Cash back vs. travel rewards will be a win for cash back credit cards in most cases. For one thing, cash back tends to be more flexible. You can spend cash rewards on anything. But redeeming points and miles for something other than travel often means sacrificing a lot of value. Plus, many travel rewards cards require you to book flights, airfare, etc., through the credit card company’s travel portal. So you miss out on the lower prices potentially available on other sites.
So, all else being equal, cash back rewards are the better option. But in the real world there are always exceptions.
When travel rewards might beat cash back:
Extra value for travel: Some credit cards give you more value for the rewards you earn when you redeem them for travel. For instance, Chase Sapphire Preferred and Chase Sapphire Reserve give you 1.25 cents and 1.5 cents per point, respectively, when you book travel through the Chase website. And Capital One Venture gives you twice as much value when you redeem for a travel statement credit vs. other redemption options.
Attractive perks: Travel rewards cards often come with benefits such as travel insurance, airline fee credits and airport lounge access. For people who travel a lot, the extra convenience and monetary value these perks give may be worth sacrificing some redemption flexibility.
No foreign transaction fees: If you spend a lot of money abroad, or online at merchants located in other countries, foreign transaction fees can add up quickly. Since travel rewards cards rarely charge them, having one can save you money.
Generally, cash back vs. travel rewards is a win for cash. But luckily, it isn’t necessarily a choice you have to make. You can always use a cash back card for your everyday spending and keep a travel card in your wallet for trips. Just watch out for annual fees.
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