By now, most people have a general idea of what a credit card is: a physical card that you use for purchasing goods and services. The card allows a person to make purchases without cash or checks, and has a feature that allows the cardholder to pay for goods and services over time. This is usually done through a monthly payment plan, which is facilitated by the issuer of the credit card. Â However, there are other ways for cardholders to use their cards.
Here we compare Cashback vs Air Miles vs Rewards Credit Cards in UAE for 2022.
Knowing the meanings of these terms and being able to distinguish between them will help you make more informed and smarter decisions about which credit card is best suited for your lifestyle and needs when it comes time to apply for one.
| Cashback | Air Miles | Rewards | |
|---|---|---|---|
| Mechanics | Receive X% in cash automatically to offset your next bill payment | Earn X miles per dollar that you can redeem for flights/rewards | Earn X points per dollar that you can redeem for rewards |
| Pros | Hassle-free | Value of miles usually higher than cashback Usually no cap limits to mile earnings | Value of rewards might be higher than cashback Flexibility of choosing between rewards, cash rebates or miles depending on card |
| Cons | Cashback caps may apply Min. spend may apply | Miles rate changes Conversion fees/min. spend may apply Expiry dates | Redemptions usually restricted at merchant partners Expiry dates |
Cashback Credit Cards
Many banks now just use the term “cashback†for different types of cards, but it’s important to understand how each one works before you decide which is right for you. With a cashback card, you’ll earn a percentage of what you spend back in cash, which is deposited directly into your account. With a cash rebate card, you’ll earn points for every dollar you spend, which can be redeemed for cash or merchandise. So before you apply for any type of cashback credit card, make sure you know how it works so you can take full advantage of the rewards!
A simple breakdown of how cashback credit cards work is as such:
- An item costs $100
- I am using a card with 5% cash back.
- $100 is charged to my card
- $5 is then used to offset my credit card bill for the next month
In short, a percentage of your monthly spending is used to offset your next credit card bill
Pros of cashback credit cards
- Cashback is a simple mechanism that directly benefits one’s pocket with no fancy effort needed
- Cashback is ultimately money that can be used to purchase multiple things
- The amount is directly back to the credit card account, hassle-free
Cons of cashback credit cards
- To maximise cashback there is usually a list of requirements to meet which can include minimum spending on certain categories per month
- There is usually a cap to the amount of cashback one can receive
Pro Tip: For the most hassle-free experience, you can opt for unlimited cash back cards that give you cashback with no exclusions.
Who should apply for a cashback credit card?
- Those who prefer flexibility with cash and don’t want to be stuck in loyalty programmes or worry about expiry dates
- Those who don’t spend much and cannot justify the time and money required to accumulate miles or reward points
- Those who prefer a hassle-free experience as air miles/rewards cards require monitoring, converting and redeeming
Air Miles Credit Cards
A simple breakdown of how air miles card work is as such:
- An item costs $100
- I am using a credit card for air miles
- $100 is charged to my card
- Miles/points are credited to my card account and subsequently your frequent flier membership thereafter (eg. Krisflyer miles) to be redeemed for flight tickets
In short, one is rewarded with air miles for the amount spent on the miles card.
Pros of air miles credit cards
- The value of miles is usually higher than that of a cashback credit card
- There is often, no cap limit to the maximum amount of miles one can accumulate
Cons of air miles credit cards
- Miles can only be spent on travel-related items such as air tickets or rewards but at an abysmal rate
- Miles rate and value change from time to time
- There is usually an expiry date for miles (3 years for KrisFlyer Miles)
- There are usually conversion fees to change your points into miles (unless you use a KrisFlyer card)
- You’ll have to learn how to play the miles games which include knowing the best way to earn miles and redeem them to get the most out of your miles
Who should apply for an air miles credit card?
- High spenders and frequent flyers as it will be easy for you to accumulate miles and redeem them for flights
- Those who have a big-ticket purchase coming up and want to get the most value out of it
Rewards Credit Cards
A simple breakdown of how rewards for reward credit card work is as such:
- An item costs $100
- I am using a credit card with a certain rewards points system (usually a standard rate)
- $100 is charged to my card
- Rewards points are credited to my card account
- One can go to respective merchants to claim the reward.
Pros of rewards credit cards
- At times, the value of rewards points can be higher than the cash value
- The flexibility of choosing between rewards, cash rebates or miles depending on the card
- Possible offers or gifts exclusively for members under the rewards points system
Cons of rewards credit cards
- Reward redemptions are usually restricted to merchant partners
- Rewards points may have an expiry date
Who should apply for a rewards credit card?
- High spenders as it will be easy for you to accumulate points and redeem them for rewards
- Those who prefer to have a choice between miles or cashback as some cards let you redeem your points for cash rebates or air miles.
In conclusion, choosing between cashback, air miles, and rewards credit cards in the UAE depends on your personal spending habits and preferences. Each type of card has its own benefits and rewards program that can help you save money and earn points or miles.
If you prefer simple and straightforward savings on your everyday spending, a cashback credit card may be the best choice for you. On the other hand, if you like to travel frequently, an air miles credit card can help you earn rewards that can be redeemed for flights, hotel stays, and other travel-related expenses.
Lastly, if you want a more versatile rewards program that allows you to earn points on all types of spending, a rewards credit card may be the way to go. These cards often offer a wide range of redemption options, including shopping vouchers, gift cards, and more.
No matter which type of credit card you choose, it’s important to compare your options carefully to find the best deal for your needs. We encourage customers to visit Compare4Benefit’s website for more credit cards, credit card offers, and other credit card services that can help you save money and earn rewards in the UAE.
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