Difference Between Cashback & Reward Points in Credit Cards

The appeal of Credit Cards is no longer restricted to accessing a credit line. As its usage becomes a part of everyday spending, its features have evolved. Besides making purchases on credit, you can now earn cashback and rewards on them! They maximise savings as you spend. While both are part of the Credit Card offers, the way they help you save differs. Learn all about it in this blog, decoding the difference between cashback and reward points.   

Reward points are incentives that you earn on Credit Card purchases. They differ across spending categories and can be valued anywhere between ₹0.10 and ₹5.00. You accumulate reward points based on how you spend. You typically earn them through everyday transactions, reaching spending milestones, a welcome bonus, and international usage. The specific means depend on the card variant and the card issuer’s offers. 

Cashback is a small, fixed percentage of your Credit Card spending sent back to you on eligible transactions. It is either credited to your Credit Card account or adjusted against your outstanding balance. You get tangible and immediate returns with cashbacks. You can typically get 1-5% based on the type of Credit Card, with Cashback card variants offering the most value. 

With cashbacks, you need not do much after they’re credited. The amount will reflect as per the credit system in your account or outstanding Credit Card balance. Credit Card reward points, however, accumulate in your rewards account. You can choose to redeem them at any time before the expiry. Exchange them for travel bookings, shopping vouchers, bill payments, or other discount offers. This is the fundamental difference between cashback and reward points. 

For more information on what the difference between rewards and cashbacks on a credit cards is, let’s consider the distinct benefits. 

Pros of Reward Points 

• Even small points amount to big savings over time

• Personalised card variants like Travel, Lifestyle, Everyday Rewards-Based, or Digital Cards cater to specific needs, offering the opportunity to earn more.  

• Choice to redeem across multiple categories with attractive offers 

• Frequent users reach milestones effortlessly 
   

Pros of Cashbacks 

• Clear and predictable savings 

• Easy to understand and avail 

• Suitable for everyday spending 

• No need for manual calculation or planning

• Sign-up bonuses are often available as cashbacks

In the cashback versus rewards debate, both hold unique value. Most Credit Cards include both for maximised benefits. If you like one over the other, you can opt for specialised variants favouring either. Before making your choice, consider your spending habits and financial goals, besides the rewards. Explore the range of HDFC Bank Credit Card to find an option that complements your unique needs. 

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*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Credit Card approvals are at the sole discretion of HDFC Bank Limited. Credit Card approvals is subject to documentation and verification as per the Bank's requirement. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.