Do Credit Card Rewards Really Matter — Or Is Cashback Better?

Two friends are comparing credit cards over coffee.

"You should get this card. 5x points on dining, 3x on online shopping, 2x on groceries. I'm racking up points!"

"How much have you actually redeemed?"

"Well... I haven't redeemed yet. I'm saving up for a flight. But I have like 18,000 points already!"

"How much is that worth?"

Long pause.

"I'm not really sure. But it sounds like a lot, right?"

This conversation happens constantly. Someone excitedly explains their rewards strategy. Then you ask what they've actually gotten from it, and the answer gets vague.

Here's the uncomfortable truth about credit card rewards: they're designed to change your behavior, not make you rich.

And for most Filipinos, especially beginners, the mental energy spent chasing rewards costs more than the rewards are worth.

Rewards Are Marketing, Not Free Money

Banks spend billions on rewards programs for one reason: they work.

Not for you. For them.

Research shows that paying with cards activates the brain's reward centers and dulls the "pain of paying." When you add points, miles, and promos on top of that, the whole system can quietly push you to justify extra spending.

"Para sulit ang rewards."

You've said it. Your friends have said it. Everyone's said it.

And every time you say it, the bank wins.

Because here's what actually happens: you spend ₱8,000 on something you were only planning to spend ₱5,000 on, just to hit a bonus threshold or maximize category multipliers. You earn 800 extra points worth maybe ₱80 in real value.

You spent ₱3,000 extra to earn ₱80.

The math is backwards, but the psychological pull of "maximizing rewards" overrides logic.

This is why behavioral finance research shows that rewards programs can encourage overspending rather than helping you save more.

Want the full picture on rewards? Start here: Credit Card Rewards & Miles in the Philippines

The One Rule Nobody Follows

Rewards only create real value if you never carry a balance and always pay on time.

Always.

Once you start paying interest, the cost wipes out any points, miles, or cashback you earned on those purchases.

Think about it: if you carry a ₱10,000 balance and pay around 3% monthly interest (up to 36% annually, per BSP's cap), you're paying around ₱300 in interest that first month. Your "amazing" 5x points card just earned you maybe ₱50 worth of rewards on that ₱10,000.

You paid ₱300 to earn ₱50.

That's not rewards. That's paying the bank to make you feel good about losing money.

People who focus on rewards are more prone to overspend "for the points" because the brain overweights the small gain (1–5% back) and underweights the much larger cost of the purchase and potential interest.

If you're already juggling balances, dealing with stress, or occasionally paying late, chasing rewards is like trying to invest while you still have high-interest debt.

The structure is stacked against you.

Several personal finance experts now recommend ignoring rewards entirely until you can consistently pay in full and on time for at least 6–12 months, because discipline, not perks, is what actually changes your net worth.

Why Cashback Just Makes More Sense

Cashback is the cleanest, most predictable form of rewards.

₱1 of cashback is simply ₱1 saved. No conversion charts. No expiry dates. No wondering if you're getting good value.

Flat-rate cashback cards that give the same percentage on all purchases (usually around 1–2%) are regularly recommended as the easiest setup for beginners because you don't need to track categories, check conversion charts, or monitor promo calendars.

In the Philippine market, newer cashback products offer up to around 4–8% on select categories like groceries, fuel, or dining. But they still pay you in pesos, not in points with shifting values that banks can devalue whenever they want.

Cashback works with small spending

You don't need to hit huge minimum spends or master airline award charts to feel the benefit.

Liza uses a basic cashback card. Every month, she gets around ₱200–₱400 back automatically. It's not life-changing money, but it's real, it's automatic, and it requires zero mental energy.

Her officemate with a rewards card has 47,000 points accumulated over two years. He still hasn't redeemed them because he's "waiting for the right redemption opportunity."

Those points are currently worth exactly zero pesos in his pocket.

No redemption stress

The lack of "redemption stress" is why many financial guides now suggest cashback as the default for first-time cardholders and anyone who just wants to automate small savings.

