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Cash back vs. points: Which is better?

Travel rewards cards can offer a much better value, even for casual travelers


Cash back and points cards each have their own advantages. Cash back cards give you simple, flexible cash rewards that you can use any way you please. Points and miles cards, on the other hand, offer the chance to get extra value out of your rewards by redeeming them for travel.

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It’s easy to become overwhelmed with the sheer number of rewards credit cards available today, and that’s especially true if you’re flexible on the type of card you wind up with. Picking a hotel credit card is simple if you always stay with the same hotel brand, for example. But, what if you’re flexible on where you travel and when? Or, what if you’re not sure if you should go with a travel card at all, or if you’re better off sticking with cash back rewards?

Cash back and points or miles cards each have their own advantages. Cash back cards give you simple, flexible cash rewards that you can use any way you please. Points and miles cards, on the other hand, offer the chance to get extra value out of your rewards by redeeming them for travel. Not to mention, travel rewards cards often include valuable perks such as airport lounge access and travel insurance.

If you’re trying to decide between a cash back credit card or a card that earns flexible points or miles, here are some of the details you should consider.

Cash back credit cards

Cash back credit cards let you earn a percentage of rewards based on your spending, usually with a flat rate or a tiered rewards program. While all cash rewards credit cards let you redeem points or miles for cash back or statement credits, some also let you cash in rewards for gift cards, merchandise, travel and other options.

Some of the top cash back cards include: 

 Earning rateAnnual feeRedemption options
Citi® Double Cash Card

Citi® Double Cash Card

Earn 2% back for each dollar you spend – 1% when you make a purchase and another 1% when you pay it off$0Statement credits, check in the mail or direct deposit
Chase Freedom Unlimited®

Chase Freedom Unlimited®

  • Earn 5% back on Lyft rides through March 2022 and on travel through Chase Ultimate Rewards
  • Earn 3% cash back at restaurants and on drugstore purchases
  • Earn 1.5% back on all other purchases
$0Statement credits, gift cards, merchandise, travel and more

Pros of cash back cards:

  • No annual fee – Most cash back credit cards don’t charge an annual fee.
  • Simple rewards – You can redeem your rewards as statement credits, a check or a direct deposit without having to understand the ins and outs of a rewards program.
  • Flexibility – Cash back rewards offer the ultimate flexibility, since you can use your cash however you wish, instead of being restricted to the options on an issuer’s rewards program portal.

Cons of cash back cards:

  • No travel perks – Cash back credit cards are typically very light on perks, particularly when it comes to travel protections and benefits.
  • Limited ability to maximize your rewards – Cash back credit cards don’t let you transfer points or miles to airline or hotel partners, where you can often get outsized value.
  • Earning caps – Some cash back cards come with earning caps that drastically limit how much you can earn in rewards each year.
  • Smaller sign-up bonuses – Both cash back and travel cards frequently offer a bonus for opening a card and meeting a spending threshold. Unfortunately, with cash back cards, bonuses tend to be much smaller.

Travel rewards credit cards

Travel rewards credit cards offer points or miles rather than cash back on your spending. Most travel cards come with a variety of redemption options, including cash back or statement credits, gift cards and merchandise. However, you’ll usually get the best value by using points to book travel directly through a portal, or for transfers to airline and hotel partners.

Examples of travel rewards credit cards include:

Earning rateAnnual feeRedemption options
Chase Sapphire Preferred® Card

Chase Sapphire Preferred® Card

Earn 5x points on Lyft rides (through March 2022), 2x points on travel and dining and 1x points on other purchases$95Statement credits, gift cards, merchandise, travel through the Chase portal and 1:1 transfers to Chase airline and hotel partners
Capital One Venture Rewards Credit Card

Capital One Venture Rewards Credit Card

Earn 2x miles on every purchase$95Travel statement credits, gift cards, cash back statement credits and checks (at a value of 0.5 cent per mile) and transfers to airline partners

