Cash Back, Points and Miles: What’s the Difference?

How Cash Back Works

Cash back is generally the simplest way to earn and redeem credit card rewards. That said, some cash back credit cards technically offer points that may provide more flexibility than traditional cash back options. Here are some of the main features:

• Annual fees: Most cash back credit cards don't charge an annual fee, and those that do typically charge less than $100.
• Welcome bonuses: Bonus offers will depend on which card you choose, and some don't offer a bonus at all. Among top cash back credit cards, bonuses range from $100 to $300.
• Rewards rates: Cash back credit cards may offer a flat rewards rate on all purchases, tiered rewards with certain categories earning higher rates or rotating rewards categories that change throughout the year.

• Redemption options: Most cash back cards allow you to redeem your rewards as a direct deposit or statement credit, but some may also let you buy gift cards, book travel, shop online and more. Some cards only allow statement credits, which helps you pay down your credit card balance, but it limits your flexibility.
• Redemption value: In most cases, what you see is what you get: $100 in cash back rewards is worth $100. But with some cards, you may get more or less value, depending on how you use your rewards.
• Other notable benefits: Many cash back credit cards offer introductory 0% APR promotions on purchases, balance transfers or both. Others may offer statement credits on certain purchases, travel and purchase protections, and discounts with certain merchants.
• Credit requirements: Cash back credit cards are available to borrowers across the credit spectrum, though the best ones are typically reserved for people with good or excellent credit.

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How Points Work

Credit card points are a broad category that includes a range of credit card programs. For example, most general travel credit cards and hotel credit cards offer points, but even some frequent-flier programs use the term "points" instead of "miles."

Here are some features of points credit cards:

• Annual fees: Some points credit cards don't charge an annual fee, but high-end options can charge up to $695 each year. More commonly, you can expect an annual fee of around $100.
• Welcome bonuses: Bonus offers will depend on which card you choose, but many are worth $500 or more, and, in some cases, they can exceed $1,000.
• Rewards rates: Points credit cards may offer a flat rewards rate on all of your purchases or tiered rewards with certain categories earning higher rates.

• Redemption options: Your card will determine your redemption options. With general points credit cards, for instance, you may be able to get cash back, buy gift cards, book travel, shop online and more. But with hotel and airline cards, you may be mostly limited to free hotel stays and award flights—typically with the hotel chain or airline the card is through.
• Redemption value: Most points credit cards offer fixed redemption values based on how you use your rewards—for instance, travel may get you 1 cent per point, while shopping online offers just 0.8 cents per point. With hotel and airline rewards programs, however, redemption values may be dynamic and based on several variables.
• Other notable benefits: Depending on which card you choose, you may benefit from several extra features, including 0% intro APR promotions, hotel-specific benefits, other travel perks, discounts with certain merchants and more.
• Credit requirements: Most points credit cards require good or excellent credit.

How Miles Work

In the past, the term "miles" only referred to rewards you could earn with frequent-flier programs. But now, some airlines use the term "points" instead, while some general travel rewards programs use "miles." It can get confusing, but here are the main features:

• Annual fees: A few miles credit cards don't charge an annual fee, but most charge around $100 or more. In some cases, they can go as high as $550.
• Welcome bonuses: Bonus offers will depend on which card you choose, but many are worth $500 or more, and, in some cases, they can exceed $1,000.
• Rewards rates: Miles credit cards may offer a flat rewards rate on all of your purchases or tiered rewards with certain categories earning higher rates.

• Redemption options: Because most miles credit cards are airline cards, your best option is typically award flights. But with general travel cards, you may have more flexibility with other types of travel redemptions.
• Redemption value: General travel cards may offer a flat 1 cent per mile, but with airline programs, redemption values are often dynamic and based on several variables.
• Other notable benefits: Miles credit cards may offer airline-specific perks or general travel benefits.
• Credit requirements: Miles credit cards typically require good or excellent credit.

Frequently Asked Questions

Check Your Credit Before Applying for a Rewards Card

Most of the top cash back, points and miles credit cards are targeted to people who have good or excellent credit. That generally means having a credit score in the upper 600s or higher.

Before you apply for a new credit card—or any type of credit for that matter—check your credit score to get an idea of where you stand. If it needs some work, take time to improve your credit before you submit an application. Then, Experian can help you find rewards credit cards matched to your credit profile.