Credit card rewards have gained considerable popularity among consumers in the Philippines, especially because of how they enhance the cardholder’s spending power. Generally speaking, credit card rewards are incentives earned for every peso spent using a credit card. They can come in the form of cashback or points that can be redeemed for different benefits, including statement credits, travel, merchandise, or gift cards and vouchers.
With various options available today, the credit card rewards a cardholder is entitled to can cater to a variety of financial and lifestyle-related goals. For example, everyday shoppers might prefer cashback rewards, while frequent travelers might enjoy earning travel points from the best credit card for travel Philippines issuer. Anyone applying for their first or next credit card, particularly because of its reward system, should think about the type of reward that will be most useful to them.
If you’re currently wondering whether cashback or points are best for you, here’s a guide that will help you understand the two most popular types of credit card rewards and how to choose a card with perks that you’ll truly enjoy.
What are Cashback Credit Cards?
First, let’s define what cashback credit cards are. They offer a straightforward reward, which is a percentage of your spending returned to you as cash. This cash can then be applied as a statement credit, thus helping you lower your outstanding balance with the use of the cashback amount.
The Advantages of Cashback Credit Cards
There are many reasons cashback credit card rewards appeal specifically to a large subset of cardholders. At the top of this list is the simplicity of how cashback rewards work. Essentially, for every purchase you make, you’ll be able to receive a set percentage or rebate amount back. For example, if your cashback rate is 2% and you spend PHP5,000, you’ll get PHP100 back.
One great example of a card with a generous and innovative cashback system is Maya’s Landers Cashback Everywhere Credit Card, a two-in-one credit and membership card collaboration with Landers Superstore. Not only does this card make shopping at Landers more rewarding with up to 5% cashback per transaction; it rewards you everywhere, with a 2% cashback whenever you spend for dining and a 1% cashback for every other eligible type of transaction.
Cashback rewards are also very easy to understand and track on the Landers Cashback Everywhere Credit Card. PHP1 equates to 1 point, and users will receive PHP500 vouchers every time they reach 500 points. If you prefer a simple, no-fuss reward system, this one will take much of the guesswork out of what reward you can expect every time you accumulate points. Plus, if your rewards points accumulate quickly and you’d like them to be usable immediately, a cashback card like the Landers Cashback Everywhere Credit Card by Maya is the way to go.
The Disadvantages of Cashback Credit Cards
While there are some noteworthy benefits to a cashback credit card reward program, this system is not without its downsides. Some cashback programs have restrictions on how and when you can redeem your rewards, potentially limiting their usefulness. For example, some cards may only allow you to redeem cashback in increments of PHP 500 or more.
There’s also a limitation to the rewards. Other than the cashback amount, you can’t exchange the reward for other perks, such as travel miles or waived annual fees. You also won’t be able to exchange the cashback for actual cash that you can spend elsewhere. If this type of credit card rewards program doesn’t suit your needs or your preferences for using your rewards, consider other options.
What are Credit Card Reward Points?
Credit card reward points, on the other hand, are points you accumulate for every peso spent. These points can be redeemed for various rewards, including travel, retail merchandise, or gift vouchers for dining or shopping. If your credit card program permits, you can also use the points as annual fee waivers to help you save on credit card fees, cash credits, or donations to different charities.
The Advantages of Points Credit Cards
When you use credit cards that offer reward points, you have a better chance of getting a higher value per peso spent. That’s because some credit cards allow you to earn up to four times the rewards points for each purchase. Take note that this may depend on the spending category, like the credit card’s partner supermarkets, certain shopping malls, or partner restaurants.
All the same, earning more reward points per purchase allows you to earn points faster than usual. If you typically use your credit card to purchase goods and services in certain establishments, credit card reward points are worth considering for these alone.
In addition to getting the opportunity to earn more rewards, you can also redeem your points for a variety of useful things. This provides you with flexibility in how you use your points. You can choose to use them on travel bookings, merchandise, statement credits, and much more.
Moreover, many banks offer non-expiring reward points. This means you can keep accumulating points until you want to exchange them for a specific perk you’ve been eyeing. If you prefer to spend your reward points on large-ticket items like gadgets or airline miles for travel, credit cards that offer points for certain amounts are worth exploring.
The Disadvantages of Points Credit Cards
Reward points systems have their disadvantages, too. For one, the issuer may have a complex system for earning and redeeming points. The value of the points themselves can vary, and different rewards can have different point values.
As a consequence, it may be both more difficult and more time-consuming for a cardholder to figure out the best deals. Plus, the process of redeeming points can also take longer than earning a cashback. After you’ve found the perfect reward to exchange your points for, for example, you may need to send a request to the bank and wait for days or even weeks for your reward to be processed and released.
Sometimes, reward points are also harder to use than cashback rewards. A reward point is not always equivalent to one peso; the reward rate really depends on the bank’s offer. It may actually take you several purchases before you can accumulate the number of points you need to redeem a sizable reward.
Ultimately, both types of rewards come with their own unique benefits, and the best choice for you will depend on how you plan to use your card and what kind of rewards will be most beneficial to your lifestyle. Whether you choose a cashback credit card for its simplicity and immediate benefits or a credit card with a point system for its potential higher value and variety of redemption options, the key is to always match your choice with your needs.