Cash back vs. rewards points: Which is worth more?

Cash back and rewards cards each have benefits and drawbacks. Read our cash back vs rewards credit card guide before selecting the best fit for you.

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Credit card rewards come in different shapes and sizes, with points and cash back the most popular, but which is best?

Deciding between cash back and rewards points credit cards can significantly impact your financial returns. Our comprehensive guide breaks down which option might be right for your spending habits and lifestyle.

At a glance: Cash back vs. rewards points comparison

Feature
Cash Back
Rewards
Typically maxes out around $200
Can be equivalent to $300+ in value
Competitive and straightforward
Competitive but varies by redemption method
Generally fewer premium perks
Often includes extensive travel benefits and insurance
Simple and low-maintenance
Can involve complex redemption rules and transfer options
Comparable across both card types
Comparable across both card types

Types of cash back and rewards cards

Cash back credit cards

Cash back cards typically fall into three main categories:

  1. 1 Flat-rate cards: Offer the same percentage back on all purchases (typically 1-2%), with no caps on earnings.
  2. 2 Tiered cash back cards: Provide higher percentages in specific spending categories and 1% on everything else.
  3. 3 Rotating category cards: Offer elevated cash back (typically 5%) in categories that change quarterly, up to a spending cap, and 1% on all other purchases.

Points or miles credit cards

Similarly, points and miles cards come in several varieties:

  1. 1 General travel points cards: The most flexible option, allowing redemptions across multiple airlines, hotels, or even as cash back.
  2. 2 Airline miles cards: Co-branded with specific airlines and ideal for frequent flyers loyal to one carrier. These often include benefits like free checked bags and priority boarding.
  3. 3 Hotel points cards: Co-branded with hotel chains, these cards earn points redeemable for stays and room upgrades, though point values tend to be lower than airline miles.

Welcome bonuses: First-year value comparison

You can’t beat the quick budget boost of netting hundreds of dollars’ worth of extra cash or rewards just by signing up for a card and spending the required minimum. When comparing miles vs cash back credit cards, rewards cards usually offer the most generous welcome bonuses. Cash back introductory offers commonly top out at a couple hundred dollars, whereas rewards cards frequently follow a “go big or go home” approach with offers worth $300 or more.

For example, the TD Cash Back Visa Infinite* Card currently offers up to $600 in value†, including 10% cash back in the first 3 months on eligible purchases up to a total spend of $3,500†. Meanwhile, the TD First Class Travel® Visa Infinite* Card offers up to $1,000 in value†, including up to 135,000 TD Rewards Points† and a first-year annual fee waiver†.

Just remember: the largest introductory offer in the world will be worthless if you can’t meet the required minimum spend. Always ensure you can realistically fulfill the spending requirements before being swayed by a flashy sign-up bonus.

Earn rate: Maximizing your everyday spending

In the battle between rewards points vs cash back, there’s no clear winner when it comes to regular earn rates. Since both card types can feature accelerated earn categories, you need to assess where exactly you spend your money to determine which card will generate the biggest return for you.

Consider the American Express Cobalt® Card, which offers:

  • 5x points on eligible dining and groceries in Canada
  • 3x points on eligible streaming subscriptions in Canada
  • 2x points on eligible gas, transit, and ride shares in Canada
  • 1x point on all other purchases

By comparison, the Tangerine Money-Back Credit Card lets you choose up to three categories (from a list of ten) where you’ll earn 2% cash back, with 0.5% on everything else. This flexibility makes it perfect for those whose primary expenses don’t fall into common cash back categories.

The key is matching your card’s earning structure to your actual spending habits.

Perks and features: Added value beyond just cash and points

Most basic cash back or rewards cards include purchase security and extended warranty, with insurance and concierge service commonly offered among higher-end cards.

The main difference appears in premium travel rewards cards. Travel-focused cards typically offer enhanced perks designed to win the loyalty of frequent travelers, including comprehensive insurance packages and airport lounge access.

