The last decade has seen a rise in many new ways of paying electronically and while the world goes digital, usage of credit cards has become the most popular and holds a convenient mode of transactional value to opt for. But little did you know that these cards come in into different categories. While some cards offer cash back, others offer rewards for redemption. But before we choose sides, let’s first understand the difference between a rewards credit card and cash back credit card. Credit cards offer cashback and a lot of rewards on select purchases. However, the requirement for these might differ from person to person. Choosing the best credit card in UAE will be not a big deal after that. Are you a cashback person or a rewards person?

Cash back Credit Card

Cash back Credit Card vs reward cards

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Cashback credit cards

Cashback credit cards allow the holder to save a lot of money on daily expenditures and popular expense attractions. A cashback card is useful for the cardholder who uses the credit card for purchases regularly. By doing so, the customer earns back a certain percentage of the amount of transaction at every place the card is used. This cashback is then credited to the card holder’s account to be used at the pleasure of the customer. Most customers fail to redeem the category wise offers and monthly limits into their account.

There are a lot of credit cards in the UAE that offers cashback up to as much as 10% of the transaction amount. Only a few of the best credit cards in the UAE offer unlimited cash back redemption as a policy. Most cards have a monthly or quarterly limit on the cashback that can be earned in total.

Rewards credit card

Rewards credit card is the one that enrols its user into a loyalty points program. The customer can earn loyalty points by engaging in selected purchases, payment of bills, and other expenses from the credit card. Points are often offered by the bank in exchange for services at the cost of credit taken from the bank using the credit card.

The cardholder earns loyalty points for every purchase made with the credit card. These points accumulate over time and are stored on the credit card. These rewards, after a certain point, can be redeemed by the user in different ways. Users can use these rewards to pay the credit card’s annual fee, make select purchases, acquire discount vouchers, get services for free on a discounted price or redeem other options like flight tickets, electronics, complimentary hotel stays, and much more.

Reward Points or cashback?

Since you have now observed the features that cashback and rewards cards hold, it is time to make a personal choice. You need to make this choice depending on what kind of expenditure you regularly partake in. If you want to use your credit card for daily expenses like groceries, shopping, paying bills, utility payments and other regular expenditure, it might be a smart idea to use a cashback card to save a lot more. However, if you are a traveller, businessman or any other working professional, it might be a good idea to get yourself a rewards card and earn lots of points for travel miles at expensive purchases.

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The following is a list of some questions that you must ask yourself before making a decision.

Question 1: What do I spend the most on and how much is my average monthly expenditure?

Question 2: How much would I save in a month with cash back deals?

Question 3: Approximately, how much would my redeemed rewards be worth?

Question 4: What rewards will I actually be able to utilize?

Question 5: Are my expenditures mostly in local currency or international currency?

It is after answering these questions effectively that you can make an informed decision about the kind of card you should use on a daily basis.

Original Post Date : May 28, 2020 , Updated on : Aug 20, 2020