Often, a high-rewards credit card seems like the obvious choice when choosing a card. After all, premium rewards credit cards usually offer attractive benefits such as air miles, hotel privileges, airport lounge access, and other lifestyle perks. Frequent travellers or high spenders may get more value from such cards.
Cashback credit cards, meanwhile, have a simpler reward structure. You earn a percentage back on eligible spending. This type suits people who spend more on fuel, groceries, dining, and online purchases.
As we can see, there is no fixed answer as to which type is better. The suitable choice depends on how you spend, what benefits you use, the fees you pay, and the redemption flexibility. Read on to look further.
Cashback or Premium Rewards Cards: Understand the Difference
Before diving deeper, understand the basic difference between cashback and premium rewards credit cards.
| Feature | Cashback Credit Card | Premium Rewards Credit Cards |
| Primary Benefit | Direct cash rebate on your statement | Points, hotel stays, or air miles |
| Value Type | Predictable, fixed, and instant | Variable, depends on how you redeem |
| Annual Fees | Usually low or 0 annual fee | High fees |
| Additional Benefits | Basic shopping or dining discounts | Golf access, concierge services, travel insurance, and airport lounge access |
| Suitable for | Daily household and local expenses | High spenders and frequent flyers |
Note: The actual value depends on the card’s terms, including eligible categories, cashback caps, rewards expiry, excluded transactions, and annual fees.
When is a Cashback Credit Card a Better Option?
A cashback credit card is a better option than a premium rewards credit card if most of your spending is on predictable everyday bills like daily life categories (fuel, groceries, and utilities).
You Want Simple, Predictable Savings
Cashback gives you an exact percentage back as a direct statement credit. It has a fixed, transparent value that never changes. Premium reward points fluctuate in value based on how and when you redeem them for flights or hotels.
You Have Everyday Spending
If your money goes towards supermarkets (LuLu, Carrefour), utility bills (DEWA, SEWA), fuel (ADNOC, ENOC), education, and dining out, cashback cards offer direct returns of about 1% to 10% in these categories.
Premium cards (like airline co-branded cards or elite-tier cards), on the other hand, yield lower base rates on these basic spending categories.
You Don’t Travel Frequently
Some premium rewards credit cards derive their value from reward structures like airline miles (example: Emirates Skywards and Etihad Guest) or hotel loyalty rewards/discounts.
However, if you fly once or twice a year, you may not collect sufficient air miles. This, combined with these points having an expiry date, high annual fees, and devaluation risk, makes the card unsuitable for you.
You Don’t Want to Pay a High Annual Fee
Several UAE cashback credit cards are free for life or charge a low annual fee. The latter is often waived if you meet the specific spending criteria.
Premium cards usually charge a high annual fee, typically between AED 500 and AED 1,500. So to recover AED 1,000 in annual fees using travel points, you would need to spend extensively or travel frequently.
If you are not a heavy spender or frequent traveller, a cashback card with minimal annual fee is an option.
You Want Flexibility Over Reward Optimisation
With a cashback credit card, your earnings are automatically credited to your card statement every month once you meet the minimum spending threshold. You don’t need to transfer points to partner airline programs or worry about blackout dates.
Cashback credits reduce your liabilities immediately, eliminating the risk of losing the accumulated value. All in all, cashback is clean and instant.
When Does a Premium Reward Credit Card Make Sense?
A premium rewards credit card is a better option only if your monthly spending exceeds standard cashback caps and you use high-value travel or lifestyle perks.
You are a Frequent Traveller
Premium cards, especially travel cards, usually offer unlimited airport lounge access, fast-track immigration services, free travel insurance, and complimentary hotel nights. So if you are a frequent flyer flying out of Dubai and Abu Dhabi, the value of these perks easily outdoes monthly cashback limits.
You Want to Maximise Reward Categories
Premium reward credit cards reward major purchases, such as education fees or international spending, at higher rates without penalising non-MCC blocks as aggressively as cashback products do.
You Want to Redeem Points Strategically
Flexible reward points can earn higher per-point monetary value when redeemed for long-haul flights or luxury hotel stays than a cashback credit on the statement.
You Want to Make the Most of Premium Benefits
Premium credit cards give you free, unlimited access to airport lounges globally, including ones at Dubai International Airport. With premium reward cards, you also get additional perks like free travel insurance, airport transfer facilities, and hotel upgrades. You also get free golf rounds, fine dining privileges, cinema ticket discounts, and more across Dubai and Abu Dhabi.
Cashback or Premium Rewards: Which Will Work the Best?
Cashback is generally for people who prefer direct savings, have frequent everyday spending, and want predictable value. Cashback credit cards do not have high annual fees or complex reward structures either, making them a better fit for those seeking straightforward benefits.
Premium rewards credit cards, on the other hand, offer higher overall value for high spenders, frequent travellers, and consumers who usually use travel, lifestyle, and rewards benefits.
But the promoted reward rates alone do not establish your choice. Also look at reward caps, annual fees, exclusions, eligible categories, redemption values, and other benefits that you’re going to use in real time.
Compare cards on third-party portals like Paisabazaar.ae and see how different card benefits fit your spending needs before applying. With this comparison, you can make an informed decision.
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