vs Reward Points: Which Credit Card Offers Best Value for You?

Cashback vs Reward Points:
Cashback vs Reward Points: When choosing a credit card, one of the key factors to consider is the reward structure. Credit cards typically offer two types of rewards: cashback and reward points. Each option is designed to cater to different spending habits and lifestyle preferences. In this article, we’ll explore the differences between cashback and reward points credit cards to help you decide which is better suited to your needs.

Cashback vs Reward Points:

What are Cashback Credit Cards?

Cashback credit cards offer a simple reward system: a percentage of the eligible transaction amount is returned to the cardholder as cashback. The cashback accumulates during a billing cycle and is credited back to your account after the statement is generated.

It’s automatically applied to reduce your bill, which makes it easier to use. The best part? There’s no need to redeem the cashback; it’s simply credited to your account for future use.

Cashback Credit Cards

Cashback credit cards typically offer rates between 1-5%. However, some cards provide higher cashback (up to 10%) in specific categories like online shopping or food delivery. Most cashback cards have a cap on the amount you can earn each billing cycle. Also, many cards charge annual fees, though some waive them if you meet a minimum spending threshold.

Types of Cashback Cards

Cashback SBI Card: Offers 5% cashback on eligible online spends and 1% on offline purchases. The annual fee is Rs. 999, with a renewal fee waived on spending Rs. 2 lakh annually.

Swiggy HDFC Bank Credit Card: Provides 10% cashback on Swiggy services and 5% cashback on selected online merchants. The maximum cashback is Rs. 1,500 per billing cycle.

What are Reward Credit Cards?

Reward credit cards offer points for every transaction, which can be redeemed for a variety of benefits like flight bookings, hotel stays, or gift vouchers. The reward rate typically varies, with some cards offering 1 point per Rs. 100 spent, while others may provide more points for specific purchases.

Reward Credit Cards

The versatility of reward points is one of the major advantages. Points can be redeemed for travel-related expenses or transferred to partner airlines and hotel chains. This makes reward cards ideal for those who travel frequently and want to accumulate points for free flights or hotel stays.

Types of Reward Cards

Axis Bank Atlas Credit Card: Earns 2 EdgeMiles for every Rs. 100 spent, with accelerated rewards for travel-related purchases.
American Express Platinum Travel Credit Card: Offers 1 Membership Reward point per Rs. 50 spent, with bonus points for high spending.

Which Card Should You Choose?

If you frequently travel, a reward credit card could be your best bet. These cards often provide higher value per point, especially for flight and hotel bookings. Additionally, you can transfer points to airline and hotel partners to make your travel more affordable.

On the other hand, if you prefer simplicity and don’t travel often, a cashback card might be a better choice. It’s easy to use, with no need for point redemption. You simply earn a percentage of your purchases back as cashback, which helps reduce your monthly expenses.

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