Loyalty Credit Cards vs Cashback Credit Cards

This card gives you more cashback than any other major Australian credit card

Learn the pros and cons of loyalty credit cards vs cashback credit cards. Understand how they work and how you can benefit from your spending on them.

It is easy to become disoriented when deciding between loyalty credit cards vs cashback credit cards. The division is not clear-cut, for starters. Some loyalty programs include a cashback element, and some cashback programs work on a loyalty basis, such as the Citibank BP MasterCard.

What is a loyalty credit card?

This is a credit card that has a rewards program that awards extra points when the customer purchases goods or services through a specific company or partner companies. The rewards that are then available are often related to a specific company or partner companies. However, a loyalty credit card does not restrict the customer to a certain brand or marque; it just rewards more highly when your money is spent on them. You can actually earn money on all your purchases with a loyalty credit card. Equally, your choice of rewards will generally include far more than the option to redeem for products or services related to the named company or partner companies

So if you are struggling with loyalty credit cards vs cashback credit cards because you feel you don’t want to be limited, this should not actually be an issue. Information is always available on the related rewards websites showing you exactly how the program works and how versatile it is.

The drawback with loyalty credit cards is that the dollar value of the points you earn can vary, so you must dig a little deeper to see how your spending will actually translate back into dollar value when you come to redeem your points.

You can normally spot a loyalty credit card because it will be obviously named, such as the Woolworths Everyday Money™ credit card. Another retail example would be the David Jones American Express credit card. Any frequent flyer credit cards from Qantas and Emirates would be classed as a loyalty credit card.

What is a cashback credit card?

As the name suggests, this is a credit card that rewards your spending with a return of some credit to your card account, or cashback in cheque form. This may be an option within a more general rewards scheme, or the card may be specifically for cashback only. These cards can work two ways: either it will be a simple matter of you receiving back a stated percentage of your spending, or your spending will accumulate points that are then translated into a dollar value for cashback. You clearly need to know what this translation is.

Examples of cashback cards currently on the market are the Commonwealth Bank Awards Card and the appropriately-named Citibank BP Credit Card, which offers 5% cashback for the first $600 you spent per month at BP and 0.5% off everything else you buy anywhere.

When it comes to loyalty credit cards vs cashback credit cards , your decision should be based simply on what you want as a reward for your spending, and then you will have to locate which card in your chosen category gives the best deal.

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Popular Credit Card Offers

			Interest Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Cash Advance Rate (p.a.)
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	ANZ Platinum Credit Card	An introductory interest rate offer on balance transfers and purchases, plus a $0 first year annual fee.	0% for 6 months (reverts to 19.24% )	0% for 6 months	$0 annual fee for the first year( $87 thereafter)	20.99%