Most individuals use a credit card just to enjoy the offers and deals. There are some credit card users who prefer it because of its reward points and Cashback offers. But it is really important for you to understand the difference between Cashback vs Reward Points in Credit Cards. The major difference between a Cashback and Reward Points is that the Cashback offers are only available at the partner outlet whereas a reward point is available almost on all the transactions. So, here you can see the comparison between the reward points and Cashback if you are a frequent user of a credit card. Once you know the difference between these two then it will be easy for you to make the optimum use of your credit card.
Difference Between Credit Card Cashback and Credit Card Reward Points
In the table given below, you can spot all the major differences between a reward point and a Cashback. After going through the table you can clear all your doubts.
| Basis of Difference | Credit Card Cashback | Credit Card Reward Points |
|---|---|---|
| Transaction | Cashback offers are usually applicable to those transactions that are done at a particular brand outlet. | You can earn reward points on almost all the transactions depending upon the minimum transaction required. |
| Fluctuations | The percentage of the Cashback remains fixed and the fluctuations become constant when the offer reaches the maximum limit of the Cashback. | You can earn thousands of reward points through your credit card and the reward points fluctuate as the transaction is increased or decreased. |
| Validity | Cashback have no validity because once they are credited to your account, you can use them anytime. | The Reward Points have a validity of 2 to 3 years depending upon the bank after which they expire. |
| Usage | Once the amount of Cashback is credited into your account, you can use it anywhere to buy any product. | You can use the reward points only to buy those products that are available on the shopping websites of the bank. |
| Minimum Transaction | In some of the Cashback offers there is no need for a minimum transaction and you can earn it at a low transaction. | In order to earn reward points, you will always need a minimum transaction of ₹100 and it might vary from bank to bank and credit card to credit card. |
| Calculation | It is easy to calculate the Cashback on a certain transaction because the percentage of Cashback is defined in the offers. | The reward points vary from transactions to transactions therefore it is not easy to calculate the exact value of reward points. You will a different reward point on dining and a different on travelling transactions. |
| Extra Bonus | You cannot earn an extra bonus in the Cashback offers because once the amount of Cashback is credited; no extra bonus will be given. | There are some credit cards in which the bank gives you additional reward points on achieving a milestone or a transaction limit. |
| Frequency | There are some credit cards that give you an immediate Cashback and in some credit cards, you receive the amount of Cashback after 90 days from the date of transaction. | The reward points get reflected in your account immediately after the transaction has been made. |
| Welcome Offer | You will not receive any Cashback at the time of activation of your credit card. | There are some credit cards that give you a welcome bonus in reward points that you can redeem later in shopping. |
| Multiplication | Your Cashback will not multiply on different transactions because the percentage is fixed by the bank. | Your reward points might multiply 2X, 5X, and 10X depending upon the category of the transaction and the offers given by the bank. |
| Maximum Limit | There is a maximum limit for earning a Cashback on particular offers and a particular brand. | There is no maximum limit for earning reward points because the more transaction you make the more reward points you will earn. |
Conclusion
These are the major differences between Cashback vs Reward Points in Credit Cards. But the good news is that you can enjoy both reward points and Cashback on the same credit cards and it results in extra savings. On the other hand, the Cashback offers on different credit cards from different brands are being introduced from time to time and get expired. Whereas the reward point offers are available on the credit cards for life.