For example, the Scotiabank Passport® Visa Infinite* Card includes:

  • No foreign transaction fees
  • 6 complimentary airport lounge visits annually
  • Hotel burglary insurance up to $1,000
  • Baggage loss/delay coverage up to $1,000
  • Travel emergency medical insurance up to $2 million for 25 consecutive days

By comparison, even premium cash back cards like the Scotiabank Momentum® Visa Infinite* typically offer less comprehensive travel benefits, though they may include unique perks like mobile device insurance.

Simplicity: Ease of use matters

Cash back credit cards significantly outperform rewards cards when it comes to simplicity. With cash back, you typically don’t need to worry about:

  • Optimal redemption timing
  • Minimum point redemption thresholds
  • Point transferability or expiration dates
  • Calculating the real-world value of your points

For example, the SimplyCash® Preferred Card from American Express offers straightforward cash back that’s automatically credited to your account. In contrast, even relatively straightforward rewards programs like Scene+ (with the Scotiabank Gold American Express®) require more management, with points values varying based on redemption choice.

If you prefer a set-it-and-forget-it approach, cash back cards may better suit your lifestyle.

Annual fee: Comparable costs

Overall, the annual fees for cash back and rewards cards are comparable, ranging from $0 for basic cards to $120-$150 for mid-tier options, and $500+ for truly premium cards. Your decision shouldn’t hinge on annual fee alone, but rather on which card’s benefits best offset its cost based on your spending habits.

How to compare rewards vs cash back credit cards

One misconception about travel rewards cards is that they come with many restrictions. While this may have been true in the past, most modern travel loyalty programs now offer considerable flexibility. When comparing travel rewards to cash back options, choose cards and programs that align with your spending patterns and travel preferences.

Cash back advocates often point out that generous welcome bonuses with travel rewards cards only apply to the first year. While partially true, you should factor in the additional ongoing benefits that come with premium travel cards:

  • Free checked bags
  • Airport lounge access
  • NEXUS rebates
  • Comprehensive travel insurance
  • No foreign exchange fees

These perks could save you hundreds of dollars annually, potentially exceeding the card’s annual fee.

Sometimes the decision between loyalty points and cash back comes down to mental accounting. When grocery and gas prices rise, getting immediate cash back feels gratifying. However, you might end up spending more on travel later without points to redeem.

If you travel frequently, rewards cards typically deliver superior value. If you rarely travel, cash back likely makes more sense for your lifestyle.

Real-world comparison: Cash back vs. points

Let's compare actual Canadian credit cards with real numbers to show you the difference in value between cash back and points systems.

Scenario: How much value does each example provide based on $2,000 in monthly spending?

Cash back option: CIBC Dividend® Visa Infinite*

CIBC Dividend® Visa Infinite* Card

4.2

Winner: Best Cash Back

10% cash back†

Welcome Bonus

$878

First Year Value

$558

Annual Value

Welcome Bonus: Earn 10% cash back for the first 4 statements on net purchases of up to $2,000.† Plus, get a first-year annual fee rebate for you and up to three Authorized Users.†

Learn More Apply Now On CIBC's Secure Site

Annual spending breakdown:

  • Groceries/Gas: $800/month = $9,600/year × 4% = $384
  • Dining/Transit: $400/month = $4,800/year × 2% = $96
  • Everything else: $800/month = $9,600/year × 1% = $96
  • Total annual cash back: $576

Points option: TD® Aeroplan® Visa Infinite

up to 40,000 pts†

Welcome Bonus

$1,870

First Year Value

$570

Annual Value

Welcome Bonus: Earn up to $1,300 in value† including up to 40,000 Aeroplan points† and no Annual Fee for the first year†. Conditions Apply.

Learn More Apply Now On TD's Secure Site

Annual spending breakdown:

  • Groceries/Gas: $800/month = $9,600/year × 1.5 points = 14,400 points
  • Everything else: $1,200/month = $14,400/year × 1 point = 14,400 points
  • Total annual points: 28,800 Aeroplan points

Who’s the winner?

So, who wins? It's pretty much a draw, but if you simply want value-for-money, the TD® Aeroplan® Visa Infinite has the slight edge. That's because $28,800 Aeroplan points is valued at around $609 when used for flights - roughly $30 more than the Dividend Visa Infinite Card. 

