Cashback vs Reward Points: Which Credit Card Type is Better in India?

Published: July 31, 2025 | Reading Time: 6 minutes

One of the biggest decisions when choosing a credit card in India is whether to go for cashback cards or reward points cards. Both have their advantages, and the right choice depends on your spending habits, preferences, and financial goals. Let’s break down everything you need to know to make the best decision.

Understanding the Basics

Cashback Cards

Cashback cards give you a percentage of your spending back as cash, typically credited to your statement or bank account. It’s straightforward – spend ₹100, get ₹1-5 back depending on the card and category.

Popular Examples:

ICICI Amazon Pay: 5% on Amazon
SBI Cashback: 5% on online spends
Flipkart Axis Bank: 5% on Flipkart

Reward Points Cards

Reward points cards give you points for every rupee spent, which you can later redeem for various options like vouchers, products, air miles, or statement credit.

Popular Examples:

HDFC Regalia: 4X points on dining/travel
Axis Magnus: 12X points on travel bookings
SBI Prime: 10X points on dining/movies

Detailed Comparison

1. Simplicity and Transparency

Cashback Cards: Winner ✅

Simple calculation: 5% cashback = ₹5 back on ₹100 spent
No confusion: Easy to understand value
Direct benefit: Money back in your account
No expiry worries: Usually credited quickly

Reward Points Cards:

Complex calculation: 4X points might equal ₹1-4 depending on redemption
Variable value: Points value changes based on redemption option
Multiple options: Can be overwhelming to choose best redemption
Expiry concerns: Points often expire in 2-3 years

Example:

Cashback: Spend ₹10,000 on dining with 5% cashback = ₹500 cash back
Points: Spend ₹10,000 on dining with 4X points = 40 points = ₹100-400 value (depending on redemption)

2. Earning Potential

Reward Points Cards: Winner ✅

Higher earning rates: Premium cards offer 5X-12X points
Bonus categories: Accelerated earning on specific spends
Welcome bonuses: Often higher value in points
Milestone benefits: Additional points for spending targets

Cashback Cards:

Limited rates: Usually 1-5% cashback
Monthly caps: Many have monthly/quarterly limits
Fewer categories: Limited high-earning categories
Lower welcome bonuses: Typically modest cash bonuses

Real Example:

HDFC Regalia (Points): ₹1 lakh annual dining spend = 4,00,000 points = ₹10,000+ value
Cashback Card: ₹1 lakh annual dining spend = ₹5,000 cashback (5% rate)

Mathematical Comparison: Real Examples

Scenario 1: Young Professional (₹30,000 monthly spend)

Spending Pattern:

Online shopping: ₹15,000
Dining: ₹8,000
Groceries: ₹4,000
Others: ₹3,000

Cashback Card (ICICI Amazon Pay + General Cashback):

Amazon (5%): ₹15,000 × 5% = ₹750
Others (1%): ₹15,000 × 1% = ₹150
Monthly earning: ₹900
Annual earning: ₹10,800

Reward Points Card (HDFC Regalia):

Dining (4X): ₹8,000 × 4 = 32,000 points
Others (2X): ₹22,000 × 2 = 44,000 points
Monthly earning: 76,000 points = ₹1,900 (if redeemed optimally)
Annual earning: ₹22,800

Winner: Reward Points Card (+₹12,000 annually)

Making Your Decision: Quick Checklist

Choose Cashback Cards If:

☐ You’re new to credit cards
☐ You prefer simplicity over optimization
☐ Your monthly spending is below ₹50,000
☐ You want immediate, tangible benefits
☐ You primarily shop in specific categories (Amazon, Flipkart)

Choose Reward Points Cards If:

☐ You’re comfortable with complexity
☐ Your monthly spending exceeds ₹50,000
☐ You travel frequently
☐ You enjoy optimizing for maximum value
☐ You want access to premium experiences

Conclusion

Both cashback and reward points cards have their place in the Indian credit card market. Cashback cards are ideal for simplicity and immediate value, while reward points cards offer higher earning potential for strategic users.

For most Indians, starting with a lifetime free cashback card like ICICI Amazon Pay makes sense, then adding a reward points card as spending and confidence grow. The key is matching the card type to your spending patterns, lifestyle, and comfort with complexity.

Ready to find your perfect card? Use our Credit Card Comparison Tool to compare cashback and reward cards based on your specific spending patterns, or try our Rewards Calculator to see potential earnings from both types.

Disclaimer: Card terms and reward rates are subject to change. Always verify current offers on respective bank websites before applying.