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When it comes to credit cards, there are many options available in the market. The most popular ones are cash back and travel rewards credit cards. Both types of credit cards provide different benefits and perks. In this article, we will compare cash back vs travel credit cards to help you decide which one suits your needs.
Cash Back Credit Cards
Cash back credit cards allow you to earn a certain percentage of cash back on every purchase you make with the card. The cash back percentage varies from card to card. Some cards offer a flat rate of cash back on every purchase while others offer higher cash back rates on specific categories such as groceries or gas.
One of the biggest advantages of cash back credit cards is that they provide immediate value to the cardholder. The cash back earned can be used to pay off the balance on the card or can be redeemed as a statement credit or cash deposit.
Another advantage of cash back credit cards is that they usually have lower annual fees compared to travel rewards credit cards. This makes them a more cost-effective option for those who don’t travel frequently.
Travel Rewards Credit Cards
Travel rewards credit cards allow you to earn points or miles on every purchase you make with the card. These points or miles can be redeemed for travel-related expenses such as flights, hotel stays, rental cars, and more.
One of the biggest advantages of travel rewards credit cards is the flexibility they provide. Cardholders can use the points or miles earned to book flights, hotels, and other travel-related expenses with any airline or hotel chain.
Another advantage of travel rewards credit cards is that they often offer sign-up bonuses which can be worth hundreds of dollars. These bonuses are usually earned after a certain amount of spending is done with the card within a specific time period.
Cash Back vs Travel Credit Cards – Which One Should You Choose?
The answer to this question depends on your individual needs and spending habits. If you don’t travel frequently and want a credit card that provides immediate value, then a cash back credit card is a better option for you.
On the other hand, if you travel frequently and want a credit card that provides flexibility and a wider range of rewards, then a travel rewards credit card is a better option for you.
It’s important to note that both types of credit cards have their own pros and cons. Therefore, it’s important to carefully evaluate your needs and spending habits before choosing a credit card.
FAQ
| Question | Answer |
| Which is better – cash back or travel rewards? | It depends on your individual needs and spending habits. If you don’t travel frequently and want a credit card that provides immediate value, then a cash back credit card is a better option for you. On the other hand, if you travel frequently and want a credit card that provides flexibility and a wider range of rewards, then a travel rewards credit card is a better option for you. |
| Do cash back credit cards have an annual fee? | Cash back credit cards usually have lower annual fees compared to travel rewards credit cards. However, some cash back credit cards do have annual fees. |
| Do travel rewards credit cards have an annual fee? | Travel rewards credit cards usually have higher annual fees compared to cash back credit cards. This is because they offer more perks and rewards compared to cash back credit cards. However, some travel rewards credit cards do have no annual fees or have waived annual fees for the first year. |
| How do I redeem cash back rewards? | Cash back rewards can be redeemed as a statement credit or a cash deposit. Some cash back credit cards also offer other redemption options such as gift cards, merchandise, or charitable donations. |
| How do I redeem travel rewards? | Travel rewards can be redeemed for travel-related expenses such as flights, hotels, and rental cars. Some travel rewards credit cards also offer other redemption options such as merchandise or cash back. |