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Points card or cash back: which one actually pays?

Points look richer than cash for one precise reason: everyone counts them at brochure value. This page counts them at the value you actually bank, fees and lost points included, next to a benchmark nobody gets paid to sell you: flat 2% cash at $0 a year.

Verified July 10, 2026 No affiliate links Your numbers, not ours

By Ahmed Squalli, Studio Squalli, Montréal

Verdict

For most people, a good cash back card beats the points card, because cash pays 100 cents on the dollar, immediately, with no redemption grid, no devaluations and no expiring points. The points card only wins if you redeem consistently at high value, usually long-haul premium-cabin flights, and its annual fee is covered by perks you genuinely use.

The sleight of hand

Why do points look so lucrative?

A cash back card advertises a flat number: 2%. A points card advertises a possibility: "up to" so many cents per point, computed on the best redemption in the grid, the one almost nobody makes. Between those two numbers sits everything the brochure does not count: the real value of the redemptions you actually make, the points that sit idle and eventually expire, the devaluations decided after you earned, and an annual fee paid in real dollars while the reward stays virtual.

None of those four holes appears in the marketing, and comparison sites, paid per premium-card referral, have no reason to add them up. It is simple arithmetic. Here it is.

The calculator

What are your points actually worth?

Enter your program's numbers. The first line shows what the brochure tells, the second what you bank, the third the free benchmark.

The points-value calculator Your program, in banked dollars
Everything you would put on the card in a year, in Canadian dollars.
The earn rate your program advertises, points per dollar of spend.
The value the brochure implies, usually the best redemption in the grid.
What you actually get on the redemptions you actually make.
Charged in real dollars, every year, before any point is redeemed.
Expired, orphaned or forgotten. Loyalty programs count on this.
Result, dollars per year
  1. The points card, as the brochure tells it On paper
    $480/ yr

    30,000 points at the advertised value, fee $120

  2. The points card, as actually redeemed The gap
    $204/ yr

    at 1.2 cents per point, 10 % never redeemed, fee $120

  3. A flat 2% cash back card, $0 fee Winner
    $480/ yr

    no points, no grid, no expiry

Cash wins: $480 against $204 actually banked by the points card. The brochure promised $480; the difference is the business model.

How to read this
  • The defaults are illustrative, not any specific program. Enter your own earn rate, values and fee; the point of this tool is your numbers, not ours.
  • Realistic value means the cents per point you get on the redemptions you actually make, not the best case in the redemption grid. For most people redeeming for statement credits or gift cards, it is well below the advertised number.
  • The flat 2% benchmark exists in Canada at $0 a year; see the Rogers Red World Elite review. Fees are charged in dollars every year, while points can be devalued after you have earned them.
  • Not modelled: welcome bonuses (one-time, both kinds of cards have them) and travel perks like lounge access, which are worth real money only if you use them.

The four leaks

What does the brochure leave out?

Redemption value, first. The advertised value assumes the perfect redemption; cashed out as statement credits or gift cards, the way most people redeem, the same points are often worth half. Devaluations, second: a program can rewrite its grid overnight, and points you already earned are suddenly worth less without your signature on anything. Cash cannot be devalued.

Breakage, third: forgotten, orphaned and expired points are so predictable that loyalty programs build them into their business model. And finally the fee asymmetry: annual fees are paid in hard dollars every year, whether you travelled or not, while the reward accrues in a private currency whose exchange rate the issuer controls.

The honest exception

When does a points card genuinely win?

That person exists. They travel often, redeem for long-haul business class where the cents per point really do climb, never let a point sit idle, and use enough of the travel credits and lounge visits to cover the annual fee with spending they would have done anyway. If that is you, the calculator above will confirm it with your own numbers, and you do not need our blessing.

For everyone else the benchmark is brutal: a flat 2% cash card with no fee exists in Canada. Before accepting points, demand that they beat that number once converted into banked dollars. See the Rogers Red World Elite review for the benchmark, and the Wealthsimple Privilege review for its no-conditions 2% rival.

The method

How this math is done

The calculator is deliberately program-agnostic: it targets no specific program and uses only the numbers you enter. The defaults are illustrative. Welcome bonuses are not modelled, because they are one-time and both kinds of cards offer them; travel perks are not modelled either, because their value depends entirely on your usage. This is not financial advice, it is arithmetic.

This page is a Studio Squalli labs demonstration, with no affiliate links and no paid placement. All the analyses live on the Labs page.

Sources: no external data; the math uses only the numbers you enter. The 2% benchmark is documented in the Rogers Red World Elite review.