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Comparing Cash Back vs. Points or Miles

Last Updated: December 12, 2023
5 min read

Key points about: credit card cash back vs. points vs. miles rewards

  1. Credit card rewards are incentives that give cardmembers a percentage of their purchases back as rewards.

  2. Credit card rewards come in various forms including cash back, points, and miles, and differ across card issuers.

  3. Choosing cash back vs. points or miles depends on your rewards goals, and the flexibility and simplicity you need.

A rewards credit card can be a simple way to earn benefits on your everyday purchases. There are so many rewards credit cards to choose from, though. So, how can you choose between credit card cash back vs. points? Or miles vs. points?

In order to select the right card for you, you’ll need to understand the differences between cash back, points, and miles. Plus, keep in mind that each card issuer may define these terms differently in their rewards program. Ultimately, the best card type for you may depend more on the cards’ earning rates and other benefits, rather than the name of the rewards.

What’s the difference between credit cards that give cash back, points, and miles rewards?

Broadly speaking, there are three types of credit card rewards: cash back, points, and miles. Because the reward structures differ, it may be easier to classify them based on the credit card type, rather than based on the name of the rewards.

As the name suggests, cardmembers earn cash back on purchases when they use their cash back cards. Typically, you can redeem the cash back rewards for statement credits that you can apply toward credit card charges. You can also opt for shopping credits to make purchases with certain merchants, or you may be able to choose a cash deposit into your bank account.

Some rewards credit cards offer points through the card issuer’s rewards program and typically will have varying redemption options.

Several card issuers offer travel credit cards that give miles as rewards for purchases. Depending on the card, you may be able to redeem your miles as a statement credit toward travel purchases. Sometimes you can use the miles for non-travel redemptions.

An airline, hotel, or retail credit card offers points or miles in the associated company’s loyalty program. You can redeem the points or miles through the loyalty program rather than with the credit card issuer.

Remember, there’s some overlap in the rewards options. For example, some cards are labeled “cash back cards,” but give points in the card issuer’s program. You could redeem your points for cash back, but you may also have other redemption options.

Are credit cards with cash back, miles or points rewards better for travel?

Having a specific goal in mind for your rewards card, like travel, can make choosing between the rewards card options easier.

If you’re interested in using rewards for travel, there are a few pros and cons to consider with each option:

  • If you choose a cash back card, you may be able to redeem your cash back for statement credits to pay for travel expenses.
  • If you choose miles rewards, you may turn Miles into cash. Or redeem as a statement credit for your travel purchases like airfare, hotels, rideshares, gas stations, restaurants and more.
  • If you choose points rewards, you may be able to purchase certain travel rewards designated by the card issuer or those included on the rewards platform.

Card-issuer rewards points vs. cash back

Points rewards programs can vary widely across card issuers in how you earn points and how you redeem. Check the issuer’s terms to learn how their programs work and the limitations you may find when trying to redeem your points.

Conversely, cash back rewards can be simple to use. Generally, you’ll know exactly how much your rewards will be worth. You can also redeem your cash back rewards in different ways regardless of where you made purchases.

Loyalty program points or miles vs. cash back

An airline or hotel credit card may be a good choice if you have a preferred airline, favorite hotel chain, or travel partner that you use often. For instance, if you live near a major hub for a particular airline, getting the corresponding airline credit card to earn miles could make sense.

The downside is that you may be limited to redeeming your miles for flights only through that airline—or hotel nights at that chain. Your rewards’ value may also depend on current travel costs. There’s no guarantee that the program won’t change its rules and require more miles or points to redeem your rewards in the future.

Cash back isn’t specific to a single airline or hotel chain, on the other hand. The value of your cash back rewards tend to be easy to calculate, although card issuers could impose rules on their cash back rewards programs that change the final available cash back value. Cash back rewards do tend to be flexible though, so you may not be limited to company-specific travel with cash back cards.

Travel card rewards miles vs. cash back

Travel card rewards miles, which are often similar to cash back cards in that you can use your miles rewards or opt for cash back. With the Discover it® Miles travel card, you earn 1.5x Miles on every purchase. You can redeem Miles for travel or cash.1 

When is cash back better than other types of rewards?

Cash back may be better than other types of rewards if you want simplicity.

Did You Know?

Cash back allows you the freedom to choose how you use rewards, instead of getting locked into a points or miles system.

Another consideration is that with cash back cards you’ll always know how much your rewards will be worth. Conversely, with travel rewards and miles, the value of your rewards may increase or decrease based on current travel costs or a loyalty program’s rules.

You can compare cash back cards to determine which card will be best. Some cash back cards require you to accumulate $20 or more in cash back before you can redeem your rewards, or the rewards expire after a certain amount of time. With Discover rewards redemptions, you can redeem your rewards for cash at any time.2

Do you have to choose between cash back, points, and miles rewards?

You don’t necessarily have to stick to a single type of rewards credit card for all your purchases. In fact, some people like to have two or more types of credit cards to maximize how much they earn.

For example, the Discover it® Cash Back Credit Card lets you earn 5% cash back on everyday purchases at different places you shop each quarter like grocery stores, restaurants, gas stations, and more, up to the quarterly maximum when you activate. Plus, earn 1% cash back on all other purchases–automatically. You could use the Discover it® Cash Back Credit Card on purchases that earn 5%, and the Discover it® Miles Card lets you automatically earn unlimited 1.5x Miles on every dollar of every purchase.

Keep in mind, applying for multiple cards could lead to new hard inquiries on your credit report, which may hurt your credit score. Some credit issuers let you see if you’re pre-approved for their credit card offers before applying, which may not impact your credit score.

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  1. Redeem Miles: Starting at 1 Mile, you can redeem your Miles as a credit to your account to pay for all or part of your bill, for cash as an electronic deposit to your bank account, or for a credit for Travel Purchases made on your statement within the last 180 days. Travel Purchases include airline tickets, hotel rooms, car rentals, travel agents, online travel sites, commuter transportation, restaurants and gas stations. Restaurant purchases include those made at merchants classified as full-service restaurants, cafes, cafeterias, fast-food locations, and restaurant delivery services. Gas Station purchases include those made at merchants classified as places that sell automotive gasoline that can be bought at the pump or inside the station. Gas Stations affiliated with supermarkets, supercenters, and wholesale clubs may not be eligible. Even if a travel purchase on your statement appears to fit in a Travel Purchase category, the merchant may not have a merchant category code (MCC) in a Travel Purchase category. Merchants and payment processors are assigned an MCC based on their typical products and services. Discover Card does not assign MCCs to merchants. Certain third-party payment accounts and digital wallet transactions may not be eligible for credit redemption if the technology does not provide sufficient transaction details or a qualifying MCC. See Terms and Conditions for more information.
  2. Rewards never expire. We reserve the right to determine the method to disburse your rewards balance. We will credit your Account or send you a check with your rewards balance if your Account is closed or if you have not used it within 18 months.
  • Legal Disclaimer: This site is for educational purposes and is not a substitute for professional advice. The material on this site is not intended to provide legal, investment, or financial advice and does not indicate the availability of any Discover product or service. It does not guarantee that Discover offers or endorses a product or service. For specific advice about your unique circumstances, you may wish to consult a qualified professional.