Do you know the difference between rewards and cashbacks?

A credit card is a potent financial tool when used judiciously. It is therefore important to choose a credit card that offers features and benefits useful to you. With so many options, how to choose your first credit card? 

While some cards offer higher reward points, others have good brand partnerships for cashbacks and discounts. Before you choose your credit card, take a look at some key features and benefits of both types of cards. 

Applicability

Credit cards allow you to earn rewards points on almost all types of offline or online transactions. Cashbacks, however, are only available for specified transactions, either done at a partner channel, merchant outlet or during a specified promotion period.

Value

The value of reward points awarded depends on the category of spend. For example, users can earn more rewards when spending on electronic items as compared to groceries and essentials. The value of cashbacks is usually fixed on a cash or percentage basis, with a specified upper limit. With IDFC FIRST Bank Select Credit Cards there is more. You get 6X and 3X Reward Points on online and offline purchases respectively for spends up to Rs. 25,000 per month. And get 10X Reward Points on incremental spends above Rs. 25,000 per month and on your birthday.

Estimating the benefit

Considering reward points vary from one transaction to another, it is difficult to calculate the value of benefit earned per transaction. With cashbacks, the cash or percentage benefit is clearly defined and is easy to figure out. For example, IDFC FIRST Bank offers a 5% cashback (up to ₹1000) on the transaction value of first EMI done within 30 days of card generation

Redeeming

Reward points can be redeemed against products at the bank's online shopping portal, as Airmiles or in cash value to reduce your amount due. The redemption value of points to Rupees will vary depending on the exchange category.

A cashback is directly added to your credit card account, and you can use the free credit as you wish – to buy other products or reduce your repayment liability.

Additional benefits

Some reward credit cards will give additional points as a joining bonus or for crossing a milestone or transaction limit within the last six months or one year. There are no additional benefits with a cashback offer. There is a specified limit to the benefit and once it is claimed the deal expires.

IDFC FIRST Bank Credit Cards offer a gamut of rewards and benefits with additional benefits like a welcome voucher worth Rs. 500 on spending Rs.5,000 or more within 30 days of card generation!

Validity

Cashback and reward points both usually have a limited validity. Depending on the bank, reward points are valid for two or three years. The points then expire in the chronological order in which they were earned. Cashback offers, too, are valid for a limited time unless the card issuer has a long-term arrangement with the brand or merchant. IDFC FIRST Bank Credit Cards have Reward Points that are valid for life and one can use them anytime at ease!

To sum it up

The choice is easier with IDFC FIRST Bank credit cards. Offering the best of both worlds, IDFC FIRST Bank cards offer accelerated rewards on certain purchases as well as cashback and a host of offers, privileges and discounts on shopping, dining, entertainment and more. IDFC FIRST Bank credit cards have no joining or annual fee and are free for life! Sign up here for a credit card like no other!

Note: The welcome bonus/joining benefits listed here are for credit cards issued after 9th October 2023. For cards issued earlier, please visit https://www.idfcfirstbank.com/credit-card

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.