Conclusion

No single card can meet every consumer’s needs. Rather than trying to determine categorically whether a cash back or rewards card will serve you better, examine each card individually to find the best match for your spending habits and lifestyle preferences.

The ideal credit card isn’t about maximizing every possible point or percentage of cash back—it’s about finding the option that delivers the most value based on how you actually live and spend.

TD Cash Back Visa Infinite disclosures:

  • To receive the first-year annual fee rebate for the Primary Cardholder, you must activate your Card and make your first Purchase on the Account within the first 3 months after Account opening. To receive the first Additional Cardholder first-year annual fee rebate, you must add your first Additional Cardholder while the offer is in effect.
  • †Terms and conditions apply.

    This offer is not available for residents of Quebec. For Quebec residents, please click here.

    The Toronto-Dominion Bank (TD) is not responsible for the contents of this site including any editorials or reviews that may appear on this site. For complete and current information on any TD product, please click the Apply Now button.

TD First Class Travel Visa Infinite disclosures:

  • [[ ribn.prod.td-first-class-travel-visa-infinite-card.long_disclaimer ]

American Express Cobalt disclosures:

  • Contact American Express for the most up-to-date referral bonus figures.

    American Express is not responsible for maintaining or monitoring the accuracy of information on this website. For full details and current product information, click the Apply Now link. If you apply and get approved for an American Express Card, (I/we) may receive compensation from American Express, which can be in the form of monetary payment.

Tangerine Money-Back disclosures:

  • *Terms and Conditions apply

Scotiabank Passport Visa Infinite disclosures:

  • Rates, fees and other information are effective as of January 3, 2025. Subject to change.

    Conditions Apply. Visit here for the Scotiabank Passport® Visa Infinite* Card to learn more.

    *See Card Provider's website and Card Application for complete card details, terms and current offers. Reasonable efforts are made to maintain accuracy of information.

Scotiabank Momentum Visa Infinite disclosures:

  • Conditions Apply. Visit here for the Scotiabank Momentum® Visa Infinite* Card to learn more.

Scotiabank Gold American Express disclosures:

  • Conditions Apply. Visit here for the Scotiabank Gold American Express® Card to learn more.

    *See Card Provider's website and Card Application for complete card details, terms and current offers. Reasonable efforts are made to maintain accuracy of information.

SimplyCash Preferred disclosures:

  • Contact American Express for the most up-to-date referral bonus figures.

    American Express is not responsible for maintaining or monitoring the accuracy of information on this website. For full details and current product information, click the Apply Now link. If you apply and get approved for an American Express Card, (I/we) may receive compensation from American Express, which can be in the form of monetary payment.

CIBC Dividend Visa Infinite disclosures:

  • †Terms and Conditions Apply. This offer is not available for the residents of Quebec.
  • This is a digital-exclusive offer.†

    To be eligible for this offer:

    1) this offer must have been directly communicated to you from CIBC or from a partner/affiliate; and

    2) you must apply for the eligible card through the link provided in the CIBC or partner/affiliate communication to you.†

    This offer is reserved for you. Please do not forward it to anyone else.

    CIBC may approve your application, but you are not eligible to receive this Offer if you have opened, transferred or cancelled another Dividend card within the last 12 months.†

    Any opinions, analyses, reviews, or recommendations expressed on this page are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by our advertising partners.

TD Aeroplan Visa Infinite disclosures:

  • †Terms and conditions apply.
  • This offer is not available for residents of Quebec. For Quebec residents, please click here.  

    The Toronto-Dominion Bank (TD) is not responsible for the contents of this site including any editorials or reviews that may appear on this site. For complete and current information on any TD product, please click the Apply Now button. Sponsored Content.

    †Terms and conditions apply.
Sandra MacGregor Freelance Contributor

Sandra MacGregor has been writing about finance and travel for nearly a decade. Her work has appeared in a variety of publications like the New York Times, the UK Telegraph, the Washington Post, Forbes.com and the Toronto Star.

Barry Choi Contributor

Barry Choi is a Toronto-based personal finance and travel expert who makes frequent media appearances. When he's not educating people on how to be smarter with money, he's earning and burning miles and points for luxury travel.

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