Cashback vs Rewards Points Credit Card: Which is Best 2025?

Published: July 31, 2025 | Reading Time: 7 minutes

When it comes to choosing a credit card in India, one of the most common debates is cashback vs rewards points credit card. Both types of cards can save you money, but the value depends on your lifestyle, spending pattern, and goals. Some people prefer the simplicity of cashback, while others enjoy maximizing value through reward points. In this detailed guide, we will compare both options side by side, share real-life examples, and help you decide which card is best for you.

Cashback vs Rewards Points Credit Card: Understanding the Basics

What is a Cashback Credit Card?

A cashback credit card is the simplest form of a rewards card. It gives you a percentage of your spending back in cash, usually credited to your monthly statement or directly to your account. There are no complicated calculations – spend ₹1000, get ₹50 back (if 5% cashback).

Popular Cashback Credit Cards in India:

• ICICI Amazon Pay: 5% cashback on Amazon for Prime members
• SBI Cashback Card: 5% on online transactions
• Flipkart Axis Bank Card: 5% on Flipkart

What is a Rewards Points Credit Card?

A rewards points credit card gives you points for every rupee spent. These points can be redeemed for vouchers, discounts, merchandise, or even air miles. The catch is that the value of points depends on redemption, so optimization is key.

Popular Rewards Points Credit Cards in India:

• HDFC Regalia: 4X points on dining and travel
• Axis Magnus: 12X points on travel bookings
• SBI Prime: 10X points on dining, movies, groceries

Cashback vs Rewards Points Credit Card: Side by Side Comparison

1. Simplicity and Transparency

Cashback Cards: Winner ✅

• Straightforward: 5% cashback = ₹5 back on ₹100 spent
• No hidden rules: Value is fixed
• Immediate benefit: Credited quickly to your account
• No expiry issues: Cashback rarely expires

Rewards Points Cards:

• Complex valuation: 4X points could mean ₹1 to ₹4 value depending on redemption
• Variable benefits: Better value on travel, weaker on vouchers
• Expiry problem: Points often expire in 2–3 years

Example:

• Cashback: Spend ₹10,000 on dining at 5% = ₹500 back
• Rewards: Spend ₹10,000 at 4X points = 40 points = value between ₹100–₹400

2. Earning Potential

Rewards Points Cards: Winner ✅

• High multipliers: Premium cards give 5X–12X points
• Milestone bonuses: Extra points on annual spends
• Welcome gifts: Joining bonuses worth thousands

Cashback Cards:

• Low ceiling: 1–5% cashback typically
• Category restrictions: Higher cashback mostly on partner sites
• Monthly caps: Cashback often limited to ₹500–₹1000 per month

Real Example:

• HDFC Regalia (Rewards): Spend ₹1 lakh on dining = 4,00,000 points (~₹10,000 value)
• Cashback Card: Spend ₹1 lakh at 5% cashback = ₹5,000

3. Flexibility of Redemption

• Cashback: Direct credit to statement, universally useful
• Rewards: Can be used for flights, hotels, vouchers, lifestyle benefits

If you value cash in hand, cashback is unbeatable. If you love luxury travel or shopping, rewards points shine.

Cashback vs Rewards Points Credit Card: Real-Life Scenarios

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
• Total Monthly Cashback: ₹900
• Annual Value: ₹10,800

Rewards Card (HDFC Regalia):

• Dining (4X): ₹8,000 × 4 = 32,000 points
• Others (2X): ₹22,000 × 2 = 44,000 points
• Total Monthly Points: 76,000 (~₹1,900 value if used on travel)
• Annual Value: ₹22,800

Winner: Rewards Points (+₹12,000 extra per year)

Scenario 2: Family Spender (₹60,000 monthly spend)

Spending Pattern:

• Groceries & essentials: ₹20,000
• Travel & dining: ₹15,000
• Online shopping: ₹15,000
• Others: ₹10,000

Cashback Card:

• Groceries (2%): ₹20,000 × 2% = ₹400
• Online shopping (5%): ₹15,000 × 5% = ₹750
• Other spends (1%): ₹25,000 × 1% = ₹250
• Monthly Cashback: ₹1,400
• Annual Value: ₹16,800

Rewards Card (Axis Magnus):

• Travel & dining (12X): ₹15,000 × 12 = 1,80,000 points
• Other spends (2X): ₹45,000 × 2 = 90,000 points
• Total Monthly Points: 2,70,000 (~₹6,000 if optimized)
• Annual Value: ₹72,000

Winner: Rewards Points (over 4X more value)

Cashback vs Rewards Points Credit Card: Quick Checklist

Choose Cashback Cards If:

• ☐ You are new to credit cards
• ☐ You prefer simplicity and transparency
• ☐ Your monthly spends are below ₹50,000
• ☐ You shop mostly online on Amazon, Flipkart, Myntra
• ☐ You want instant savings without tracking points

Choose Rewards Points Cards If:

• ☐ You spend more than ₹50,000 per month
• ☐ You frequently travel within India or abroad
• ☐ You don’t mind optimizing points for maximum value
• ☐ You want milestone rewards, lounge access, luxury benefits

Conclusion: Cashback vs Rewards Points Credit Card – Which is Better?

Both cashback and rewards points credit cards have their advantages. Cashback cards are best for beginners who want simple and instant savings. On the other hand, rewards points cards are ideal for high spenders and frequent travelers who can maximize redemption value.

For most Indians, the smartest approach is to start with a lifetime free cashback card like ICICI Amazon Pay or SBI Cashback Card. Once you’re spending grows and you travel more, add a premium rewards points credit card like HDFC Regalia or Axis Magnus. This way, you enjoy both worlds – guaranteed savings from cashback and higher value from reward points.

Next Step: Use our Credit Card Comparison Tool to compare cashback vs rewards points credit card benefits based on your spending or try our Rewards Calculator to calculate potential earnings.

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Disclaimer: Credit card offers, cashback rates, and reward structures are subject to change. Always check the issuing bank’s official website for the latest details before applying.