Rewards on credit cards are one of its major attractions. Many people apply for a credit card to benefit from its reward points and cashback offers. Each credit card reward works differently and comes with its features. Therefore, one may find
it confusing to understand the various rewards offered when applying for a credit card.
So, those who plan to apply for a credit card or are already making credit card bill payments must understand the difference between rewards and cashback. It will help make optimal use of the card and gain maximum benefits from the rewards offered.
What are reward points on a credit card?
Rewards points are credited every time a customer spends using their credit card. After earning and accumulating enough reward points, they can redeem the points against merchandise, vouchers and air miles.
For example, the Axis Bank Vistara Signature Credit Card offers four Club Vistara reward points for every Rs. 200 spent on the card. The points
earned can be redeemed against upgrades and award flights.
What is cashback on a credit card?
Cashbacks on a credit card are amounts credited to a cardholder’s account as a percentage of their credit card spending.
If they apply for a credit card like the Flipkart Axis Bank Credit Card, they enjoy great cashback across different categories, including travel, online shopping,
etc. For example, the Flipkart credit card offers a 5% cashback on purchases on Flipkart and Myntra platforms.
Axis Bank’s Ace Credit Card offers unlimited cashback on every spend with no upper limit on cashback. It gives a 5% cashback for utility bills, Direct-to-Home
(DTH) payments and mobile recharge via Google Play. The card provides a 4% cashback on Swiggy, Zomato and Ola and 2% on all other spendings.
[Also Read: Top 6 Credit card features you should not miss]
Difference between rewards and cashback on credit cards:
| Parameters |
Reward points |
Cashback |
| Applicability |
Reward points are earned on almost all the transactions on a credit card. |
Cashback is applicable mainly for transactions done at select outlets.
Indian Oil Axis Bank Credit Card offers a 4% cashback only for
fuel purchases made at Indian Oil fuel outlets in India. |
| Minimum transaction |
Most banks expect a cardholder to spend at least Rs. 100 to earn reward points. The minimum amount differs between banks and credit cards. |
Some cashback offers may come with no minimum transaction.
For example, the Indian Oil Axis Bank Credit Card offers 4% cashback on all fuel purchases at Indian Oil outlets. |
| Maximum limit |
No maximum limit. Rewards points even multiply based on the transaction category and bank offers. Axis Bank’s Edge Rewards depend on credit card spending patterns. |
Have a maximum limit. |
| Flexibility |
Rewards points earned can increase or decrease based on the credit card spend. |
The cashback percentage is fixed. Fluctuations are constant when the maximum cashback limit is reached. |
| Validity |
Rewards points have a validity period of around one to three years, depending on the card provider. |
Cashback has no validity. Once credited to the cardholder’s account, it can be used anytime. |
| Use |
Reward points can be used only to buy those products available on the credit card provider’s websites. |
The cardholder can use the cashback credited to their account anywhere, anytime. |
| Welcome offer |
Some cards, like Axis Bank Buzz Credit Card, offer Welcome Bonus. It offers a Flipkart gift voucher worth Rs. 1,000 for three purchases
made within 45 days of card activation. |
Usually, no cashback is given at the time of card activation. |
| Extra bonus |
Certain credit cards have a bonus for achieving a milestone or a transaction limit.
Axis Bank Buzz Credit Card offers Flipkart gift vouchers worth up to Rs. 7,000 yearly for milestone spending. |
No bonus is given. |
| Calculation |
Reward points differ across transactions like dining, travel, etc. So it may be difficult to remember. |
Cashback is easy to calculate as it is a fixed percentage on certain spending. |
Apply for a credit card after evaluating the reward points and cashback on offer. Axis Bank has exciting credit card customised to varying customers’ needs. For more details, click here.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
