What's the Difference Between Cash Back, Points, and Miles?

We know you’ve heard about cash back, points, and miles being awarded by credit card issuers. In this article, we will explain the difference.

It feels good to be rewarded for something you may have to do anyway. In the case of credit cards, some issuers will reward you for using their card. The real question is how do you decide what reward system is right for you?

This Means Real Money

Whether it is cash back, points, or miles, your credit card rewards are tabulated based on how much and where you use the card. Signing up for a rewards card means that you will be given either cash back, points, or miles based on your spending. The simplest of these options is cash back.

Cashback means that you will get a percentage of your spending back at the end of the billing cycle, or sometimes, at the end of the year. This percentage can be 1%-5% and may depend on what you are using the card for. A great example would be a card that rewards you for dining out. Those meals may reward you with 3% cash back on that particular bill.

The Value of Points

While cashback is the simplest form of reward, points systems aren't much more difficult. The main difference points have versus cash back is that they have no cash value. The points usually have to be traded towards goods or services offered by the credit card issuer.

Points can be earned by spending, but some spending may be favored over another, depending on what promotions are being offered. Your card may offer 2x points to specific retailers, giving you an opportunity to stock up points. In turn, these points may lead to free meals, free clothing, or even bill credits applied to your credit card.

The Value of Miles

Miles are usually associated with travel credit cards and are a form of the points system. The miles you are awarded are not literal travel miles. They are calculated based on each specific card issuer's system. For example, if you have 500 travel miles earned, it may calculate out to $50 in associated travel expenses.

Every card can be different, so make sure to research how the miles are earned and what they are worth. Miles are almost always associated with travel and travel cards, while points are a more general reward system. If you are ready for a life of travel, then earning miles may be your best bet.

Different Rewards For Different Cards

No matter which rewards card you pick, the credit card issuer intends to incentivize you to spend more with that card. They make deals with retailers, restaurants, airlines, hotels, and anywhere else that they feel will benefit you as a consumer. This mutually beneficial system means that you get the goods and services you require with the added bonus of a reward soon after.

Make sure you pick a rewards card that suits your spending and how you like to be rewarded.

  • Cashback for cold hard cash
  • Points for their ability to trade for goods and services
  • Miles for lessening the expense of travel or earning free trips

No matter which system you choose, being rewarded for your regular spending feels good.

Ready to find the perfect card?
Ready to find the perfect card?
Compare cards for all credit ranges.
Advertiser Disclosure:

The credit card offers that appear on this site are from credit card issuers from which CardGuru.com receives compensation. This compensation may impact how and where products appear on this site, including the order in which they may appear within listing categories. CardGuru.com does not include all credit card offers that might be available to consumers in the marketplace.

Editorial Note:

Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.