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Credit card rewards programs can be confusing—here's the difference between cash back, points and miles

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Earning rewards is one of the biggest perks of using a credit card, but it can also be confusing to navigate the different offers. Credit cards typically provide one of three reward structures: cash back, points or miles.

Each type of reward works a bit differently, and often comes with its own quirks. Below, CNBC Select breaks down the difference between cash back, points and miles, along with tips on how to maximize your earning potential.

Cash back

Cash-back cards offer cardholders a percentage of their spending back. For example, if you have a card like the Citi® Double Cash Card, one of our top picks for cash-back credit cards, you earn 2% on your purchases (1% when you buy and 1% as you pay). 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

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.

For example, points earned with the Chase Sapphire Preferred® Card are worth 25% more when redeemed for travel through the Chase Ultimate Rewards® portal, so 60,000 points would be worth $750. However, if you redeem for gift cards, statement credits or other options, the value of a point varies.

Similarly, miles earned with the Capital One® Venture® Rewards Credit Card are each worth one cent when redeemed for statement credits to cover travel purchases. But redemption rates vary for other options.

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.

What's the best way to redeem points or miles?

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. You can score some great deals with travel redemptions, but you should do price comparisons to maximize rewards.

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.

Are there rules about when and how I can redeem points?

In order to redeem cash back, points or miles, card issuers often require you to reach a certain amount of rewards — typically $25 or 2,500 points/miles. There are select card issuers, such as Capital One, that let you redeem points at any amount.

If you're not sure what card is best for you, take a look at CNBC Select's round-up of the best credit cards of 2019.


Information about the Capital One® Venture® Rewards Credit Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.