Cash back vs. points
Quick insights
- Cash back and points are two common ways that credit cards earn rewards.
- How your card earns rewards is dependent on the card you have.
- Many credit card issuers, including Chase, allow cardmembers to convert their rewards.
Credit card rewards may seem confusing given how many cards are on the market. When trying to find a card, you may have wondered if earning cash back or points is better. Below, we review the differences between earning points vs. cash back.
How can you earn rewards with a credit card?
Many credit cards allow you to earn rewards on your purchases. Typically, you'll earn a certain number of points for each purchase you make. The type of rewards you can earn depends on the card, but points are common. Miles are another form of rewards and are usually associated with airline credit cards.
Even if you have a card that earns cash back on your purchases, your rewards may post to your account in the form of points. The exact calculation of the cash back you can earn varies from card to card, but the accumulated rewards are typically added to your account once per statement cycle. When redeemed for cash back, each point likely has a monetary equivalent.
Points vs. cash back: What's the difference?
Points and cash back are different types of rewards currencies. Depending on the card and issuer, cash back rewards may post directly as a statement credit or may accrue as points that you can later redeem for cash. Likewise, some programs allow you to redeem reward points for cash at a set rate. Terms vary by card and issuer.
For Chase cash back credit cards that earn Chase Ultimate Rewards® points, the cash back you earn on your purchases is first calculated in Ultimate Rewards points. Once Ultimate Rewards points post to your account, you can redeem them in various ways, including as cash back. Other credit card issuers may handle your cash back rewards differently.
Redeeming points for cash back
Many card issuers allow cardmembers to redeem their points for cash back. When you redeem rewards points for cash back, you usually have at least two options: requesting to receive rewards as a deposit in a checking or savings account, or as a statement credit.
Please note that with co-branded credit cards, rewards are typically deposited into or transferred to the partner’s loyalty program account (for example, an airline or hotel program). Redemptions then occur through that program and often do not include a cash option. Redemption rules and values vary by card and partner, so check the program terms.
Credit card reward redemption options
Credit card rewards programs that use points often have a variety of redemption options. This flexibility is one upside to earning rewards points with your credit card, even if your goal is to earn cash back.
Points are a common form of rewards even for cash back cards, because, as explained, cash back can be posted in the form of points. With Ultimate Rewards, for example, you can redeem points for a statement credit or deposit to a Chase bank account, gift cards, travel, select retail shopping and more. With eligible cards, Ultimate Rewards can also be transferred to certain travel partners.
When you're ready to redeem your points through Ultimate Rewards, you'll be able to view the dollar equivalent of your points and redeem them for cash back if you prefer.
In conclusion
Nowadays, credit cards often post your cash back rewards as points. As you make purchases with your cash back card, you may earn your cash back as points. This normally means that each point has a dollar equivalent when redeemed.
With many Chase credit cards, including cash back cards, you earn Ultimate Rewards points based on your spending. Ultimate Rewards is a system with several advantages, including flexible redemption options, so you can make the most of your rewards.
