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Your Take: Credit Card Cashback or Reward Programs?

In the pantheon of credit card reward programs, you have two types: cards that offered straight cash back or cards that offered points that could be redeemed for rewards. Until the last year so, I’d always used a cash back credit card [3] rather than a points reward card because I wanted the discount. 5% cash back is a 5% discount, 5% in points might be a 5% discount if the reward program offered rewards I would’ve otherwise purchased with cash, but there’s never a guarantee. With 5% cash back, I’m guaranteed to get the maximum value out of it.

Last year, I signed up for the American Express Business Gold Rewards card [4] because I needed a business credit card to segregate expenses (their sizzling hot $250 promotion [5] helped too) and kept using it because it offered 5% off Yahoo products such as their advertising network. Without the 5% off (this was a direct discount, not 5% in points), I don’t know if I’d still be using it because it’s a rewards card that gave you 1% in points.

One side effect of my business spending is that we’ve been able to convert those points into gift cards at restaurants we normally would go to (though we wouldn’t go as often without them!). One such restaurant is Roy’s [6], a well-known Hawaiian fusion restaurant chain located near the Inner Harbor of Baltimore. In fact, we used those cards twice in Hawaii (once in Kauai and once in Hawaii Kai, Oahu) to entirely pay for our meals.

I can see the allure of these types of rewards program though, you get to enjoy all of the spending without any of the guilt. 🙂

What’s your take on different programs? Are you a strict cash back person or do you like rewards? Both? It depends?

(Photo by crispyteriyaki [7])