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Comparing Cash Back vs. Points

7 min read

Last Updated: January 10, 2025

Table of contents

Key Takeaways

Credit card rewards are incentives that give cardmembers a percentage of their purchases back as rewards.
Credit card rewards come in various forms including cash back, points, and miles, which differ across card issuers.
The best reward option between cash back, points, or miles, depends on your rewards goals, including the flexibility and simplicity you need.

A rewards credit card can be a simple way to earn benefits on your everyday purchases. There are so many rewards credit cards to choose from, though. So, how can you choose between credit card points vs. cash back? Or miles vs. points?

In order to select the right type of credit card reward for you, you’ll need to understand the differences between cash back, points, and miles. Plus, keep in mind that each card issuer may define these terms differently in their rewards program. Ultimately, you may want to consider how a card’s bonus category (or categories), membership reward rates, and redemption options line up with your spending habits to find the best fit.

What’s the difference between credit cards that give cash back, points, and miles rewards?

Broadly speaking, there are three types of credit card rewards: cash back, points, and miles. Because membership reward structures differ across issuers, let’s break down credit cards by type. And keep in mind that some rewards credit cards may charge an annual fee just for using the card, while others have none.

As the name suggests, you earn cash back on purchases when you use your cash back credit cards. Typically, you can redeem the cash back rewards for statement credits that you can apply toward credit card charges. Some credit cards allow you to opt for shopping credits to make purchases with certain merchants, or you may be able to choose a cash deposit into your bank account. Certain cash back credit cards may allow you to earn rewards at a higher rate in a bonus category, like gas or groceries. Depending on your spending habits, this may help you take your rewards even further.

Some rewards credit cards offer points through the card issuer’s rewards program. These cards typically offer varying redemption options. Like cash back rewards cards, points credit cards may offer bonus rewards for certain types of transactions or purchases from specific retailers.

Several card issuers offer travel credit cards that give miles as rewards for purchases. Depending on the travel rewards card, you may be able to redeem your miles as a statement credit toward travel purchases, like flights or hotel rooms. Sometimes you can use the miles for non-travel purchases as well, though redemption rates may differ.

An airline, hotel, or retail credit card can offer points or miles in the associated company’s loyalty program. You can redeem the points or miles through the loyalty program rather than with the credit card issuer. Some membership reward credit cards may only work for purchases with the partner retailer, like a department store credit card. Others may allow you to use your credit card elsewhere.

Remember, there can be overlap in the rewards options. For example, some cards are labelled “cash back cards” but give points in the card issuer’s program. You may be able to redeem your points for cash back, but you may also have other redemption options.

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Are credit cards with cash back, miles, or points rewards better for travel?

Having a specific goal in mind for your rewards card, like travel, can make choosing between credit card reward types easier.

Using your credit card rewards for travel may work differently across types of rewards credit cards:

If you choose a cash back card, you may be able to redeem your cash back for statement credits or extra cash to pay for travel expenses.
If you choose a travel rewards credit card you may turn Miles into cash. Or redeem as a statement credit for your travel purchases like airfare, hotels, rideshares, gas stations, restaurants and more.
If you choose a reward points credit card, you may be able to purchase certain travel rewards designated by the card issuer or those included on the rewards platform.

Card-issuer rewards points vs. cash back

The ways you can earn and redeem rewards points can vary across points credit cards. Check the issuer’s terms to learn how you might earn and redeem points rewards, including bonus points categories and limitations.

Conversely, cash back cards may be more simple than points cards. You typically know exactly how much your cash back is worth. Cash back rewards cards may also come with flexible redemption options.

Loyalty program points or miles vs. cash back

An airline or hotel credit card may be a good choice if you have a preferred airline, favorite hotel chain, or travel partner that you use often. For instance, if you live near a major hub for a particular airline, getting the corresponding airline credit card to earn miles could make sense.

Limited redemption options may be a disadvantage of travel rewards cards. You may only be able to redeem your miles for flights through a certain airline or hotel nights at a specific chain. Your rewards’ value may also depend on current travel costs. There’s no guarantee that the program won’t change its rules and require more miles or points to redeem your rewards in the future.

Cash back isn’t specific to a single airline or hotel chain, on the other hand. The value of your cash back rewards tend to be easy to calculate, although card issuers could impose rules on their cash back rewards programs that change the final available cash back value. Cash back rewards do tend to be flexible though, so you may not be limited to company-specific travel.

Travel card rewards miles vs. cash back

Travel card rewards miles are often similar to cash back cards in that you can use your miles rewards or opt for cash back. With the Discover it^® Miles travel card, you earn 1.5x Miles on every purchase.¹ You can redeem Miles for travel or cash.²

When is cash back better than other types of rewards?

Cash back may be better than other types of rewards if you want simplicity.

Did You Know?

A credit card cash back program gives you the freedom to choose how you use rewards, instead of locking you into a points or miles system.

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The value of credit card cash back typically stays consistent, so you can know the value of the rewards you earn. Conversely, the value of a credit card mile or point may increase or decrease based on current travel costs or a loyalty program’s rules.

You can compare cash back cards to determine which card will be best. Some cash back cards may require you to accumulate a specified cash back amount before you can redeem your rewards, or the rewards expire after a certain amount of time. With Discover rewards redemptions, you can redeem your rewards for cash at any time.³

Do you have to choose between cash back, points, and miles rewards?

You don’t necessarily have to stick to a single type of rewards credit card for all your purchases. In fact, some people like to have two or more types of credit cards to maximize how much they earn.

For example, the Discover it^® Cash Back Credit Card lets you earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn 1% cash back on all other purchases–automatically. You could use the Discover it^® Cash Back Credit Card on purchases that earn 5%, and the Discover it^® Miles Card lets you automatically earn unlimited 1.5x Miles on every dollar of every purchase.¹

Multiple credit cards may mean multiple annual fees. However, some rewards credit card issuers, like Discover, charge no annual fee on any card. Keep in mind, applying for multiple cards could lead to new hard inquiries on your credit report, which may hurt your credit score. Some credit issuers let you see if you’re pre-approved for their credit card offers before applying, which may not impact your credit score.