Cashback vs points reward cards

Reward credit cards pay you back for spending, but they do it in two different ways. A cashback card returns a percentage of what you spend, usually as credit on your card balance or paid into your bank account. A points card gives you points that you exchange for goods, vouchers or travel. Both are types of reward card, and the choice between them comes down to how you want to be paid back and what you will do with the reward¹.

Cashback rates typically range from 0.25% to 1% of spending³. Some cards pay more for a limited period: one card pays 1% cashback on spending for the first 90 days from account opening, and another pays 3% cashback on petrol, everyday travel, eating out and takeaways in the first year, with 0.25% on all other purchases⁴. Points cards work differently: the points build up and you redeem them later, and what they are worth depends on the scheme and what you exchange them for¹.

Neither type is free money. If you do not pay off your balance in full each month, interest is charged on the whole amount, not just the unpaid part, and that interest can easily outweigh any reward you earn⁶. The sections below set out what each type offers, what it costs, how to apply, how to complain and what protects your money.

What each type of reward card offers

Reward cards come in four broad kinds: cashback cards, air and travel mile cards, points cards and retail rewards cards¹. A reward credit card offers rewards when you use it, such as cashback, air miles or points you can exchange for shopping vouchers and discounts⁸. Cashback credit cards reward you by paying back a percentage of what you spend on the card, usually as credit on your card balance². General points cards reward you with points that can be cashed in for a wide range of goods and services¹. Retail reward credit cards reward you in the same way as general points cards but usually offer double or triple points for shopping with the co-branded retailer¹.

The practical difference is what you receive. Cashback is money, and it is paid automatically, into your bank account monthly, quarterly or annually, or taken off your credit card bill². With a cashback credit card, cashback is paid into your bank account or rewarded to you as credit either monthly or annually, depending on the type of card you have⁹. Points are a currency: you collect them and then choose what to exchange them for, which may be vouchers, travel or goods¹.

Some cards combine the two. A cashback offer can sit on both a debit card and a credit card, so the same customer may earn cashback on everyday spending through more than one product¹⁰. Retail cards blur the line further, because the points they pay are often worth most when spent with the retailer that issues them¹.

Fees, charges and eligibility

Reward cards carry the same costs as any other credit card, plus sometimes an annual fee. Some cards charge a fee each year for use of the card; the fee is added to the amount due and you will have to pay interest on it if you do not clear your balance¹¹. Some providers charge an annual fee, and some rewards cards have an annual fee¹². Credit is subject to status, and eligibility criteria and fees may apply⁹.

Beyond the annual fee, the standard charges apply. You will usually be charged for going over your credit limit, for using the card abroad and for late payments¹¹. If you go over your credit limit the provider may charge you a fee¹². Charges of more than £12 for missing a credit card repayment may be seen as unfair¹⁰. If you take cash out on a credit card, interest is added to your account straight away, even if you pay off the balance by the due date, and you may also be charged a cash handling fee of around 2% of the amount you withdraw¹⁰. The interest rate for cash advances is usually higher than the interest rate for purchases¹⁰.

Reward schemes have their own exclusions. On one rewards card, you do not earn reward points on ATM cash withdrawals, cash advances or cash related payments, balance transfer transactions, tax payment transactions, or any fees or charges incurred through using your credit card; eligible spend excludes cash advances, fees, balance transfers, cheques, refunds, interest or any other charges. In other words, the spending that earns rewards is usually ordinary purchases, not the transactions that cost the provider money.

How cashback and points are paid

Cashback is the simpler of the two. Some lenders pay cashback directly into your bank account either monthly, quarterly or annually, while other lenders take it off your credit card bill². With a cashback credit card, cashback is paid into your bank account or rewarded to you as credit either monthly or annually, depending on the type of card you have⁹. The rate can step up for a period: one card pays 1% cashback on spending for the first 90 days from account opening⁴, and another pays 3% cashback on petrol, everyday travel, eating out and takeaways in the first year, with 0.25% cashback on all other purchases⁵.

Points work on a different rhythm. You collect them as you spend and redeem them when you choose, and the scheme sets what they are worth¹. That means the value of a points card depends on how you use it: the same points balance may buy more through one redemption route than another, and the rewards on offer can change.

