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The ability to earn rewards on your everyday spending is one of the best perks that credit cards have to offer. But if you're shopping for a new rewards credit card, you'll most likely find yourself confronted with an important choice—cash back vs. points. 

Both cash rewards and travel rewards can offer valuable redemption opportunities, so choosing the right type of rewards credit card depends on your habits and preferences. This guide provides an overview of both types of credit card rewards programs. Understanding how cash back and points work is the first step in determining which credit cards are the best fit for your lifestyle. 

How Cash-Back Credit Cards Work

young couple loading groceries in a car

Cash-back credit cards give you a chance to earn extra cash back on your purchases. Some cards offer a flat rewards rate (often 1%-2.5%), and this structure makes it easy to understand how much cash you can earn. 

The Citi Double Cash® Card, from our partner Citi, is an example of this simple type of cash rewards program. This card offers 2% cash back—1% at the time of purchase and 1% when you pay your bill. So, if you use the card to spend $1,000 on eligible purchases and pay off your balance right away, you could earn $20 cash back with this account.

Other cash-back cards may feature different rewards rates—one rate for standard purchases and another higher rewards rates in certain spending categories. For example, a card might offer an elevated rate on groceries, gas or other categories.

Recommended Cash-Back Credit Cards

Credit Card Rewards Rate Intro Bonus Annual Fee Learn More

Chase Freedom Unlimited®

1.5% - 5%Cashback More Info

Enjoy 5% cash back on travel purchased through Chase Travel, 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.

1.5%Extra Cash Back More Info

Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) — worth up to $300 cash back. That's 6.5% on travel purchased through Chase Travel, 4.5% on dining and drugstores, and 3% on all other purchases.


Wells Fargo Active Cash® Card

2%Cashback More Info

Earn unlimited 2% cash rewards on purchases.

$200Cash Bonus More Info

Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.

Citi Double Cash

Citi Double Cash® Card

2%Cashback More Info

Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases. To earn cash back, pay at least the minimum due on time. Plus, for a limited time, earn 5% total cash back on hotel, car rentals and attractions booked on the Citi Travel℠ portal through 12/31/24.

$200Cash Bonus More Info

Earn $200 cash back after you spend $1,500 on purchases in the first 6 months of account opening. This bonus offer will be fulfilled as 20,000 ThankYou® Points, which can be redeemed for $200 cash back.


Ink Business Cash® Credit Card

1% - 5%Cashback More Info

Earn 5% cash back on your first $25,000 spent in combined purchases at office supply stores and on internet, cable and phone services each account anniversary year. It also offers you 2% cash back on your first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year.

$750Cash Bonus More Info

Earn $350 when you spend $3,000 on purchases in the first three months and an additional $400 when you spend $6,000 on purchases in the first six months after account opening


Cash Back Pros and Cons

The beauty of a cash-back credit card (especially a flat-rate cash-back card) is its simplicity. It's typically easy to understand how much cash you're earning on purchases. And when it's time to redeem that cash, you have a lot of flexibility to use those funds as you wish. Additionally, many cash-back credit cards feature no annual fee

As far as drawbacks, the biggest issue is rewards earning power. If you're willing to do some extra legwork, the points and miles you earn on a rewards credit card might go a lot further than cash rewards. Even the sign-up bonuses on cash-back credit cards tend to be more modest than those you might find with more traditional rewards credit cards. 

How Rewards Credit Cards With Points Work

enjoying a view of the ocean

A rewards credit card allows you to earn points or miles when you make an eligible purchase with the account. You can save up these rewards and redeem them for free travel, experiences, gift cards and more. (Note: The value of the rewards you earn can often offset any annual fee on the account by a long way, though some rewards cards are available with no annual fee if you prefer that option.)

Most rewards credit cards don't offer a flat-rate rewards structure. Instead, these cards tend to feature category spending bonuses that you'll want to match with your spending habits to get the best rewards possible. 

If you spend a lot on travel, for example, a card like the Chase Sapphire Reserve® that offers 3x to 10x rewards on various travel purchases might be worth considering. Likewise, people with sizable grocery bills might benefit from having a rewards card with category bonuses for supermarket purchases in their wallets.

Credit Card Points Pros and Cons

The biggest appeal of rewards credit cards is in the potential redemption value of their points and miles. People can often redeem the rewards they earn from sign-up bonuses and everyday spending for vacations that would cost thousands if they were paying out of pocket. You do want to avoid certain mistakes with rewards credit card redemptions, however, or you could miss out on a lot of their potential value.

Rewards credit cards may also come with valuable benefits on top of generous rewards rates. Annual travel credits worth hundreds of dollars, airport lounge access when traveling and generous statement credits are just a few examples of the extra perks a rewards credit card might offer.

Choosing the Best Credit Card for You

Even after you decide whether you prefer cash-back or rewards credit cards, it can be tough to choose the next account to add to your wallet. But if you answer the following questions, the selection process should be easier to navigate.

  • What is the condition of my credit? Knowing what your credit score and credit report look can help you make sure to apply for accounts for which you're more likely to qualify. 
  • How do I spend my money? This information can help guide you toward credit cards that will offer you the most lucrative rewards rates in your biggest spending categories. 

Note that the ability to build good credit history is perhaps the biggest perk any credit card can offer you. Whether an account gives you cash back, points, miles or nothing at all on your purchases, it's imperative to only spend what you can afford to pay back. You also want to pay off your full statement balance each month. If you carry a balance over from one month to the next (and don't have a 0% APR offer), the interest you pay will almost certainly overshadow the value of any cash back or rewards you earn. 


Michelle Lambright Black

Michelle Black is founder of and Michelle is a leading credit card journalist with over a decade and a half of experience in the financial industry. She’s an expert on credit reporting, credit scoring, identity theft, budgeting, small business, and debt eradication. Michelle is also a certified credit expert witness and personal finance writer.