Cash back vs. points rewards

Cash back and points credit cards are two types of rewards credit cards. They both reward you for the purchases you make. But they don’t work in exactly the same way.

Learning about some of the differences between cash back and points may help you find the right rewards card for you.

What you’ll learn:

• Cash back credit cards help you earn cash as you spend.

• Cash back and points rewards can usually be redeemed in several ways, including for a check, statement credit, gift card or travel purchase.

• Points and cash back cards might come with different interest rates, annual fees and redemption options.

A cash back credit card lets you earn back a percentage of what you spend on it to redeem as a statement credit or a gift card, among other options. For example, if you earn 2% back on certain purchases, that’s $2 for every $100 you spend. The amount you could earn varies by card and how much you’re spending. 

Some cards offer flat-rate cash back. For example, the Capital One Quicksilver card earns unlimited 1.5% cash back on all purchases. Others have a tiered system, like the Capital One Savor card, which earns unlimited 3% cash back at grocery stores and on dining, entertainment and popular streaming services, plus 1% cash back on all other purchases.¹ Those cards also earn 5% cash back on hotels and rental cars booked through Capital One Travel.

Other cash back cards may offer bonus rewards for rotating categories. Depending on the card, these categories typically change every few months.

Like cash back cards, credit cards with points offer rewards based on how much you spend. But instead of earning cash back, you earn points. How you earn or redeem points depends on the card’s terms and conditions. Some may be similar to a miles rewards credit card, and others may be more like a cash back card.

Some points cards have a fixed point system where you earn the same number of points for all purchases. Other cards might offer rotating bonus categories that allow you to earn even more points with certain purchases.

If you’re not sure which rewards credit card to choose, you might want to think about where you already use your credit card the most. The right rewards card could help you earn rewards for things you already buy.

Which type of rewards credit card is right for you depends on your lifestyle and spending habits. 

If you’re deciding between cash back and points, you may want to consider these factors:

• Rewards: The best rewards credit cards help you maximize rewards for things you already buy. You might compare redemption options and whether the rewards expire.

• Card terms: In addition to looking at the annual fee, you should make sure you understand all of the card’s terms before you apply. This includes things like APRs, introductory offers and other benefits. And don’t forget to look into other potential fees like balance transfer fees and foreign transaction fees.

• Bonuses: Many card issuers offer bonuses to new cardholders, so it’s worth finding out what’s available. But Bankrate warns about overspending and going into debt just to earn a reward.

• Additional benefits: Some credit cards offer advantages like $0 liability for unauthorized charges, fraud alerts, card lock or the ability to monitor your credit scores.²

• Cardholder exclusives: Some cards also come with extras like exclusive event access, travel upgrades, insurance and other benefits.

The right card for you is one that’s tailored to your spending habits. And no matter which credit card you choose, you can get the most out of your rewards by using your card responsibly. That means doing things like paying your balance on time each month.

Whether you’re a globe-trotting adventurer, an avid foodie or someone who wants to earn cash back on everyday purchases, Capital One has a rewards card to fit your lifestyle.

• See if you’re pre-approved for credit cards without harming your credit scores. 

• Explore travel rewards cards with unlimited miles you can actually use. 

• Earn unlimited 1.5% cash back on every purchase, every day, with a cash back rewards card. 

• Earn unlimited cash back on food and fun with a dining and entertainment rewards card.