Rewards: Cash Back vs Points.

In plain English

Credit card rewards come in two main forms. Cash back pays you a percentage of what you spend back as a dollar amount, which is simple and predictable. Points (and miles) are earned units you redeem later, and their value can shift depending on whether you cash them out, buy gift cards, or book travel. Cash back is easier to compare because a dollar is always a dollar, while points can be worth more or less than a penny each depending on how you redeem them. Issuers can also change what points are worth over time. Neither type is worth chasing if it tempts you to spend more or carry a balance, because interest erases rewards fast.

01Why it matters

Points can look bigger than cash back on paper, but their real value depends entirely on redemption, so comparing them in plain dollars keeps you from overpaying for a flashier-sounding reward.

02The math, step by step

On $1,000 of spending, a 2 percent cash back card gives you $20 you can use any way. A points card might give 2,000 points on the same spending. Whether those points beat $20 depends on the redemption: cashed out they might be worth $20, but redeemed for certain travel they could be worth more, or for gift cards possibly less.

03What this is NOT

04Receipts

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