How to Choose Between a Cash Back or Travel Rewards Credit Card

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Once you’ve built a solid credit score, developed good credit habits, and learned to use your credit card responsibly, you might be looking to level up your credit card use by maximizing rewards. Most rewards credit cards fall under two categories: cash back or travel rewards. And while we may not have a definitive answer to which one is better — it depends on your lifestyle, spending habits, and budget — we can help you figure out which is best for you.

Consider this: While both cash back and travel cards reward your spending and purchases, they work very differently. Cash back cards are typically more focused on everyday spending and offer more straightforward statement credits or cash redemptions. On the other hand, travel rewards can offer potentially higher value on more focused categories, such as dining and airfare, along with travel-related benefits like lounge access or credits for programs like TSA PreCheck or Clear. They offer the best redemption value on travel.

But you’ll always get the best value by finding what works for you.

As Andrea Woroch, a consumer finance expert, puts it: “Not all reward cards are created equal, and it’s important to consider your spending habits and how you prefer to be rewarded in order to find the best option for your personal financial needs.”

Here’s what you need to know about cash back and flexible travel rewards so you can choose the right rewards card for your wallet:

Cash Back Rewards vs. Travel Rewards

In general, cash back credit cards are most useful for saving money on your everyday purchases. You’ll get a percentage of each eligible transaction back, which you can redeem for statement credits or cash. In fact, some cards can save you upwards of $600 in the first year alone, according to a NextAdvisor analysis.

Depending on the type of cash back card, you can earn a flat cash back rate on all purchases, or a varied cash back rate within specific spending categories. Some common cash back categories include dining, travel, entertainment, and streaming services.

Conversely, travel rewards credit cards can help you earn points or miles toward future free or discounted travel. Like cash back cards, you may earn a flat rate on all purchases, or bonus points within certain spending categories. Some travel rewards cards have categories focused on everyday spending like dining or groceries, which you can redeem toward travel, while others are more centered on rewarding travel purchases for more travel.

Another thing to consider is the annual fee you’re willing to pay. Many of the best cash back credit cards are no annual fee cards, meaning as long as you remain in good standing with your issuer and pay your balances in full and on time, there’s no cost to the rewards value you get. Travel rewards credit cards, however, frequently charge annual fees. While we do believe these fees can be worth it if they offer more value than they cost — and there are plenty of cards that can pay for themselves with added benefits and perks — an annual fee makes it even more important to consider your spending habits and budget before you apply. 

Cash back and travel cards may differ in how you earn and redeem rewards, but both card types charge high interest rates on any revolving balances. With any rewards credit cards — whether cash back or travel — it’s important to practice financial responsibility and never spend more than you can afford just to earn rewards. Accumulating debt can negate any type of earnings, so it’s important to pay your bills on time and in full whenever you can.

Best Cash Back Credit Cards

Cash back credit cards are great for helping you save money on daily purchases, and those savings can add up over time.

If you don’t travel often, or you prefer to redeem your rewards for purchases directly, cash back may be the best card type for you. As Woroch explains, “Cash back may be better than a travel card especially if you don’t plan to use the rewards for travel right away.” Especially given the ongoing uncertainty surrounding the coronavirus pandemic, she says, “Cash back offers more flexibility for redemption options and could come in more handy to benefit your budget than travel rewards.”

For people who travel only occasionally, a cash back credit card can make the most sense, says Jasmin Baron, a certified educator in personal finance and associate editor at Insider. ”While you won’t get outsized value from your rewards [like you might from travel redemptions], you can cash them in for anything,” she says.

If cash rewards sound right for you, here are some of our favorite cash back credit cards on the market:

Chase Freedom Unlimited®

The Chase Freedom Unlimited is our favorite cash back credit card pick because of its wide range of rewards options. It earns 5% cash back on groceries (not including Target or Walmart) on up to $12,000 in your first year, 5% cash back on travel when booked through the Chase Travel portal, 3% cash back on dining at restaurants and drugstores, and 1.5% cash back on everything else.

There’s no annual fee, and new cardholders can earn a $200 bonus after spending $500 within three months of account opening. “That’s a low spending threshold so it’s easy to earn that $200 back,” Woroch says. “That extra cash back can be used toward a big-ticket purchase.”

