If you love traveling, a credit card that offers travel rewards could be worth your while. But selecting one with flexible points or miles can be daunting.
Value of points and miles depends on how they’re redeemed; cashback may prove more valuable when used for travel purposes.
Earnings
There are various credit cards that offer rewards points or cash back, so it’s essential that you compare all available options so you can select one that meets your financial goals best. Travel rewards cards typically have higher rewards rates than cash back cards with bonus categories like frequent flyer miles; however, fees may also apply with this type of card.
If you want to maximize the value of your rewards, a travel rewards card offering free flights and hotel stays could be ideal. But if travel isn’t on your itinerary often enough for this to make sense for you, consider cash back credit cards instead; many offer low annual fees with clear descriptions of what is returned from purchases with less expiration dates than airline miles and most offer statement credits or direct deposits into your bank account as rewards.
Redeeming rewards
Many travel cards allow users to redeem rewards for airline flights and hotel stays through their issuer’s travel portals, with additional benefits such as primary auto rental coverage, airport lounge membership membership fees waived and credits towards TSA PreCheck/Global Entry membership being included among them.
Travel cards usually offer more total value than cash back cards for frequent travelers looking for additional perks such as complimentary or upgraded hotel rooms, but may incur higher annual fees and require good or excellent credit in order to be approved.
Cash back cards tend to provide greater redemption flexibility, allowing you to redeem for statement credits, gift cards and merchandise rather than having to transfer points or miles between airline partners and hotels that could yield greater redemption values. Some cards even allow for dual earnings of both cash back and points; giving even greater flexibility.
Fees
Credit card rewards come in various forms, from cash back to miles and points. Each reward type offers its own set of advantages and disadvantages depending on your spending habits and how you intend to redeem them.
Travel cards offer great value when it comes to rewards; redeeming points for flights or hotel stays can unlock enormous value from rewards you earned – for instance, 26500 Citi ThankYou Points can earn you one-way business class flight from Chicago to Lisbon! However, their redemption values vary considerably by airline so that your efforts may not always yield maximum benefit.
Although travel rewards cards can provide significant benefits, it is important to determine whether paying an annual fee and transferring points into loyalty programs is worthwhile for your lifestyle and spending habits. Sometimes a cash back card without an annual fee might offer greater value in comparison. Furthermore, make sure to pay your balance off in full each month to prevent interest charges.
Convenience
Cash back or travel rewards? Ultimately, that depends on your spending patterns and priorities – having both cards in your wallet may provide greater flexibility to meet your rewards goals.
If simplicity and low maintenance are top of mind for you, select a card offering straightforward cash redemption options such as statement credits or gift cards. While travel cards tend to offer greater redemption values overall, these cash redemption cards may have lower redemption values per year and may even impose limits on how much can be earned each year.
Credit cards that offer flexible points and miles, like Amex Membership Rewards or Chase Ultimate Rewards, typically provide the best redemption values. However, they can be more challenging to manage and require some effort in order to maximize their benefits; specifically you need to keep tabs on how many points you have accrued as well as transfer them between airline partners and hotel partners in order to maximize them.
