What’s Better Cashback or Rewards?

When it comes to choosing a credit card, the best way to decide which type of credit card is best for you is to assess your lifestyle, so you could take advantage of the perks offered. If you are not sure which type of card you should pick – Points or Cashback – below are some details that will help you understand each type of card.  


Cashback is a great way of getting a certain percentage of your purchases back in a dollar amount, which then is credited to the user at the end of the year. They are the most simple and common form of credit cards used and most of them don’t have an annual fee. 

The standard cashback rate is 1%, but with some cards, you can earn much more. Some cards offer 2x cashback on certain purchases like grocery stores, partnered restaurants, gas stations, etc. For example, in Canada, CIBC Dividend® Visa Card and RBC Cash Back Mastercard offer 2% cash back on groceries and 1% on everything else. While in the US, Chase Freedom® credit card offers 5% cashback on up to $1,500 in combined purchases in bonus categories each quarter you activate and unlimited 1% cashback on all other purchases.  


Reward offers a much greater value if you are a frequent traveler. They provide additional benefits that could either save you money on your travel or improve your travel experience with services, such as Flight Delay and Baggage Insurance, complimentary airport lounge access which might outweigh the cards’ annual fees.  

Rewards or Travel cards offer much higher signup bonuses and allows you to earn more points. Most of these travel cards have annual fees and usually have an income requirement to qualify, however, cards with no annual fee aren’t simply worth it. For example, in Canada, CIBC Aventura® Visa Infinite* Card currently offers 35,000 signup bonuses and much more, which if used towards flight tickets equals $800. In the US, Chase currently has multiple personal credit cards with signup bonuses starting at 40,000 points and much more. However, keep in mind all credit card providers may have their point system.  

With rewards cards, it does get more complicated with multiple restrictions on when and how they can be used. As there are blackout dates and limitations like partnered hotels and airlines where you can use the points and gain additional benefits. However, if travel points are used with the right partner, they provide much greater value than cashback. 

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