Credit cards are no longer just a way to buy things now and pay later — they are powerful tools to save money or earn benefits when you spend wisely. But with so many offers in the market, two terms come up the most: Cashback and Rewards. Let’s break them down and help you choose which one fits your lifestyle.
- What Is a Cashback Credit Card?
Cashback credit cards give you a portion of your spending back in cash. That amount is usually credited right to your credit card statement — meaning it reduces what you owe.
Real-Life Example:
Suppose you spend ₹2,000 on Swiggy using the Axis Bank ACE Credit Card — you get 4% cashback, which is ₹80 added back to your card account. You also pay your mobile bill of ₹500, earning 5% cashback → that’s ₹25 savings.
Other examples in India include:
Flipkart SBI Credit Card — up to 7.5% cashback on Myntra, Flipkart, Uber, Zomato, PVR (higher returns on partner brands).
SBI Cashback Card — 5% cashback on online spends plus 1% offline (a clear and wide-use cashback option).
✅ Pro: Cashback is easy to understand — you see ₹ back in your statement.
❗ Con: Often there’s a cap on how much cashback you can earn each month/year.
- What Is a Rewards Credit Card?
Reward credit cards give you points for every purchase instead of straight cash. Points can then be redeemed for things like flight tickets, hotel bookings, merchandise, gift vouchers, or even cashback itself — but often at different values.
Real-Life Example:
Let’s say the HDFC MoneyBack+ Credit Card gives 20 reward points for every ₹150 spent. If you spend ₹15,000 in a month, you earn 2,000 points.
Later, if each point is worth around ₹0.25 when redeemed, those 2,000 points convert to roughly ₹500 of value — which you can use for travel or discounts.
Many rewards cards also offer bonus points on specific categories like travel, dining, shopping, etc.
✅ Pro: Points can lead to higher value if used smartly (like flight redemptions).
❗ Con: Rewards programs can be complicated, and point values vary widely depending on how you redeem them.
- Key Differences at a Glance
Feature Cashback Card Rewards Card
What you earn Direct ₹ back Points you redeem later
Best for Everyday spenders Travel/shoppers who redeem points wisely
Value simplicity Easy to calculate Varies by redemption option
Caps & limits Often capped monthly/yearly Points can expire or change value
Flexibility Use anywhere Requires redemption process
- How to Decide What’s Best for You
✔ Choose Cashback If:
You want straightforward, quick benefits.
You shop online frequently (Amazon, Flipkart, Swiggy, etc.).
You want returns that directly reduce your bill.
✔ Choose Reward Points If:
You travel often and want air miles or travel perks.
You don’t mind redeeming points later for better value.
You’re willing to keep track of point values and offers.
- A Real-Day Example to Compare
Scenario:
You spend ₹50,000 in a month.
Cashback card: You earn 5% cashback on specific categories (say ₹2,000 back this month).
Reward card: You get 5,000 points, each worth ₹0.20 when redeemed → that’s ₹1,000 value.
In this case, the cashback card gave more immediate value. But if you save these points and redeem them for a flight ticket worth ₹3,000, then the rewards card wins.
- Final Tips Before You Apply
🔹 Check annual fees and whether they’re waived based on spending.
🔹 Look at category benefits (e.g., higher cashback on groceries vs. dining).
🔹 Always pay your bill on time — benefits are great only if you avoid interest.
Conclusion
There’s no one best credit card — only the right one for you.
If you want simplicity and cash savings you can see immediately, go for cashback cards. If you enjoy travel, shopping perks, and are comfortable managing points, reward cards can give more long-term value.
