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Credit Cards With Cashback vs Credit Cards With Reward Points – Best Option to Save in FY 2024-25

Roshani Ballal Posted on May 16, 2025

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In today’s fast-paced, digitally driven world, credit cards aren’t just tools for borrowing — they’re also powerful enablers of savings. Two of the most popular types of cards in India are cashback cards and reward points cards, both offering value every time you spend.

Cashback credit cards give you a straightforward benefit — a percentage of your spending is credited back, often as a discount on your bill. Reward credit cards, on the other hand, let you earn points that can be redeemed for vouchers, merchandise, flight tickets, or even fuel.

But which one offers better value? The answer depends on how you spend and how you redeem. Let us break down the differences which can help you choose the right option to maximise your savings in FY 2024-25.

What Are Cashback Credit Cards?

Cashback credit cards are all about simplicity and instant gratification. Instead of collecting points and figuring out how to redeem them, you earn back a portion of what you spend — in cash. It’s a direct reward that reduces your outstanding bill or adds to your statement balance.

Typically, these cards offer 1% to 5% cashback on eligible purchases. For example, if your card gives you 5% cashback on online shopping and you spend ₹5,000, you’ll receive ₹250 back — often reflected in your next billing cycle.

There are no complicated conversions, no hunting for redemption partners, and no expiry dates to track. Cashback is visible, tangible, and ideal for those who prefer immediate savings over delayed gratification.

Many cashback cards also come with tiered benefits. You may earn:

Higher cashback for online shopping, grocery, or utility payments
Basic cashback on all other spends
Waived annual fees if you hit a minimum spend threshold

So, are cashback cards better than regular credit cards? If you value clarity, simplicity, and money back on everyday expenses — absolutely. They're particularly useful for disciplined spenders who pay their bills in full and want effortless savings without managing a reward system. If you want to make your spending work for you — with no extra tracking or effort — a cashback credit card could be your smartest pick.

What Are Reward Point Credit Cards?

Reward credit cards let you turn your everyday spending into something more. Instead of getting cash back instantly, you accumulate points — and those points can unlock a wide range of benefits, from flight tickets and hotel stays to gadgets, gift vouchers, and more.

Most reward cards offer 1 point per ₹100 spent on regular transactions. But where they really shine is in accelerated categories like dining, travel, or online shopping — with some cards offering 5x to 10x points for specific purchases.

So, what’s the difference between reward points and cashback? Cashback is immediate and automatic. Reward points, on the other hand, offer greater flexibility — but they also require you to track your points, check expiry dates (usually 24 to 36 months), and select the right redemption option to maximise value.

Key Differences Between Cashback and Reward Point Credit Cards

Understand the difference as per different aspects:

Feature	Cashback Cards	Reward Point Cards
Reward Type	Cash credited to statement	Points accumulated
Redemption	Bill reduction	Vouchers, travel, merchandise
Tracking	Not needed	Required
Expiry	Rarely	Often after 2–3 years
Value	Fixed, visible	Variable, based on use
Best For	Daily spenders	Travel, online shoppers
Fees	Usually low	Moderate to high
Bonus Categories	Fuel, groceries, bills	Flights, luxury shopping

Looking for the best credit cards with cashback rewards and no annual fee? Go for no-fee cashback cards with basic perks. Those who enjoy choice may prefer reward point credit cards. Both work—depending on how you spend.

Benefits of Using Cashback Credit Cards

Why pick cashback cards?

Simple savings with no complexity.
Instant cashback on essentials like fuel or groceries.
Many cards waive fees if you meet a spend limit.
Cashback reduces your monthly dues automatically.
No expiry worries like with points.

Cashback is best for those who spend steadily and don’t want to manage reward portals.

Benefits of Using Reward Point Credit Cards

Reward cards shine for users who enjoy flexibility.

Points can be redeemed for flights, hotels, or gifts.
Some offer 10x points on select platforms.
Ideal for travellers or luxury spenders.
Annual fees often come with valuable bonuses.
Flexible across spend categories.

Reward cards are best if you plan to redeem smartly and spend more.

Which Credit Card Option is More Suitable for Daily Expenses?

For regular bills, fuel, groceries, and phone recharges, cashback works best. It gives money back on necessary spends. Cash back credit cards suit daily earners, students, or salaried professionals who want effortless savings. Reward points may not give high value unless you redeem for big spends. So, if your card is mainly for routine use—cashback wins.

Here are some top credit cards available on Bajaj Markets suitable for daily expenses:

Credit Card	Key Features	Best For
SimplySAVE SBI Card	- 10x reward points on dining, movies, groceries - 2,000 bonus points on joining	Everyday shopping and entertainment
BPCL SBI Card	- 4.25% value back on fuel at BPCL pumps - 1% fuel surcharge waive	Fuel expenses
Axis Bank NEO Credit Card	- Up to 40% off on Zomato - EMI conversion on big purchases	Dining and large purchases
Lifestyle Home Centre SBI Card	- 5x reward points at Landmark stores - 2,000 bonus points on joining	Retail shopping at partner stores
IRCTC RuPay SBI Card	- Up to 10% value back on railway bookings - Complimentary lounge access	Travel and commuting

Which Type of Card Offers Better Value for Long-Term Savings?

Planning to save over the year? Let us understand how it panes out.

If you spend ₹10,000 per month on a 5% cashback card, you receive ₹6,000 as cashback annually. A reward card might offer more, but only if points are redeemed at high value. For ease and steady savings, the cashback one seems better. But if you travel often or shop online heavily, rewards may suit you more. This also addresses the cashback vs rewards credit card debate—neither is better. It depends on how you spend.

FAQs on Cashback vs Reward Points on Credit Cards

Cashback vs Reward Points

Are cashback credit cards better than reward cards for bill payments?

Cashback directly reduces your spends. Rewards take time to redeem. Hence, the choice is yours.

Can I convert reward points into cash?

Some banks allow this. But the value may be lower than other redemptions.

Which credit card type gives more flexibility in redemption?

Reward cards. You can use points for travel, vouchers, or items.

Do cashback cards have annual limits on rewards?

Yes, some do. Check your card’s terms for monthly or yearly caps.

What’s better for fuel or travel: cashback or reward points?

Cashback typically works well for fuel. Rewards work better for travel bookings.

Hi! I’m Roshani Ballal

Blogger

Roshani has over 6 years of experience and has honed her skills in performance content marketing in the financial domain. She loves diving into research and has crafted and overviewed creative copies, long-form financial content, engaging blogs, and informative articles. She specialises in delivering user-oriented content and solving problems through various content formats. On the side, Roshani enjoys writing poems-that's how she stays creative when she is not crunching numbers.