Rewards Cards: Should You Choose Cash Back or Points?

Do you have a friend that brags about taking trips using rewards points? There are some pretty avid credit card rewards-chasers out there. Are you considering seeing what all the fuss is about? If you still haven’t committed to a rewards credit card, you’re probably wondering whether it makes sense to go for one that offers cash back or one that gives points. The choice depends on what you need and how you spend.

Cash-Back Rewards

The cash-back option has the advantage of being the simplest of the credit card rewards systems. If you think you might be too busy to maximize credit card points, you’re better off choosing a card that offers cash-back. Better still; change your rewards settings so that your cash-back rewards are automatically deposited into your checking account. It’s the hands-off approach.

Credit Card Points

The main problem with points is that most of us never redeem them. If you think there’s a good chance you would let your points languish, steer clear.

On the other hand, if you’re an optimizer, the type who can’t rest until you’ve found the best deal, you’re primed to take advantage of a points program. You’ll get to choose between a variety of point redemption options and find the one that suits you best. Some cards offer bonus points when you shop in certain categories.

Whatever card you choose, be cautious to make the most of your rewards, especially if you’re paying an annual fee for that rewards card. And, if you carry a balance be mindful of your interest rate. You don’t want to pay more in interest than the value of whatever reward you earn.

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