Cash Rebate or Reward Point Cards

Cash Reward Credit Cards

Cash reward credit cards are very simple - they provide a refund of 1-5% on all the purchases made with your credit card. Cash back accumulates as you spend and can be sent automatically, upon request, or credited to your account - at least once per year. These days there's even more incentive, as many issuers offer even bigger bonuses when you shop at specific locations such as grocery stores, restaurants and gas stations. Each program is different - with separate terms and conditions - so research them thoroughly if you choose cash back. Here are some advantages and disadvantages of cash back programs:

Advantages:

1. Less limits and easier to use than reward points.
2. Cash rewards will not expire and are often sent automatically.
3. Not limited to specific rewards - cash is very flexible.

Disadvantages:

1. May have lower (overall) payout than reward points, particularly with cards that offer bonus points for approval and on purchases made at partner locations.
2. Cash back can only be used once a check is issued - sometimes just once per year.
3. May not have the ability to earn extra bonuses.

Reward Point Credit Cards

For every dollar you spend using a reward point card, you'll earn 1-5 points which are redeemable for a whole host of rewards. Depending on which card you choose, reward options will vary and the cash value of each point will depend on how you redeem them. Generally, the more points you build up - the more value they'll have on big ticket items. Accumulating more points is often made easier through bonus incentives at partner locations. Here's some more factors to consider:

Advantages:

1. Reward points may offer more value than cash back - especially when you take advantage
   of bonus offers and collect points for higher priced items.
2. Rewards can be redeemed at any time once enough points have accumulated.
3. Ability to receive bonuses and earn extra discounts at partner locations.
4. In some circumstances, points can be redeemed for cash.

Disadvantages:

1. Limited to rewards offered by credit card issuer.
2. Need to accumulate a specific number of points to earn rewards.
3. Points may expire after a specific amount of time.

The Best Reward Program

Cash rebate credit card or reward points program? It's a matter of preference. If you're loyal to a specific brand or merchant within a points program, a reward point card might be right for you. Points will accumulate quickly - giving you the ability to earn more over time. Frequent travelers can benefit greatly from an airline miles credit card. And loyal shoppers may find a retail credit card useful.

If you don't frequent specific locations and you're looking for more flexibility, a cash back credit card might be a better choice. Rather than worry about where you shop and how you're going to redeem your rewards, choose cash back and automate your earnings.

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