The content is accurate at the time of publication and is subject to change.

Despite the credit card hype, the truth is that there are very few credit card holders who actually understand the rewards programs offered by their credit card. While these programs encourage people to keep using their card, people do not realize that there are differences to each reward programs which may not apply to their needs (and preferences).

At present, there are 2 ways to redeem credit card rewards through rebates (or cash backs) and through reward points which can be used to "purchase" merchandise or gift cards, free hotel accommodations, and many others.

If you want to apply for a credit card and you have to choose between either a reward point credit card or cash rebate credit card, mull over the pros and cons of both.

Reward Points Credit Cards

With this kind of credit card, you earn points for every dollar's worth of purchase. You can have 1-5 points easily that can be redeemable for a variety of rewards. The more dollars you spend - the more points you gain and the greater the prize you can redeem.

The advantages of a reward points card include:

• Stores that accredit your reward point credit card allow you to earn extra bonuses and will give you discounts on items purchased.

• Points accumulated over time can be redeemed anytime during the program period.

• Cash back may have less value offers than reward point cards.

Here are the disadvantages of this type of card:

• Rewards are dependent on your accumulated points. You have a specified number of points (hence a certain level of expenditure) before you can redeem for a reward.

• Points expire.

Cash Reward Credit Cards

Cash reward credit cards offer at least 1-5% returns on your actual expenses you incurred using your card. If you regularly pay your bills on time and in full, you can also get a higher discount for every product you purchase with your card.


• You don't need to earn a specific number of points. It's directly received as cash.

• Since it is in cash, it is easier to use and you can purchase anything you want and cash is recognizable anywhere and doesn't lose its value

• Cash rewards won't expire.

• Cash rewards have no annual fees.

• Cash reward credit cards have lower interest rates.


• Cash rewards are awarded in a form of a check or have it saved in your savings account. You can't have it in your pocket right away.

• Reward points credit card have higher payout offers than cash reward credit cards.

Cash reward credit cards or rewards points credit cards are beneficial for you as a user. If you have to choose which among the two cards you should have, you can ask yourself a few questions before applying for one. Questions like: Can you redeem your rewards on an incremental basis? Will you automatically receive your cash reward or redeem your reward? Is there a limit to how much you can earn from your cash rewards? Is the interest rate more costly than the value of your reward? Will your rewards expire?

These are just some questions which can guide you in your selection process. Be sure you choose a card that fit your needs.