Travel rewards vs. cash back: How to choose the right card for you

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In a Nutshell

Frequent flyers are likely to benefit from a travel rewards card. For most others, a cash back card offers simpler and more flexible rewards.

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At a glance: Our favorite travel and cash back cards

Great for travel rewards with flexible redemption Chase Sapphire Preferred® Card
Great for flat-rate cash back Citi® Double Cash Card
Great for cash back at U.S. supermarkets and U.S. gas stations Blue Cash Everyday® Card from American Express

With their impressive benefits, travel rewards credit cards can be a tempting draw. But is a travel card really better value than a cash back card?

Not for everyone, it turns out. Depending on your travel and spending habits, you might get more value from a cash back card — even while traveling.

Read on to learn all about travel and cash back cards. We’ll dive into the pros and cons of each and answer some common questions to help you determine the right type of card for you.

What’s so great about travel rewards cards, anyway?

It’s not just hype. The most popular travel rewards credit cards tend to have great perks, starting with rewards structures that typically earn anywhere from one to two points or miles per $1 spent. In some cases, you can earn even more – for example, the Platinum Card® from American Express offers five Membership Rewards® points for every $1 spent on flights booked directly with airlines or with American Express Travel.

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Platinum Card® from American Express

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On top of that, travel rewards cards often have no foreign transaction fees. A typical foreign transaction fee amount is 3% of each purchase you make, so not having one can add up to significant savings if you frequently travel abroad.

Travel cards may also come with a variety of other perks, such as priority boarding, a free checked bag on certain flights, airport lounge access, and even an annual companion fare.

What tends to get the most attention, though, are the impressive sign-up bonuses associated with travel rewards cards. With the Chase Sapphire Preferred® Card, for instance, you can earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s enough to cover up to $750 toward travel when you redeem through Chase Ultimate Rewards® — and it’s hardly uncommon for travel rewards cards to offer bonuses of this magnitude.

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Chase Sapphire Preferred® Card

From cardholders in the last year

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The catch? You’ll usually have to make sure you can spend enough within a limited time frame to qualify for such a bonus. We don’t recommend stretching your budget — and risking not being able to pay off your full monthly balance on time — just to qualify for a big sign-up bonus, tempting as it may be.

OK, but what about cash back cards?

Some popular cash back cards offer 1 to 2% cash back on all purchases, and some even offer higher cash back rates for specific categories, such as gas and groceries.

They may also offer sign-up bonuses after spending a certain amount on purchases with the card shortly after account opening, but these bonuses are typically smaller than the ones offered by travel rewards cards. But if you’re not looking to spend a lot in order to reach the spending threshold for the sign-up bonus, a cash back card may be a better choice for you.

When compared with travel card perks, cash back perks can seem a bit sparse — maybe even a bit unexciting. But if you’re not a frequent traveler, a simple, straightforward cash back card is something to seriously consider.

So, which type of rewards is right for you?

If you’re still debating between travel rewards and cash back, here are some questions to ask yourself before taking the plunge. If your answer to most of these questions is a strong “yes,” you’ll likely benefit from a travel card. Otherwise, you may find a cash back card to be a better value in the long run.

1. Do you travel often?

This seems obvious, but if you don’t travel frequently, a cash back card will likely be a better fit for you. Many travel rewards cards accrue a higher point value from travel-related spending, so you’ll earn fewer rewards with them if you don’t have opportunities to spend on related categories.

2. Do you travel internationally?

Travel cards often have no foreign transaction fee, and that’s one of the biggest ways they provide consistent value over time. Since many cash back cards charge a 3% foreign transaction fee, the savings on even one international trip can quickly start to add up when using a travel card.

3. Do you plan to use your rewards mainly to pay for travel?

If having some extra cash to pay rent or buy a new outfit seems more appealing than saving up points or miles to redeem for a plane ticket, a cash back card might be a better fit for you.

4. Are you able to meet the minimum spend to earn your card’s bonus?

Typically, one of the most attractive perks of a travel rewards card is the sign-up bonus. But here’s the thing: You may not be willing or able to spend several thousand dollars within months of opening the card just to qualify for the bonus. If spending (and paying off) this amount of money doesn’t make sense with your budget, a cash back card may be better value.

5. Do you have the patience to go deep on your card’s details to get the most value from it?

Some travel rewards cards may come with finicky processes to earn and redeem your points or miles, specific directions you need to follow to book your travel, and other potential complications.

“If you rarely travel or would rather not deal with having to use your card’s online portal to redeem your rewards, then using a cash back credit card is likely the better option for you,” says Brandon Yahn, founder of the personal finance website Student Loans Guy. “They may offer fewer incentives, but if you don’t travel much, then those extra perks are likely not worth it to you.”

Bottom line

If you travel frequently, if you travel internationally and if you’re able to meet the spending minimum to get a large sign-up bonus in your first year, you’re likely to see a travel rewards card pay off — especially in the short term.

For many other people, cash back cards will provide more consistent value, and it will likely prove simpler to actually use the rewards you’re earning. After all, that’s kind of the point, isn’t it?