Many people are excited about the idea of travel rewards cards. It sounds fantastic to be able to travel for free or almost for free by paying with points instead of cash. And if you’re always planning on traveling, travel cards live up to the hype.
But travel cards aren’t for everyone. It can be difficult to figure out how to get the most out of them, and they’re only valuable if you travel frequently. The best cash back cards, on the other hand, can work well for almost anyone.
If you can’t decide which type of card to buy, read on to learn why cashback might be the solution for you.
1. Cash rewards are easier to use
One of the most common complaints we hear about travel cards is about using rewards. People read amazing stories about how they can use their rewards points to fly business class or stay in luxury hotels. Once they have a travel rewards card, they realize it’s not as easy as it seems.
You can, but you’ll need to familiarize yourself with the details of your card’s travel rewards program first. These programs often offer all sorts of ways to redeem your points. You may be able to redeem your points on the card issuer’s travel portal or transfer them to various airline and hotel partners.
If that sounds exciting to you and you’re interested in learning more, travel rewards cards might be a good choice. If you don’t want to deal with when to use a travel portal and when to transfer points, you might want to stick with cashback cards.
Unlike travel cards, cashback cards are as straightforward as can be. When you want to use your cashback, you simply go to the rewards section of your account and redeem it. Card issuers typically give you the choice of receiving cashback as a credit on your credit card statement or as a deposit into your bank account.
2. You don’t have to wait to redeem your cashback
Cashback allows you to save money on a regular basis. Most of these credit cards pay out your earned cashback once a month, but a few pay it out daily.
If you earn $50 in cash back in a month, you can use that amount immediately after it is credited to your rewards account. You can convert that amount into a $50 deposit to your bank account to grow your savings, or you can transfer it to an investment account.
Travel rewards typically only save you money when you take a trip and have travel expenses. Between trips, they don’t do you much good. That might not be a problem if you travel regularly. But it could be a problem if you only travel occasionally or if you start to limit your trips. This often happens to couples who have children and don’t travel as much as they used to.
3. Cashback cards have lower annual fees
There’s a big difference in cost between cashback cards and travel cards. Most cashback cards don’t charge an annual fee, and those that do aren’t too expensive (usually under $100). Cashback cards with an annual fee also tend to have higher cashback rates, which can offset their cost.
You won’t find many travel cards with no annual fee. There are a few, but they offer few benefits. Most travel cards cost between $95 and $695.
To be fair, travel cards do offer benefits that can offset the annual fees, such as often offering credits that can help you save money on certain expenses, but that also means you have more to manage to make sure you get what you pay for.
Travel cards and cashback cards both have their benefits. If you’re looking for a card that’s easy to use, can save you money each month, and doesn’t have an expensive annual fee, cashback is the better choice.
