Credit cards have become a smart way to save money on everyday spending, from online shopping and groceries to travel and dining. For most people, the real value lies in the benefits, particularly cashback and reward points.
While both promise savings, they work very differently in practice. Understanding how each one fits into your spending habits can make a noticeable difference to your monthly budget.
What Is Cashback?
Cashback is simple: you spend money, and a percentage comes back directly as credit to your card statement or bank account. For example, 5% cashback means Rs 5 back for every Rs 100 spent in that category.
This amount is usually credited directly to your card statement or linked wallet, reducing the bill you need to pay.
Cashback cards work particularly well for everyday expenses: groceries, fuel, online shopping, food delivery, and utility payments. If your priority is straightforward savings on routine spending, cashback offers instant gratification and predictable value.
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What Are Reward Points?
Reward points are earned on spending and can be redeemed for various things. Instead of money coming back to you, your spending earns points that can later be redeemed for flights, hotel stays, vouchers, merchandise, or sometimes statement credits.
Points can unlock experiences, like airport lounges or premium merchandise, that you might not want to spend on out of your own pocket.
Which Is Better?
The "better" card depends entirely on your lifestyle and how much effort you want to put in.
Cashback tends to suit users who want immediate and guaranteed savings and those who primarily spend on daily essentials. It is also good for people who prefer simplicity over tracking points and redemptions.
You can choose cashback if you want to lower your monthly credit card bill.
Reward points may work better for frequent travellers who can redeem points for flights or hotels, and those who are comfortable planning redemptions to maximise value.
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It is worth remembering that neither cashback nor reward points truly saves money if they encourage overspending. A card offering attractive rewards can tempt users to buy more than they normally would, wiping out any benefit earned.
From a savings perspective, the best credit card benefit is one that rewards spending you would have done anyway: on groceries, bills, fuel, or travel you had already planned.
Neither is universally "better": the key is matching the benefit to your life. Calculate your average monthly spending, note the main categories, and pick accordingly. Always pay your bill in full to avoid interest wiping out rewards.
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