Miles and cash back credit cards are two of the best and popular credit cards on the market. Cashback is one of the most well known rewards, but if you spend the most of your time traveling, earning miles will help you earn free trips and other travel perks.
Whether you choose a cash back credit card or a travel rewards credit card, it all depends on your spending habits and how you want to spend your rewards. So keep reading below to see which one of the two satisfy the demands of what you need it for.
Cash Back Credit Cards
With a cashback credit card, your rewards come in dollars, not points or miles like a travel credit card would. Keep in mind that cash back doesn’t always mean cash back. While some credit cards will reward your cash back as a deposit to your bank account or mail a check to you, most cash back credit cards let you redeem your rewards as a statement credit.
You can redeem rewards for a credit on your statement and may also be able to redeem for gift cards, a check or a direct deposit to a bank account.
Statement credit reduces your balance by the amount of rewards you redeem. For example, you have a $100 balance and if you redeem your wards for a $20 statement credit, your outstanding balance will be $80 once the statement credit is applied. Please note that you can’t use the statement credit as a payment to your account.
Cashback credit card is a good option for a those who are looking for a low maintenance wallet, since most cashback credit cards don’t charge annual fees and redeeming rewards is simple.
Travel Credit Cards
If you travel often, a travel rewards credit card may be the better option since they tend to pay higher rewards on travel purchases made on the credit card. They give you points, miles, or some other rewards currency.
They come in two types:
These are bank-branded cards with rewards that can cover a range of travel expenses. General travel card have the benefit of flexibility among companies, but will get similar rewards rates as a cash reward credit card.
Don’t expect any upgrades or special treatment with a general travel credit card, this type of card is equivalent of a cash rewards card in its payoffs and perks, except that the rewards must generally be spent on travel.
These are cards branded with an airline or hotel chain. They typically allow you to redeem rewards within one loyalty program. You can see what are credit card points and miles worth here.
But if you plan to travel outside the country, a travel rewards credit card may be a better option, especially if you choose a credit that doesn’t charge a foreign transaction fee.
Other credit cards charge up to 3% on transactions you make in other currencies. By using a travel rewards credit card not only help you save on currency fees, but also helps you earn more rewards. As you hold on to a credit card longer, you have to spend more on it to justify keeping it.
Travel rewards credit cards offer other perks that makes the credit card more beneficial. They perks like free checked bags, annual travel credit, companion tickets, priority boarding, access to airport lounges, and trip cancellation insurance are often offered on travel rewards credit cards. People who are traveling with you can also enjoy those perks too, typically as long as you’ve booked their trip with your credit card.
Which Is Best For You?
Choosing a rewards credit card means picking from either cashback or travel benefits, both have advantages. Cashback is flexible and easy to redeem while points or miles have the possibility of paid vacation and sometimes a higher reward value per dollar spent.
Comparing miles and cash back rewards can be difficult. The number of miles required for a redemption varies by credit card or frequent flier program. Most cash back credit cards are simple. Even those with a tiered rewards system can be easier to benefit from compared to many travel rewards credit cards.
Getting the most from a travel rewards credit card also requires you to really know the detail of your rewards program. You’ll have to know the best way to maximize your rewards, how to take advantage of the other credit card perks, but also the ins and outs of redeeming rewards, including blackout dates and booking instructions.
If you’re a big traveler, you’ll find a lot of value in travel rewards credit card. Otherwise, most other consumers will benefit from the versatility of cash rewards credit card.
For many people, cash back credit cards will provide more consistent value, and it will likely prove simpler to actually use the rewards you’re earning. But if you travel frequently, internationally and are able to meet the spending minimum to get large sign up bonus then you should choose travel rewards!