You don't need to:

Browse redemption catalogs
Calculate point values
Track expiry dates
Plan redemptions months in advance
Worry about devaluations

The reward simply shows up as a statement credit or cash rebate. Done.

Carlo has been using a cashback card for three years. Total effort spent on "rewards optimization": zero hours. Total cashback received: around ₱32,000.

His friend who optimizes a complex multi-card rewards strategy? Total effort: dozens of hours maintaining spreadsheets and tracking promos. Total value redeemed: maybe ₱45,000.

The difference in value is ₱13,000 over three years. The difference in mental energy is enormous.

When Rewards Actually Make Sense

Rewards aren't worthless for everyone. They're just worthless for most beginners.

Traditional rewards points and miles start to shine only when several conditions are already true:

You have predictable, high spending

Many high-earning travel or rewards cards give the best value at higher spend levels or within specific categories.

If you're putting ₱80,000+ monthly on cards anyway and paying in full, you'll accumulate points quickly enough that the complexity might be worth it.

If you're spending ₱20,000 monthly? The juice probably isn't worth the squeeze.

You redeem efficiently

Airline and hotel points can be powerful, but only if you understand transfer partners, blackout dates, taxes, and the risk that banks can devalue points anytime.

Sofia travels internationally for work every quarter. She knows exactly which cards transfer to which airlines. She monitors sweet spots. She books award flights 6–8 months in advance. She's gotten business class flights worth ₱100,000+ for a fraction of that in points.

For her, the homework is worth it because she genuinely uses what she redeems.

For someone who flies domestic once a year? All that complexity delivers almost no real-world value.

Rewards don't change your behavior

This is the critical one.

Rewards should not change your baseline spending. If you're spending more just to earn points, you've already lost.

Research shows that both cashback and points can encourage overspending, but points-based systems with gamified multipliers tend to be especially tempting because they feel less like "real money."

The point at which rewards truly beat cashback is when you already pay in full, already travel or spend heavily in certain categories, and can treat rewards as an optimization layer — not as the reason you swipe.

If you find yourself thinking "I should buy this to hit my bonus category" or "I need to spend ₱5,000 more this month to maximize points," rewards are controlling you.

That's backwards.

Recognize this pattern? Read: Why Chasing Rewards Can Quietly Make You Spend More

Who Should Pick What

Here's the honest breakdown:

Beginners with one card: Cashback. Simple, predictable, low mental load. You're still learning to pay in full consistently. Don't add complexity yet.
People fixing past debt or budgeting: Cashback or no rewards focus. Easier tracking, no complex redemption games. Fix habits first, optimize later.
Frequent travelers with stable income: Rewards/miles can work. You can learn the systems and redeem efficiently because you'll actually use what you earn.
Promo-chasers who pay irregularly: Neither focus. Fix payment discipline before worrying about rewards at all.

The pattern is clear: cashback is the default. Rewards are the exception for specific situations.

The Question Nobody Asks

Here's what you should actually be asking:

Not "Which card gives me the most points?"

But "What's the simplest system I can maintain without stress?"

Because rewards that add stress aren't rewards. They're unpaid work that happens to give you airline miles you might use someday.

Mark switched from a complex three-card rewards strategy to a single cashback card two years ago.

His total rewards value went down by maybe ₱8,000 annually.

His stress went down significantly. His time spent managing cards went from several hours monthly to maybe 10 minutes.

He considers it the best financial decision he made that year.

Not because he optimized value. Because he optimized his life.

Final Thoughts: Rewards Are a Bonus, Not a Strategy

Credit card perks should sit on top of a solid base: spending within your means, paying in full, and keeping your setup as simple as possible.

Once those habits are stable, rewards and miles can be a bonus.

But if they add stress, push you to overspend, or keep you in debt, cashback — or even no rewards at all — is the smarter choice.

Most Filipinos would be better off with a simple cashback card they actually understand than a "premium" rewards card that requires homework they won't do.

The best rewards program is the one you can ignore while it works automatically in the background.

For most people, that's cashback.

Want to compare specific options? Read: Cashback vs Rewards Cards: What Reddit Users Actually Prefer