.CNBCselect breaks down the difference between cash back, points and miles, along with tips on how to maximize your earning potential.
, you earn 2% on your purchases . A $100 purchase effectively earns $2 cash back.
These cards are the most straightforward type of rewards card and don't require a ton of effort to collect and redeem your rewards. Cash back can conveniently be redeemed as a statement credit to offset purchases.Points and miles rewards cards are a bit more complicated. The value of one point or one mile isn't always equal to one cent. They might be worth more or less than a penny depending on the credit card you have and the way you redeem rewards.
Points and miles cards give cardholders more redemption options than cash-back cards but typically require you to put in some effort to find the best deal. You can usually redeem points or miles for gift cards, travel, merchandise and statement credits.Gift cards are usually the simplest choice, with one point/mile often worth one cent. Things get tricky when you look to redeem points or miles for travel, merchandise or statement credits.
Redeeming for merchandise through your card issuer's rewards portal isn't always the best value since items can be priced above retail cost. And unlike cash-back cards, it's rarely a good idea to redeem points or miles as a statement credit for your rewards credit card since the value of one point/mile is often much less than a penny.
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