Cashback VS Rewards Cards: Which Is Right For You?

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Imagine standing in line to grab your lunch, and the person in front of you pays with a shiny new credit card.

You overhear them mention how they just earned cashback on their order, while their friend talks about racking up points for a future vacation.

Suddenly, you start wondering if you’re missing out. Should you get a cashback card? Or would a rewards card be better for your lifestyle?

Choosing the right credit card can make a huge difference in maximising your benefits. Whether saving on daily expenses or earning reward points, the right card should complement your goals and spending habits to unlock valuable perks and savings.

The choices seem endless, and it’s easy to feel overwhelmed, especially if you’re new to credit cards. Thankfully, understanding the key differences between cashback and rewards cards isn’t as complicated as it may seem.

So, are you better off with cashback or rewards? Let’s take a look.

What are cashback cards?

Cashback cards are simple: You get a percentage of your money back for your purchases, almost like a built-in discount on everything you buy. The cashback is usually credited directly to your card, automatically offsetting your future bills.

Cashback cards are appealing because of their simplicity, and you don’t have to worry about tracking points or managing expiration dates.

With the rising costs of living, having a card that gives you something back on essentials like groceries, dining, or even online subscriptions helps make a difference in your wallet.

If you’re a digital-savvy young professional who regularly shops or orders goods online, books trips abroad, and uses mobile payment for daily transactions, the UOB EVOL Card is a great fit.

You get 10% cashback on online spending, mobile contactless payments, and overseas in-store FX purchases made while travelling. It rewards you for your typical spending habits, giving you cashback to offset your bill so you don’t need to track expiry dates and redeem points.

One thing you’ll need to note when it comes to using cashback cards is that there could be a cap on how much cashback you can earn on your card. This means that once you reach a certain amount in a particular category, you may no longer earn cashback on your additional spending.

Additionally, some cards come with minimum spending requirements, which require you to spend a certain amount each month to qualify for the cashback. If your monthly spending is inconsistent, you may not get the full benefit of the card.

When to choose a cashback card

Cashback cards are perfect if you’re looking for straightforward savings on your expenses that match your lifestyle and spending habits. These cards are also suitable for individuals looking to get their first credit card due to the relatively simple usage and benefits.

And if you have consistent monthly expenses, like dining or transportation, a cashback card could help you save without much effort.

What are rewards cards?

Rewards cards, on the other hand, let you earn points for every dollar spent, which you can later redeem for things like travel, gift cards, merchandise, and more.

The key here is maximising the value of your points by using them strategically – think flight tickets, vouchers for electronics, or premium experiences.

Imagine you’re planning a big trip or want to purchase a big-ticket item; a rewards card would allow you to accumulate points while planning for a holiday.

Additionally, rewards cards often come with an extensive catalogue of redemption options. This flexibility makes rewards cards appealing to those who want more than just a straightforward discount on purchases.

Moreover, there is often no minimum spending requirement, which adds to the convenience for people who want to earn points on any purchase, big or small.

For instance, the UOB Preferred Platinum Visa Card allows you to earn up to UNI$10 per S$5 spent on selected online shopping and entertainment as well as mobile contactless spend. The UNI$ can be used for a variety of rewards, including travel perks and shopping vouchers.

However, rewards cards can be more complex to use and to maximise.

To get the most out of the card, you need to know how and when to redeem your points to avoid them losing value over time.

Unlike cashback, points can expire, so if you’re not diligent, you may miss out on redeeming them altogether.

Additionally, bonus rewards programs often come with caps on the number of bonus points you can earn after a certain spending amount.

For instance, some rewards cards cap your bonus points to the first $1,000 spent on your card in a calendar or statement month. You may still earn points on your spend above your first $1,000, just not the bonus ones.

Also, the value of points might vary depending on what you’re redeeming them for.

When to choose a rewards card

If you’re someone who loves to travel or is planning for a big purchase that exceeds the cashback monthly cap, a rewards card might be your best bet.

These cards work well for those who are willing to invest a little time into learning how to maximise their points.

They’re also great if you enjoy redeeming points for experiences like hotel stays, flights, or even premium merchandise. As these items and experiences tend to come with a larger price tag, using points to offset your purchase can save you up to thousands of dollars!

Which one is right for you?

Ultimately, the right choice depends on your spending habits and goals. Here’s a quick comparison to help you decide:

Content sponsored by UOB

UOB offers a variety of credit cards that suit your unique needs and lifestyle:

• Cashback: Choose the UOB EVOL Card or UOB One Card for fuss-free and faster savings on essentials like groceries, dining, and online purchases.
• Rewards: Consider the UOB Preferred Platinum Visa Card or the UOB Visa. Signature Card for flexible rewards and exciting redemption options.

Alternatively, a supplementary card can also be given by working adults to retired parents, their spouses and any of their loved ones.

As a supplementary cardholder, you’ll enjoy the same benefits as the principal cardholder, contributing to their total spending and accelerating the cashback and rewards earned by the principal cardholder.

Don’t miss out on sign-up bonuses too. Here are the current sign-up promotions for each card (valid till 30 November 2024):

1. UOB EVOL Card: Get a GoPro HERO13 worth S$590 for new-to-UOB Credit Cardmembers who spend a spend a minimum of S$800 per month for the first three months. SMS registration required.
2. UOB One Card, UOB Preferred Platinum Visa Card, and UOB Visa Signature Card: Get an AirPods Pro and AirTag (2 units) worth S$439 for new-to-UOB Credit Cardmembers who spend a minimum of S$1,000 in the first 30 days of card approval and for paying the first-year card membership fee. Or get S$350 cash credit for new-to-UOB Credit Cardmembers who spend a minimum of $1,000 a month for two months. SMS registration required.
3. UOB Visa Supplementary Card: Get a HomePod mini worth S$140.25 for new supplementary Cardmembers who spend a minimum of S$2,500 within the first two months of card approval.

Apply now to start earning when you spend! Terms and conditions apply. For more information visit UOB here.