Skip to main content

Cash back vs. points

minute read

    Credit card rewards may be confusing given how many cards are on the market. When trying to find a card, you may have asked if cash back or points is better. But the right question might be if there is even a difference between cash back and points? Let's have a look.

    How can you earn rewards with a credit card?

    With most credit cards, you might earn rewards on your purchases. Typically, you'll earn a certain number of points for each purchase you make. The type of rewards you earn depends on the card, and points are common. Miles are another form of rewards, and they're usually the rewards currency certain travel credit cards use.

    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 earn as points varies from card to card, but they often post to your account once per statement cycle. When redeemed for cash back, each point likely has a dollar equivalent, such as one point to one cent. So is there any difference between points and cash back?

    Points vs. cash back: What's the difference?

    There is not much of a difference between points and cash back if you have certain rewards credit cards from Chase. With many of our cards, you earn Ultimate Rewards® points on your purchases.

    Even if you have a cash back credit card, 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

    When you redeem rewards points for cash back, you normally have at least two options. You could request a deposit into a checking or savings account, or you could request statement credit. 

    Advantages of points vs. cash back

    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 on your purchases.

    Points are a common form of rewards, even for cash back cards, because points can be versatile. With Ultimate Rewards, for example, you're not limited to redeeming points for a statement credit or deposit to a bank account. You could also redeem points for gift cards, travel, select retail shopping and more. With eligible cards, Ultimate Rewards can also be traveled to certain travel partners.

    While rewards programs differ, there may be some distinct advantages to having a credit card that calculates your rewards in points. When you're ready to redeem your points redeem through Ultimate Rewards, you'll see your choices. You'll also be able to view the dollar equivalent of your points and redeem them for cash back if you'd like.

    In conclusion

    Nowadays, credit cards often calculate your cash back rewards in points. As you make purchases with your 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.

    What to read next