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Choosing between rewards points and cashback from credit card spending is a common dilemma for Indian cardholders. Both options offer ways to earn extra value on your purchases, but the right choice depends on your lifestyle and financial goals. Understanding how each works can help you maximise your credit card benefits and make every rupee count.
The debate between rewards points and cashback from credit card usage matters because it affects how much you save or gain from your everyday spends. Rewards points may offer flexibility and bigger perks, while cashback is straightforward and easy to use.
For some, the simplicity of getting direct cashback is appealing. For others, the potential for higher value through redeeming points for travel or gifts is more attractive. Knowing the difference is key to making the most of your credit card.
Reward points are credits earned on eligible transactions made using your credit card. These points accumulate over time and can be redeemed for a variety of options, including travel bookings, shopping vouchers, merchandise, or even statement credit.
Every card has its own structure for how to earn reward points on credit card spends. For example, the ICICI Bank Coral Credit Card gives 2 reward points for every ₹100 spent on retail purchases, and higher points on dining or online shopping. These points can be tracked and redeemed via the bank’s rewards portal.
You earn points on every eligible transaction, with bonus points for select categories like dining, travel, or online shopping.
Points may have different values depending on how you redeem them (e.g., travel bookings might offer higher value than merchandise).
Most cards set a validity period for points, usually between 2 to 3 years.
Some cards offer accelerated earning rates during promotional periods or with partner brands.
Redemption options may include flights, hotels, gift vouchers, or even cash credit to your statement.
Points may be transferable to airline or hotel loyalty programmes, depending on the card.
Example: With the Axis Bank SELECT Credit Card, you earn 10 EDGE reward points for every ₹200 spent, and double points on retail shopping. These points can be redeemed for travel, shopping, or even as cashback through the bank’s rewards portal.
Cashback from credit card spending means you get a percentage of your purchase amount returned to you, usually as a statement credit or direct deposit. This benefit is simple, transparent, and provides immediate value on your transactions.
Cashback cards are popular for their ease of use. For example, the Axis Bank Cashback Credit Card offers up to 7% cashback on online spends and a base rate of 0.75% on offline and travel spends, credited automatically before the next statement cycle.
Cashback is credited directly to your credit card account, reducing your outstanding bill.
The cashback rate is fixed, making it easy to calculate your savings.
Some cards offer higher cashback rates on specific categories like groceries, fuel, or online shopping.
There is often a cap on the maximum cashback you can earn per month or year.
Cashback is usually credited monthly and does not expire.
No complicated redemption process—your savings are automatic and immediate.
Example: With the SBI Cashback Credit Card, you can get up to 5% off on online spends without any merchant restrictions and 1% on offline spends. The cashback is credited directly to your account, making it easy to track your savings.
Understanding the differences between reward points and cashback from credit card usage helps you choose the right card for your needs. Here’s a comparison based on key parameters:
Parameter |
Reward Points |
Cashback |
|---|---|---|
Earning Method |
Points earned per rupee spent, often higher on select categories |
Fixed % of spend, may vary by category |
Redemption Process |
Redeem via the bank's portal for travel, gifts, vouchers, etc. |
Credited directly to statement or account |
Value per Rupee |
Varies by redemption (₹0.10–₹1 per point) |
Fixed (e.g., 1–7% of spend) |
Expiry |
Points may expire in 2–3 years |
Cashback does not usually expire |
Complexity |
Requires tracking, planning, and portal usage |
Simple, automatic, no extra steps |
Best for |
Travel, lifestyle, frequent shoppers |
Everyday savings, simplicity |
To Sum Up:
Reward points offer flexibility and can be maximised for higher-value redemptions, especially for travel.
Cashback is direct and easy to understand, making it ideal for those who want instant savings.
The value you get from reward points or cashback from credit card spending depends on your habits and how you use your card.
If you spend more on travel, dining, or premium categories, reward points might offer greater value. For example, using an Axis Bank SELECT Credit Card for shopping and redeeming points for flight tickets may give you a higher effective return than standard cashback. However, you need to track points, understand redemption values, and ensure you redeem before expiry.
A frequent traveller uses a rewards card, accumulates points, and redeems them for a free flight worth ₹5,000. If the points were earned on ₹1,00,000 spent, the effective reward rate is 5%, which can be higher than most cashback cards.
If you prefer simplicity and want direct savings on every transaction, cashback is more suitable. For instance, spending ₹50,000 a year on a cashback card with a 5% rate gives you ₹2,500 back, credited directly to your statement—no tracking or redemption needed.
Maximising how to get rewards on credit cards and how to get cashback from credit card usage requires some planning.
Combine Offers: Use cards that offer the best rewards or highest cashback for each category. For example, use a cashback card for groceries and a rewards card for travel bookings.
Pay Bills on Time: Always pay your full bill to avoid interest charges, which can negate your rewards or cashback earnings.
Select the Right Categories: Choose cards that give higher rewards or cashback on your biggest spending areas, such as fuel, dining, or online shopping.
Track Promotions: Banks often run limited-time offers with accelerated rewards or extra cashback. Register for these offers when available.
Redeem Wisely: For reward points, redeem for options that offer the highest value, such as travel bookings or premium vouchers.
Monitor Caps and Limits: Be aware of monthly or annual caps on cashback or points to avoid missing out on potential earnings.
Choosing between a reward points card and a cashback from credit card depends on your lifestyle and preferences.
Frequent Travellers/Lifestyle Spenders: If you travel often or spend on luxury categories, a rewards card might offer better value through travel redemptions and exclusive perks.
Everyday Spenders: If your spends are mostly on groceries, utilities, or online shopping, a cashback card provides simple and immediate savings.
New Users: Cashback cards are easier to understand and manage, making them ideal for first-time credit card users.
Strategic Spenders: If you enjoy optimising rewards, tracking points, and maximising redemption value, a rewards card is more suitable.
Evaluate your spending patterns, check the latest card features on official bank websites, and pick the card that aligns with your financial goals.
Both reward points and cashback from credit card spending can add significant value to your financial life. The best choice is the one that matches your spending habits and offers the most benefits for your lifestyle. Always review updated card details on the official bank websites before applying, and use your card responsibly to maximise your rewards or cashback.
Disclaimer: The benefits of the respective credit cards mentioned above are added with reference to the information available at the time of writing. For the latest updates, please visit the official website.
It depends on your spending style. Cashback is best for those who want instant, simple savings, while reward points may offer higher value if you redeem them for travel or premium rewards.
Choose a card that offers high cashback rates on your main spending categories. Use it for eligible transactions, pay your bills on time, and track any caps or promotional offers for maximum benefit.
Redeem your points for travel, premium vouchers, or merchandise that offers the highest value per point. Always check the redemption options and expiry dates on your bank’s rewards portal.
If you want flexibility and are willing to track your rewards, points might offer more value. If you prefer simplicity and immediate savings, cashback is usually better.
A cashback card is better for straightforward savings on daily expenses, while a rewards card is better for those who spend more on travel or premium categories and want to maximise perks.
Some banks allow you to redeem reward points as statement credit or direct cashback. Check your card’s rewards portal or contact customer care for the process and conversion rates.
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| 1min read
Posted on 16 May
Roshani Ballal
Academy by Bajaj Markets
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