Citi® Double Cash Card

The Citi Double Cash card* is one of our favorites when it comes to simplicity. It earns a flat, 2% rate on all purchases — 1% when you buy, as well as another 1% when you pay for those purchases. It has a $0 annual fee and does not offer a welcome bonus.

Blue Cash Preferred® Card from American Express

The Amex Blue Cash Preferred card is one of the only cash back cards we believe is worth an annual fee. It earns 6% cash back at U.S. supermarkets on up to $6,000 per year (then 1%), as well as 6% cash back on select U.S. streaming subscriptions. It also earns 3% cash back at U.S. gas stations and on transit purchases, which includes taxis/rideshares, parking, tolls, trains, and buses. It earns 1% cash back on all other purchases.

New cardmembers can earn a $300 statement credit after spending $3,000 within the first six months of account opening. The card has a $0 intro annual fee the first year, and then $95 thereafter. 

Capital One SavorOne Cash Rewards Credit Card

The Capital One SavorOne Cash Rewards credit card* earns unlimited 3% cash back on a number of popular everyday categories. You’ll get 3% rewards on dining, entertainment, popular streaming services and grocery stores (excluding superstores like Target and Walmart). Capital One’s entertainment category is broad, and includes everything from concert tickets to tourist attractions and movie theaters. It also earns 1% cash back on all other purchases, and has a $0 annual fee.

Its current welcome offer is a $200 cash bonus after you spend $500 in purchases within three months of account opening. 

Chase Freedom Unlimited®

Chase Freedom Unlimited®

Editor’s Score: (4.7/5)
  • Intro bonus:
    $200
  • Annual fee:
    $0
  • Regular APR:
    14.99% – 24.74% Variable
  • Recommended credit:
    670-850 (Good to Excellent)
  • Apply Now externa link icon At Chase’s secure site
Blue Cash Preferred® Card from American Express

Blue Cash Preferred® Card from American Express

Editor’s Score: (4.3/5)
  • Intro bonus:
    $300
  • Annual fee:
    $0 introductory annual fee for the first year, then $95.
  • Regular APR:
    13.99%-23.99% Variable
  • Recommended credit:
    670-850 (Good to Excellent)
  • Learn more externa link icon At our partner’s secure site See Rates & Fees, Terms Apply.
Citi® Double Cash Card

Citi® Double Cash Card

Editor’s Score: (4.4/5)
  • Intro bonus:
    N/A
  • Annual fee:
    $0
  • Regular APR:
    13.99% – 23.99% (Variable)
  • Recommended credit:
    670-850 (Good to Excellent)
  • Learn more externa link icon At our partner’s secure site

Best Travel Rewards Credit Cards

Most travel rewards credit cards come with annual fees upwards of $100 — but perks such as credits on travel, airfare, dining, and more can help offset that, as long as those credits are on purchases you would have made anyway. For example, the American Express Gold Card’s $10 monthly Uber Cash credit can equal up to $120 each year. But if you don’t use the rideshare service or its delivery option, it won’t do much to offset the card’s $250 fee (See rates & fees)

Here’s a closer look at our picks for some of the best travel credit cards you can apply for.

Chase Sapphire Preferred® Card

The Chase Sapphire Preferred card is our top pick for a travel rewards credit card with an annual fee under $100. For a limited time, it’s offering 100,000 Ultimate Rewards points after you spend $4,000 in your first three months. Experts say that bonus is likely to end soon.

The card earns 5 points per dollar when you book travel through Chase Ultimate Rewards. All other travel purchases, including airfare and hotels as well as rideshares, earn 2x points. The card also earns 3x points on dining, online grocery store purchases, and select streaming services. All other purchases earn 1 point per dollar.

When you redeem your points for travel using the Chase Ultimate Rewards travel portal, they’re worth 25% more, or 1.25 cents per point. You can also transfer points to Chase’s airline and hotel partners at a 1:1 transfer ratio.

The card carries a $95 annual fee.