Pros of travel rewards cards:

  • Redemption bonuses – Some cards let you get more travel for “free” when you redeem points through the issuer’s portal. The Chase Sapphire Preferred Card, for example, gives you a 25% bonus when you use points to book airfare, hotels, rental cars and more through Chase Ultimate Rewards.
  • Point and mile transfer options – Many flexible travel credit cards offer a list of airline and hotel partners that you can transfer points to. You can increase the value of your points by looking for deals within the partners’ programs.
  • Travel perks – Some travel rewards credit cards come with valuable travel perks like primary auto rental coverage, airport lounge membership, trip cancellation and interruption insurance or credits for a Global Entry or TSA Precheck membership.

Cons of travel rewards cards:

  • Some have annual fees – You’ll probably notice that most travel credit cards charge an annual fee, although the majority offer first-year sign-up bonuses that more than make up for the fee.
  • Rewards programs can be complicated – While having the option to transfer points or miles to airline and hotel partners sounds good in theory, navigating the rules of airline and hotel programs can be confusing and exhausting, which is why many people stick to cash back instead.

How often do you need to travel to make a travel card worthwhile?

If you’re someone who only travels occasionally and may not ever take advantage of airport lounge access, TSA Precheck or other premium travel benefits, you may be wondering if you should bother with a travel credit card. Shouldn’t you earn cash back instead?

While there’s no right answer for everyone, travel credit cards can easily be the best deal whether you travel often or not.

Travel credit cards tend to offer significant sign-up bonuses you can earn within the first few months. And, if the card includes the option to transfer points to airlines and hotels, you could get significantly more value out of this bonus.

For example, imagine one of your family members owns a timeshare at a resort in Cancun, Mexico. You’ll have to pay for your flights to get there, but your trip will be mostly “free” outside of what you pay for food and fun.

If you picked up the Citi Double Cash card and earned 2% back for each dollar you spend, you would need to spend at least $50,000 on your card to earn $1,000 in cash back you could use to cover a couple flights.

If you signed up for the Chase Sapphire Preferred, on the other hand, you would earn an initial bonus of 80,000 points for spending just $4,000 on your card within three months of account opening. A $95 annual fee applies, but the bonus points you earn could easily be enough for two round-trip flights from many U.S. cities to Cancun through the Chase portal.

In April of next year, for example, round-trip flights from Chicago (ORD) to Cancun can be as low as 18,886 points per person through the Chase Ultimate Rewards portal.

Screenshot of fares for Cancun Mexico in the Chase portal

From New York City, which is further away, the fare is a little pricier – 23,014 points – but you could still easily cover it with your 60,000-point bonus.

Screenshot of fares from New York to Cancun in the Chase portal

How to decide between cash back, points and miles

Whether you travel often or aren’t sure whether you will or not, travel credit cards can easily be the best deal. Their sign-up bonuses can be lucrative, and the ongoing rewards you earn on bonus spending can add up fast. Since you can squeeze more value out of your points or miles when you redeem them for travel rewards, a travel card could leave you significantly ahead with a lot less spending up front.

Here are some questions to ask yourself as you decide which card to get:

  • Do you want the option to transfer points to airlines and hotels?
  • Are you willing to do the legwork required to transfer points to airlines or hotels?
  • Is earning a significant sign-up bonus high up on your agenda?
  • Do you mind paying an annual fee on a credit card?
  • How likely are you to use a card’s travel benefits and perks?

Bottom line

Answering these questions should help you decide which type of card is best for you. For the most part, a flexible travel credit card or points or miles card will leave you ahead based on the sign-up bonus alone. But plenty of other factors may be in play, so make sure to consider all the pros and cons of each option.

The reality is that cash back credit cards and travel credit cards let you earn something in return for nothing, and something is always better than nothing at all. Make sure you compare all the top rewards credit cards on the market today so you wind up with the best card for your spending style and rewards goals.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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