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Reward Credit Card or Cash Back -- Which Is Better?

Aug 17, 2007
A reward credit card and a cash back credit card are often confused by consumers and even used interchangeably by many credit card companies. In reality, these two types of credit cards can actually be quite different. In fact, the way you earn the rewards or cash back can be quite different, as can the method for spending the money, points, or miles you earn from the card. Therefore, it is best to compare cash back credit cards with reward credit cards before applying in order to determine which type is best for you.

Points Versus Cash

The first factor to take under consideration is whether you prefer receiving cash or points to use redeem on certain goods and services. With a cash back credit card, you will periodically receive monetary refunds. A reward credit card, on the other hand, will either provide you with miles for travel discounts or points for use on specific goods and services. For some consumers, the thought of earning cash back is more enticing, while others prefer the fun of spending their points on things they might not otherwise purchase.

Value for Your Buck

Although you might think you would prefer to get cold, hard cash in exchange for your purchases, you need to consider the value trade off. Generally, reward credit cards supply incentives of a higher value than the amount of cash you receive from cash back credit cards. Of course, if you have no use for the items offered by a reward credit card, then these points are worthless to you. If the items are something you could use or something that you want, however, it might be more worthwhile for you to take advantage of reward credit cards.

Staying Organized

One drawback to reward credit cards is the fact that you need to keep track of points in order to make your purchase. With cash back credit cards, the money is either sent to you automatically or is applied directly to your credit card balance. Therefore, it does not require any organization on your part. If you are somebody that lacks strong organizational skills or you simply don't want to be bothered with keeping track of one more item, reward credit cards may be too much of a hassle for you.

At the same time, some of the best reward credit cards take the paperwork out of the picture for you. For example, reward credit cards that provide you with free gasoline as a reward may simply deduct the cash back reward from your gasoline purchases made with the card. In that way, you don't have to keep track of your points and redeem them for your reward.

Getting What You Need

Another potential drawback to reward credit cards is the fact that you are restricted on what you can purchase with your reward. Obviously, you can purchase whatever you wish with the money you receive from a cash back credit card. On the other hand, most people are not bothered by this possible drawback because there are so many reward credit cards available that there is generally a reward credit card to suit anyone's taste.

If you take the time to carefully shop around and to explore all of the options available, you will likely find a reward credit card that is right for you. From vacation savings, to savings on cars, to restaurant discounts, to merchant discounts, to free airline travel, there are unlimited possibilities. In addition, reward credit cards help ensure that you will spend your credit card reward on something fun for yourself - something you deserve for being a smart financial planner.
About the Author
For help in deciding between a cash back or reward credit card reward credit card is right for you, Robert Alan recommends that you visit CreditCardAssist.com.
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