Choosing Between Rewards: Cashback vs. Travel Points Cards
This article guides you in choosing between cashback and travel rewards credit cards. It highlights the benefits, earning methods, and ideal usage scenarios for each type, helping consumers make informed financial decisions based on their travel habits and spending behaviors.
Guidelines for Selecting Cashback and Travel Rewards Credit Cards
Many credit cards offer attractive incentives to attract customers. Using a credit card responsibly can boost your credit score and provide valuable perks. Primarily, credit cards fall into two categories based on rewards: cashback and travel rewards. If you're considering applying for a new credit card, here are some key points to help you decide between a travel rewards card and a cashback card.
Keep in mind that you earn rewards only after paying off the full balance on your account.
Travel Rewards Card
When is it ideal to choose a travel rewards card?
If your goal is to maximize earning and redeeming travel points, especially when frequent traveling is involved, a travel rewards card is beneficial. It's worth researching if your preferred airlines and hotel chains offer loyalty programs that can be combined with these cards for greater benefits.
Ways to earn points with travel rewards cards
Many travel credit cards award miles or bonus points redeemable for flights, hotel stays, dining, entertainment, or car rentals.
Assessing the value of travel rewards
Depending on your travel habits, you can convert miles into upgrades or long-haul flights, adding value to your rewards. Travel rewards cards can be especially useful for last-minute bookings or expensive trips, offering potential savings and upgrades.
Related: Setting Spending Limits with Your Credit Card
Cashback Cards
When should you opt for cashback?
Cashback credit cards work well for individuals whose expenses surpass their income. Many prefer cashback because it can be used for paying mortgages, loans, groceries, rent, and more. Unlike travel rewards, which are limited to travel-related expenses, cashback can be utilized almost anywhere.
How to earn cashback rewards
You can accumulate cashback through everyday purchases such as shopping, groceries, fuel, and department store transactions.
Understanding the value of cashback cards
If you’re comfortable saving your points and redeeming them later, cashback cards are ideal. They allow for broad usage and gradual point accumulation for various regular expenses.
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