While both the options have pros and cons, pick the one that suits your spending limits and habits

 

I t is difficult to ignore the conven ience of a credit card. It is not only a safer option compared to cash transactions, but also offers benefits in the form or rewards or cash-back options. However, picking up credit cards randomly can defeat the purpose of the benefits. Make the most of them before you opt for one.

CASH BACK:

In the case of a cash-back card, you get back a fixed percentage of the amount you have spent every time you swipe it. The amount varies for various banks and card issuers may notify you about the changes in their offers from time to time. Besides, most banks set a minimum transaction amount on their cards to qualify for the benefits and have a cap on the cash they return to the customer. Our bank lets you adjust the cash-back amount against that due for the next month's bill

REWARD POINTS

Like cash-back cards, you can accumulate reward points on card purchases. For every `100-150 you spend on your card, you get 1-5 points.If you do not redeem your reward points in time, they might lapse.

HOW TO PICK THE RIGHT CARD

Both have their own advantages and limitations. The good part about cash back is that most banks automatically adjust it against the outstanding bill amount.

However, rewards points have to be redeemed against products. As far as indus try numbers go, only 35-40% of rewards points are being used. Most cash back cards come for specific spending categories, such as dining and entertainment. If you spend across categories, generic reward point cards work well. However, your choice of cards should depend on how much you spend on it and for what (see graph).