If you're considering a rewards credit card, you've likely seen offers promising "1% cashback," "2 Nectar Points on all spend" or "3 miles on flight purchases." Credit card rewards are all based on point, miles, or cashback in one form or another. But without knowing the real value of the relevant points or miles, it may be difficult to understand which offers are ultimately best. We've created this guide to help you make heads and tails of credit card points, miles, and cashback offers. You will better understand how each type of rewards program performs against different spending patterns, so you can weigh the features that matter most to your own situation.

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Cashback, Points, and Miles: How do they Differ?

The main difference between cashback, points, and miles is the flexibility they provide to consumers. At their core, all three things work in the same way - make a purchase with your credit card and earn a "thank you" reward (in the form of points, miles, or cashback) from the card issuer.

Points: Rewards points can be redeemed at designated locations for products and services. The precise value of the points varies from program to program and it’s often possible to convert the points between points programs or even into miles for a fee. Some of the most common points programs in the UK are:

• Nectar

• Tesco Clubcard

• Avios

• Amex Membership Rewards

• Marriott Bonvoy

• IHG Rewards Club

Miles: Miles from an air rewards card can be used to get free flights at partner airlines, as specified by the program (well, the fare is "free" but you still need to pay for taxes, fees, and carrier charges for all tickets bought with miles). The value of a mile depends on how you redeem your miles and can be anywhere from £0.002 to £0.03 per mile or more. Typically the miles redeemed for long and costly flights are worth more than the miles used for short, economy class trips. As a very rough-and-ready guideline, 1p of value per mile is a reasonable benchmark on most of the large air rewards programmes.

Cashback: Cashback is the most flexible and easiest-to-use rewards system. Cashback credit cards return a percentage of your spending made using the card. Beware that the percentage reward can vary by spending location (e.g., the Partnership card pays 1.25% on Waitrose/John Lewis spending but just 0.1% on out-of-store spending). This is typically the case for store-branded rewards cards. Cashback is either paid as statement credits or store vouchers.

Cash back, Points, or Miles: How They Compare

As a general rule, points and miles can be worth more than cashback, though extracting that value requires understanding how the specific program's redemption structure works. In the case of miles, it also takes money to earn money - miles are usually worth the most when you use them to upgrade to business/upper class seats, but this requires first paying for a full premium economy fare (not a discounted economy fare.) Keep in mind also that some points programs require you to earn or use points every year or else you forfeit all earned points. Getting the most from points and miles programs usually takes some time to learn how the rewards structure works and where the best redemptions are.

Cashback may initially appear to offer lower potential rewards rates, but points and miles are only valuable if they're actually redeemed. Since cash back rewards can be used immediately after receiving them, the decision between cash back and miles depends in part on how frequently you can redeem your points or miles. For those who don't fly often enough to make use of reward miles, cash back tends to deliver more usable value. Eligibility, value and suitability depend on the provider’s criteria and your circumstances.

Compare Reward Rates: Cashback vs. Points vs. Miles

Imagine you're considering three different rewards cards, thinking, "For every pound spent, I could earn 1% cashback, 2 Nectar Points, or 1.5 miles - which is better?" To decide which rewards card offers the more attractive returns on your spending, it is necessary to compare the cards on equal footing. To measure the card's efficiency (i.e., how much money do you get back as rewards for the money you spend), we calculate a figure called the rewards rate. By expressing all rewards as a rewards rate, we can compare across cashback, points, and miles. For example, if one card refunds me 2% of my expenditures while another card gives me 1%, the first card is more valuable.

The first step to calculate the rewards rate for a points or miles card is to figure out the worth of the underlying miles or points. To figure this out, you have to find out how many points or miles are required to redeem a prize. In order to calculate the pound value per mile or point (£/mile or £/point), divide the pound value of the said prize by the number of miles or points needed. For example, a recent search of premium economy round-trip flights from London to New York on Virgin Atlantic found off-peak fares around £700 - £1,000, which you could pay for with ~22,500 - 55,000 miles. The value of a mile in this case is roughly in the range of 1.8p - 3p/mile.

To translate the £/mile or £/point into a rewards rate, you need to take into account the terms of the card regarding the number of points or miles you'll earn for every £1 you spend. For instance, the Virgin Reward+ card gives you 1.5 Virgin Points per £1 spent on general spending using the Mastercard. If we assume for a moment that you will redeem you Virgin points achieving a value of £0.015/mile, that means you could theoretically earn a rewards rate of 2.25% (1.5 x £0.015 per £1 spent) on your everyday spending. (Keep in mind that the actual rewards rate achieved may be lower.)

Finally, you may earn more points or miles in different categories, e.g., on money spent on flights. Going back to the Virgin Reward+ example, cardholders earn twice the rewards rate on Virgin Atlantic or Holidays spending (3 miles per £1 spent). If you understand how your monthly expenditure is distributed among the various categories, you can figure out your rewards rate - it will be different for everybody. This kind of analysis makes it possible to compare rewards cards on equal footing.

Supermarket Loyalty Integration

Several supermarket chains have strengthened their credit card offerings by tightening integration with their loyalty programmes. For example, the American Express Nectar Credit Card earns 2 Nectar points per £1 spent (3 points with Nectar partners, which include Sainsbury's), with a welcome bonus of 20,000 Nectar points when you spend £2,000 in the first three months. Importantly, Nectar points can be converted to Avios at a rate of 400 Nectar points to 250 Avios, providing an indirect route to airline miles.

Meanwhile, Tesco Clubcard points can be converted to Virgin Points at a 1:2 ratio (e.g. you earn 1 Clubcard point per £1 spent in-store, and each of those points converts to 2 Virgin Points), making Tesco spending valuable for Virgin Atlantic flyers even though the cards themselves don't directly earn airline miles. Virgin occasionally runs bonus conversion periods offering a higher ratio for a limited time.

New Options for Airline Miles Collectors

Airline miles enthusiasts now have more choices beyond traditional airline co-branded cards. The Barclaycard Avios Plus Mastercard launched in 2022, offering 1.5 Avios per £1 spent (compared to 1 Avios per £1 on the free Barclaycard Avios card). The card charges £20 monthly (£240 annually) but offers a substantial welcome bonus of 25,000 Avios when you spend £3,000 in the first three months. Additionally, cardholders who spend £10,000 in a year receive a valuable cabin upgrade voucher.

The HSBC Premier World Elite Mastercard provides another flexible option, allowing cardholders to transfer points to multiple airline programmes including British Airways, Emirates, Qatar Airways, and Singapore Airlines, giving travellers the ability to shop around for the best redemption value across different airlines.

Details correct as of 09 September 2026. Terms, rates and features are subject to change — always verify current details before applying. This article is for general information only and does not constitute financial advice.