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Credit Card

Do you know the difference between rewards and cashbacks?

Key Takeaways

Cashback gives you a fixed percentage of your eligible spending back, making it simple and predictable.
Reward points can potentially offer greater value, especially when redeemed for travel, shopping or other eligible benefits.
Cashback is ideal for people who prefer instant savings, while rewards suit those looking to maximise the value of their spends.
Some credit cards offer a combination of cashback, rewards and lifestyle benefits.
The best credit card depends on your spending habits, redemption preferences and financial goals.

29 Jul 2026 by Team FinFIRST

credit card rewards, cashbacks and redeemable rewards

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Every time you use your credit card, you have an opportunity to earn something back on your spending. Depending on the card you choose, this could be in the form of cashback or reward points.

While both help you get more value from your purchases, they work differently. Cashback offers straightforward savings that are easy to understand, whereas reward points can unlock higher value through travel, shopping and other redemption options.

If you're unsure which type of credit card suits you better, understanding how each benefit works can help you make an informed decision.

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What Are Credit Card Reward Points?

Reward points are loyalty points earned when you make eligible purchases using your credit card. The number of points you earn depends on the card and the type of transaction.

Many rewards credit cards offer accelerated reward points on selected spending categories, such as:

Dining

Travel

International spends

Online shopping

Lifestyle purchases

Depending on your card, reward points can usually be redeemed for:

Travel bookings

Shopping vouchers

Products

Statement benefits

Other eligible redemption options

Since redemption value may vary across options, checking your card's redemption terms can help you maximise the value of your points.

What Is Cashback on credit card?

Cashback is one of the simplest credit card benefits to understand. Instead of earning points, you receive a percentage of your eligible spending back as cashback.

For example, with the Hello Cashback Credit Card, if you spend ₹10,000 on eligible online purchases in a statement cycle, you could earn ₹300 cashback at 3%. Spend above ₹10,000 and the rate increases to 5%, subject to the card's terms, conditions, and applicable caps.

Cashback is generally preferred by cardholders who want immediate savings without tracking or redeeming reward points.

Credit Card Rewards vs Cashback: Key Differences

Feature	Cashback	Reward Points
What you earn	A percentage of eligible spending	Points earned on eligible transactions
Best for	Everyday savings	Maximising value from spending
Redemption	Credited as cashback or statement benefit, depending on the card	Redeemed for travel, shopping, vouchers or other eligible options
Value	Fixed and easy to calculate	Depends on how the points are redeemed
Reward potential	Usually fixed	Can be higher for selected spending categories

Rewards vs Cashback: A Detailed Comparison

1. Applicability

Reward points are generally available across a wide range of eligible online and offline transactions. Many credit cards also offer accelerated rewards on selected categories like dining, travel or international spends.

Cashback, on the other hand, is usually available only on eligible spending categories, partner merchants or promotional offers and may have monthly or statement-cycle limits.

2. Value

Cashback provides a fixed return, making it easy to know how much you have earned.

Reward points can offer greater overall value, especially when redeemed for travel or other eligible benefits, although their value depends on the redemption option.

3. Ease of Calculating Benefits

Cashback is simple because the savings are clearly defined.

With reward points, the value depends on how many points you earn and the redemption option you choose, making it slightly more complex but potentially more rewarding.

4. Redemption

Cashback is generally credited to your account according to the card's terms.

Reward points are redeemed through the issuer's eligible redemption channels for travel bookings, shopping, vouchers, statement benefits or other available options.

5. Additional Benefits

Many rewards credit cards offer more than just reward points. Depending on the card, you may also receive:

Welcome benefits

Accelerated rewards

Lounge access

Movie offers

Travel privileges

Roadside assistance

Insurance covers

Milestone benefits

Similarly, some cashback credit cards also include welcome offers and lifestyle privileges.

6. Validity

Cashback offers are generally governed by the offer period or the card's terms.

Reward point validity varies across credit cards. Some cards have an expiry period, while others may offer never-expiring reward points. Always check your card's terms and conditions for the applicable validity.

Can You Earn Cashback and Reward Points Together?

Yes. Some credit cards combine cashback with reward-based benefits.

Depending on the card, you may receive cashback on selected spending categories while also enjoying reward points, welcome benefits, travel offers, movie discounts or lifestyle privileges.

Choosing a card that aligns with your spending habits helps you maximise these benefits.

How to Choose the Right Credit Card

Before applying for a credit card, consider the following questions:

Where do I spend the most every month?

Do I prefer instant savings or long-term value?

Will I regularly redeem reward points?

Do I travel frequently?

Would I benefit from travel or lifestyle privileges?

Answering these questions can help you choose a credit card that complements your spending pattern rather than simply offering the highest advertised reward rate.

Why Choose an IDFC FIRST Bank Credit Card?

IDFC FIRST Bank offers a wide range of credit cards designed for different spending needs, including cashback credit cards, reward credit cards, and lifetime free cards.

Cashback Credit Cards

Hello Cashback Credit Card
If you shop online regularly, the Hello Cashback Credit Card puts money back on every order. Earn up to 5% cashback on online spends and 1% on in-store and UPI payments, all with zero joining fee and no income proof required.

FIRST EA₹N Credit Card
Built for everyday UPI users, the FIRST EA₹N Credit Card earns 1% cashback on every UPI payment made through the IDFC FIRST Bank Mobile App. Get started with a minimum FD of just ₹5,000 and zero joining fee.

Quantum+ Credit Card
Best for everyday spends. Earn up to 2% cashback on online spends and 1% on UPI payments via the IDFC FIRST Bank Mobile App. Zero joining and annual fee, backed by a Fixed Deposit.

HPCL Power+ Credit Card
For those who fuel up at HPCL regularly, the FIRST Power+ Credit Card delivers up to 6.5% savings on every eligible fuel transaction. It also rewards grocery purchases, utility bills, and FASTag recharges, with rewards that never expire.

Rewards Credit Cards

FIRST Millennia Credit Card
Lifetime free with 10X Reward Points on Dining, Travel, and International spends from your very first transaction. Earn 3X on all other eligible spends and enjoy a monthly movie discount and railway lounge access at zero annual cost.

FIRST Select Credit Card
Lifetime free with 10X Reward Points on Dining, Travel, and International spends, plus airport lounge access, a BOGO movie offer, and trip cancellation cover. A strong upgrade for those who want more from their everyday card.

Frequently Asked Questions

What is the difference between cashback and reward points?

Cashback gives you a fixed percentage of your eligible spending back, while reward points are loyalty points that can be redeemed for travel, shopping, vouchers or other eligible benefits depending on the card.

Are cashback credit cards better than rewards credit cards?

Neither is universally better. Cashback cards are ideal for straightforward savings, while rewards cards are better suited for users who want to maximise value through eligible spending categories and redemptions.

Are reward points worth more than cashback?

It depends on the credit card and the redemption option. In many cases, reward points can offer greater value when redeemed for travel or other eligible benefits.

Do reward points expire?

Reward point validity differs from one credit card to another. Always refer to your card's terms and conditions to understand the applicable validity and redemption rules.

Which type of credit card is better for travellers?

Frequent travellers often benefit more from rewards credit cards that offer accelerated rewards on travel-related spends along with travel privileges, depending on the card.

Which type of credit card is better for everyday spending?

If your spending is mainly on routine purchases and you prefer immediate savings without tracking reward points, a cashback credit card may be a better option.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.