There is a timing point that catches people out. If you pay off the whole amount owed on the card by the due date, you will not be charged interest on your purchases¹⁰. If you do not, interest is charged on the whole amount, not just the unpaid part⁶. A reward of 0.25% or 1% is small next to card interest, so a card that is not cleared each month can cost more than it pays back. Your credit card company should contact you to warn you of what might happen if you only make minimum payments¹⁰.

Applying for a reward card

You can apply for a credit card online, by post, by phone, or at a bank or building society¹¹. Applications are assessed on your circumstances, and the provider checks your credit file, which tells it whether you are a good payer and about any court orders you have had in the last six years¹¹. All credit card companies have to quote an APR, and the interest rate of any credit card should be clearly displayed on any application form and promotional material⁶.

Before applying, it is worth checking what the card actually pays and on what. A card may advertise a headline rate that applies only to certain spending or only for a limited period, and the exclusions listed above mean some transactions earn nothing. If you already hold an eligible current account or credit card with a provider, some cashback schemes are open to you on that basis.

Reward cards are one option among several. If your aim is to clear existing debt rather than earn rewards, a balance transfer card moves the debt to a new card, usually for a fee of around 2% of the balance, and many balance transfer deals offer 0% interest on the amount you move¹⁰. If your aim is to spread the cost of a purchase, a 0% purchase card does that. The best interest-free credit cards currently offer 0% periods of up to 25 months, though other sources put the longest at as long as 14 months, so the two figures disagree¹⁴. Consider switching to a new card once any promotional period is over¹⁵.

Service and complaints

If something goes wrong with a reward card, the first step is the provider's own complaints process. If you are unhappy with the outcome, the Financial Ombudsman Service can look at it. The ombudsman publishes complaints data by product, which gives a sense of how often card complaints reach it. In the first quarter of 2026/27, 5,783 credit card complaints were opened¹⁶. In the first quarter of 2025/26, credit cards accounted for 6,600 new complaints, with a 25% uphold rate¹⁷. Earlier data shows credit cards at 4,505 complaints in the second quarter of 2023/24, compared with 3,386 in the same quarter of 2022/23¹⁸.

Complaints about Section 75 and chargeback have risen sharply at times. The ombudsman reported a 72% year-on-year increase in complaints in these areas in 2020/21¹⁹. Older figures show credit cards at 11% of all complaints received in 2009/2010, a 1% change on the previous year²⁰, and credit card accounts at 6% of complaints in the first quarter of 2018/2019²¹.

Complaints data is published by several bodies and the figures do not always line up. NS&I, for example, recorded 13,609 complaints in its banking and credit cards grouping between 1 October 2025 and 31 March 2026²². The Financial Ombudsman Service also publishes quarterly and annual insight, and the figures move with the market¹⁶.

Protection for your money

Paying by credit card gives extra protection under Section 75 of the Consumer Credit Act⁷. This additional protection only applies to credit card purchases, not debit card purchases⁷. It covers purchases over £100 and up to £30,000, and it is why paying by credit card rather than cash can help if something goes wrong: you may be able to get your money back if a trader fails to deliver²³. Using a credit card to book a package holiday also brings extra protection under Section 75²⁴.

Below the £100 threshold, chargeback may help. Chargeback exists for both credit and debit card purchases². It applies to credit card transactions where goods cost less than £100, so Section 75 does not apply²⁵. It also applies to all debit card transactions including goods costing less than £100, although exact rules may vary between the American Express, Maestro and Visa networks²⁶. Chargeback applies to credit and debit card purchases of any value, though it is not enshrined in law and each scheme, run by Visa, Mastercard and Amex, has its own rules²⁷. Card providers sign up voluntarily and exact rules may vary between Visa and American Express, so it is not as strong as credit card protection²⁸.

Rewards do not change any of this. A cashback or points card is still a credit card, so the same protections and the same risks apply. If you are struggling with card debt, free help is available from MoneyHelper, Citizens Advice, StepChange and National Debtline, and the Financial Ombudsman Service can look at a complaint you cannot resolve with the provider¹⁶.