Rewards programs are everywhere: They’re advertised by most credit card issuers, and you can’t do much shopping for a new card without being faced with a choice between points or cash back rewards.

But which one is better?

That answer often boils down to purely personal preference, but there are some things to consider when choosing between cash back or points.

The Case for Points

Rewards points are doled out by card issuers on the basis of how much money you spend using your card. For instance, spending $2 on any item might earn you one point while spending $2 on travel might earn you two points. The number of points given out and the way in which they are distributed varies from issuer to issuer and card to card.

Rewards points certainly have several pros:

• The seemingly endless supply of prize options. You may not ever save up enough points to redeem that motorcycle, but winning it would be possible in theory. Some of the lower-dollar items are also useful, ranging from gift cards to iPods or music downloads.

• The feeling of accomplishment. Unlike when you meet requirements to earn cash back, there is a distinct feeling of accomplishment that comes along with racking up 1,000,000 points for that new barbeque grill. The race to pick up points feels almost like a giant game.

The Case for Cash Back

Card issuers have scaled back their cash rewards programs to save money in light of the recent CARD Act, which hurt their bottom lines. But if you shop around you can still find banks willing to give you cash in return for your business.

Here are the pros of earning cash back from your card:

• You can choose what to do with your money. Sure, points programs offer a huge selection of nifty gadgets and helpful gift cards, but you can spend your cash back sum on anything you please.

• Better deals exist outside of points plans. If you take your cash and head over to instead of enrolling in a points rewards plan, it’s a near guarantee you can find a better deal, considering the low worth of points as compared to money.

• Instant gratification. Instead of building up a fortune of points until you can finally start buying things, a cash back deal gives you all your money at once. That time often comes two or three months into your contract to ensure you have completed the necessary steps, but earning cash back is a much less active way to earn than is piling up points.

For a rundown of the best card rewards programs and bank deals, click here.

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