Capital One Venture Rewards Credit Card

With the Capital One Venture Rewards card*, you’ll earn a flat rate of 2 miles per dollar on all purchases, which could make it a great pick if you’re looking for a straightforward rewards credit card with miles you can redeem toward travel. The card is offering a welcome offer of 60,000 miles after spending $3,000 on purchases in the first three months.

You can redeem miles using Capital One’s Purchase Eraser feature to “erase” any travel purchases on your card statement for a value of 1 cent per point. Capital One also offers the option to transfer miles 1:1 to travel partners.

You’ll also get up to a $100 credit towards TSA PreCheck/Global Entry. The card carries a $95 annual fee.

American Express® Green Card

The Amex Green Card* carries a $150 annual fee and comes with perks like a $100 annual statement credit toward Clear Membership and a $100 annual statement credit for lounge access through LoungeBuddy, which can help offset that cost.

It earns 3 Membership Rewards points per dollar at restaurants (including takeout and delivery), on transit, and on travel, plus 1 point per dollar on all other purchases. The current welcome offer earns 45,000 Membership Rewards points when you spend $2,000 on your card within three months of account opening.

The Amex Green Card earns points toward Amex’s Membership Rewards program. For the best value, you can redeem points for travel through AmexTravel.com or transfer 1:1 to an Amex travel partner. 

Chase Sapphire Preferred® Card

Chase Sapphire Preferred® Card

Editor’s Score: (4.5/5)
  • Intro bonus:
    60,000 points
  • Annual fee:
    $95
  • Regular APR:
    15.99% – 22.99% Variable
  • Recommended credit:
    670-850 (Good to Excellent)
  • Apply Now externa link icon At Chase’s secure site
Capital One Venture Rewards Credit Card

Capital One Venture Rewards Credit Card

Editor’s Score: (4.3/5)
  • Intro bonus:
    60,000 miles
  • Annual fee:
    $95
  • Regular APR:
    15.99% – 23.99% (Variable)
  • Recommended credit:
    670-850 (Good to Excellent)
  • Learn more externa link icon At our partner’s secure site
American Express® Green Card

American Express® Green Card

Editor’s Score: (3.9/5)
  • Intro bonus:
    45,000 points
  • Annual fee:
    $150
  • Regular APR:
    See Rates & Fees
  • Recommended credit:
    670-850 (Good to Excellent)
  • Learn more externa link icon At our partner’s secure site

Which Rewards Are More Valuable?

The answer to this question largely depends on your spending habits and goals. If you’d rather save money on everyday purchases, you’ll be better off with a cash back credit card.

For example, it might be better to go with a cash back credit card whenever you’re planning a big purchase or preparing for a big event like a wedding or baby arrival, suggests Woroch. “When you sign up for a new cash back credit card, you have the chance of earning free money just for opening a new account as long as you meet the spending requirements,” she says.

If you’re looking to save money on upcoming purchases, you’ll likely find the rewards you earn on a cash back credit card to be the most valuable.

All in all, though, you’ll get the most “outsized” value with a travel rewards credit card. This is because you can often get a higher return on your rewards, especially if you have a card that earns transferable points within a program like Chase Ultimate Rewards or American Express Membership Rewards. 

This “is the best move,” according to Baron. “You can redeem these points for cash back, turn them into gift cards or merchandise, or transfer them to airline and hotel partners to book award travel.”

Because these cards offer high-value welcome bonuses, it’s also a good move to open a new travel card when you’re planning an upcoming trip. When you book your trip, those purchases will help you hit the minimum spend for a welcome bonus, and then you can later redeem those points for more travel.

Pro Tip

Wait to apply for a new card until you’re certain you can qualify for the welcome bonus without overspending or going over your budget.

If you’re not sure which type is best for you, take time to evaluate your spending — using your current credit card’s statement, past bank statements, or even paper receipts — and figure out where you spend most. Think about how often you travel, and look into different travel rewards programs to see how their redemption options align with your travel preferences. That can help narrow down the rewards categories you’ll get the most value from, and land on a card that matches your spending habits. 

*All information about the Citi Double Cash Card, Capital One SavorOne Cash Rewards Credit Card, Capital One Venture Rewards Credit Card and American Express® Green Card has been collected independently by NextAdvisor and has not been reviewed by the issuer.

For rates and fees of American Express® Gold Card, please click here

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