Cashback vs Rewards vs Shopping: What Credit Card Should You Go For [2023]

By HappyCredit -

Cashback vs Rewards vs Shopping Credit Card zaRvPY
Cashback vs Rewards vs Shopping Credit Card zaRvPY

    Credit Card usage has been steadily rising over the past few years and is predicted to do so in the future. Credit cards multiply one’s spending power and can be beneficial when used wisely. That being said, with no restrictions on the number of credit cards you can have, it is easy to get into serious credit card debt. 

    Credit card companies try to entice potential customers with a slew of discounts on select spends, Rewards Programs, and various Cashback offers. This can be overwhelming, especially for first-time credit card users. If you are in this situation and are looking for clarity on what to choose between credit cards that come with Cashback, Rewards, and discounts for shopping. Read on. 

    Cashback, Rewards, and Shopping Credit Cards: What’s the difference?

    Let’s look at each option to decide what works best for you.

    Cashback Credit Cards

    As the name implies, these Credit Cards come with a Cashback offer where you get a percentage of the money spent back into your credit card account. Here are some points to note about these offers.

    • This is probably the most flexible offer of the three. The cashback you receive is added to your credit card account, thus adding to your available credit balance. 
    • As cashback offers add to your available credit balance, they never expire. 
    • Certain cards offer instant cashback, while others credit them only after 90 days. 
    • There is usually a limit to how much cash back you can avail of on certain monthly transactions. 

    Reward Point Credit Cards

    These Credit Cards usually pay you back in terms of Reward Points. The catch with them is there are typically certain conditions involved to be eligible to earn reward points on certain transactions. Here are some key things to note about these types of offers.

    • There is usually a minimum amount you have to spend on transactions to be eligible to earn rewards points. 
    • There is no limit to how many points you can earn on a transaction. The higher the value, the more reward points you earn. 
    • Certain cards will offer you 2x, 3x or sometimes even 10x reward points on very specific transactions.
    • The reward program usually has milestones to achieve, giving you additional reward points when you cross said milestones. 
    • You can only spend the reward points on select partner websites that are a part of the reward program. 
    • Certain credit card issuers allow you to exchange reward points for actual currency. 

    Shopping Credit Cards

    Shopping credit cards are usually a result of a collaboration between credit cards issued and certain service providers or brands. These credit cards offer additional discounts when you use your card to pay at their outlets or when you use select services. Here are a few points to note:

    • You can save a lot if you get a card partnered with a brand you buy from regularly. 
    • They generally have other benefits for other spends but may not be as significant as the introductory offers. 
    • The offers are usually limited to select brands. 

    Remember that the finer points may vary from card to card. Read the fine print of each card you are considering carefully. 

    How Do You Choose?

    Some of you may be thinking, “Why not get all three types of cards and reap maximum benefits!”. However, let’s examine the pros and cons of owning multiple credit cards.

    Pros of Owning Multiple Credit Cards

    When you have multiple credit cards and spread out your spending between them, you are not utilising most of your available credit limit as you would with a single card. 

    When you use up most or all of your available credit limit, credit agencies consider you a heavy borrower, which can impact your overall credit scores. A good practice is never to utilise more than 35-40% of your total available credit limit, which is easily achievable if you use multiple credit cards. Here are some other benefits of using various credit cards.

    • If you make timely payments on all your credit cards, it will have a positive effect on your credit score.
    • You will have access to more potential funds in case of emergencies. 
    • You can choose multiple credit cards that suit your lifestyle best and reap benefits from them. 

    Cons of Owning Multiple Credit Cards

    Credit card debt is a serious issue. Having multiple credit cards can go from a blessing to a curse in the blink of an eye. This is where you need to pay close attention. 

    • Multiple credit cards mean keeping track of various billing cycles and payment dates. Each missed payment will be recorded as a “Default” in your credit history, drastically impacting your credit score. This will seriously hamper your ability to access credit in the future. 
    • It is easy to overspend with having access to a lot of credit, and if you cannot pay it back, you could land yourself in serious credit card debt. 

    Never spend more than you can afford to pay off in full. Do not fall into the trap of paying only the Minimum Amount Due. 


    Each type of credit card has its advantages and limitations. So the answer to the question, “Which card is best?” will differ based on your shopping habits and needs. In the end, whether you choose one or decide to go with all three, take cognisance of your financial situation and use them wisely. 


    Q. What is the smartest way to use credit cards?

    Treat your Credit Card like a Debit card. Use your credit card to pay and then pay off the debt immediately. That way, you reap all benefits of the offers and do not have to worry about falling into debt. 

    Q. Are credit cards that offer reward points worth it?

    This primarily depends on your credit card usage. Most credit cards charge an annual fee to use the card. Don’t get a credit card just for the reward points if the value you earn from them is less than the yearly fee.

    Q. What is the biggest advantage of cashback cards?

    The biggest possible advantage of cashback cards is that everything you receive as cashback is adjusted against the outstanding amount on your credit card.