The Difference Between Credit Card Points, Cash Back and MilesUpdated: March 20, 2019

Rewards are supposed to be one of the biggest benefits of using credit cards, but card providers don’t always make their rewards easy to understand. According to a survey we commissioned earlier this year, 45% of Americans are generally confused about credit card rewards, and 24% don’t know how to redeem their rewards. Part of the problem is that not all rewards work the same, with credit card points, cash back and miles all functioning in their own way. If you’re looking to get more out of your credit card, learning about the different credit card rewards can help you find a card with benefits you can take full advantage of. To find out more about how cash back, points and miles differ, read on.

Cash back

As you may have guessed from the name, cash back rewards pay you back a portion of the money you spend on purchases, in cash, statement credit, direct deposits or checks. Cash back cards are great for people who want rewards that are easy to understand, because most cash back rates are expressed in percentages. For instance, when you make a $100 purchase with the Wells Fargo Cash Wise Visa Card, which has a cash back rate of 1.5% on all purchases, it’s simple to figure out that your cash back reward on that purchase will be $1.50. When you redeem cash back, you often get to choose how you receive your reward, with most cash back cards offering merchandise and gift cards as options, and some others letting you redeem for travel and entertainment. With a few cards, like the Capital One Quicksilver Cash Rewards Credit Card, you can even set up automatic redemption, so you’ll automatically claim your cash back when you hit a threshold you specify.

If you’re okay with your rewards getting a little more complex in return for bigger yields, some cash back cards also have special bonus categories that earn enhanced rewards. The Capital One Savor Cash Rewards Credit Card, for example, earns and unlimited 4% cash back on dining out and entertainment, 2% cash back at grocery stores and 1% cash back on all other purchases. Although the Capital One Savor Cash Rewards Credit Card doesn’t have spending caps for category purchases, you should know that most other cash back cards do, which means you can only claim so much cash back from them before your rewards get reduced to the card’s base cash back rate. A few cards even have bonus categories that regularly change, but offer huge rewards, such as Discover it Cash Back, which earns 5% cash back (on up to the quarterly limit, currently $1,500 in purchases, then 1%) in categories that rotate every 3 months and 1% cash back on everything else. Cards with rotating categories, like Discover it Cash Back, require you to activate the 5% cash back categories each quarter. Although most cards remind you when it’s time, it does require a bit of extra work, which isn’t something all credit cardholders are willing to do.


With a points card, every purchase you make with your credit card earns points, which can be exchanged for a variety of goods, travel and sometimes even cash back. Also, like cash back cards, many points cards have bonus categories that let you earn enhanced rewards, though maximum reward spending limits are not as common. Compared to a percentage-based cash back reward, though, credit card points are a bit trickier to decipher, since you’re essentially dealing with your card provider’s own currency instead of U.S. dollars. Not all points are worth the same amount, and although some card providers give their points a set value, how you redeem your points can influence how much you get out of them. As an example, the Chase Sapphire Preferred Card has points that are worth $0.01 each according to Chase, but redeeming your points for travel through Chase Ultimate Rewards increases their value by 25% to $0.0125 each. Accordingly, points cards require a bit more attention and comparison than cash back cards.

So, why would you bother with credit card points if cash back is simpler? Well, once you figure out the best ways to redeem your points, you can get a lot of monetary worth out of them. This is particularly true with convertible points, which are credit card points that you can transfer to travel programs your credit card provider partners with to greatly increase their value. Some of the biggest credit card rewards programs let you transfer your points, including American Express Membership Rewards, Chase Ultimate Rewards and Citi ThankYou Rewards (however, note that not all American Express, Chase and Citi (a NextAdvisor advertiser) cards are tied to these respective programs). Each convertible points program has a list of specific travel partners to which you can transfer points, so if this is something that interests you, check with your credit card provider to see which travel programs they partner with.


Out of the three rewards categories, miles may be the trickiest to understand. This is partially because miles cards often earn you rewards that aren’t tied to your credit card, and partially because a lot of travel-oriented points cards rebrand their credit card points as miles. For instance, the Discover it Miles card earns 1.5 miles per $1 spent on purchases, but those miles function a lot like credit card points, since they have a set value of $0.01 per point and can be redeemed for cash back. To keep things simpler, the miles we’ll be focusing on are frequent flyer miles, which you can exchange for flights and do not have a set dollar value.

Miles rewards are common on cards that are co-branded with airlines. There are a couple of benefits to earning rewards with an airline, the first of which is that your miles can be harder to lose. Unlike cash back and points, miles you earn are often associated with your frequent flyer account instead of your credit card account, meaning you may be able to keep the miles you’ve earned even if you close your card. Additionally, co-branded airline credit cards frequently come with other nice perks related to flying, such as lounge access or free checked bags. The downside is that these rewards are not nearly as flexible as cash back or points, because you can only claim them when you fly with a certain airline. Also, some airlines further restrict your rewards by only letting you use miles to book “award seats,” of which there are a limited amount on each flight. As such, these cards can be great for avid travelers, but leave others wanting more.

Once you figure out which kind of reward you like the most, you’ll have no trouble finding a card that gives you benefits you truly value. If you need some help finding the perfect cash back credit card, enter your average purchases into our free Cash Back Calculator to find the right credit card for your spending habits. On the other hand, those who prefer a card that earns miles or points should take a look at our travel credit card reviews to find the right card for you. For more on maximizing your credit card rewards, follow our credit cards blog.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.