Cashback Credit Cards vs. Travel Credit Cards: Which One is Right for You?
Check out the main differences and benefits of each one before making your decision!
Reward credit cards come in many varieties. Some offer cashback, while others allow you to earn points or miles.
Each type has its own benefits and drawbacks, so if you’re trying to figure out which one is right for you, it’s important to look at the key differences.
Cashback Cards
If you are looking for an easy way to earn rewards on your everyday expenses, cash back credit cards are usually the top choice.
Basically, these cards give you back a percentage of what you spend in cash—usually between 1% and 5%, depending on where you are spending.
Benefits
– Simplicity: One of the best things about cashback cards is how easy they are to understand.
You don’t have to deal with complicated points systems or try to remember how many points you have for a flight. You spend money and a percentage comes back to you in cash. It’s very straightforward.
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The choice is yours if you want to save for something special, buy food, or simply treat yourself to a nice dinner.
– Immediate Value: These cards allow you to apply your rewards directly to your credit card balance quite quickly, or you can request a check or direct deposit.
Disadvantages
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– Lower Reward Potential: Cash back cards are simple, but may not be the best choice if you travel frequently.
If you frequently fly or stay in hotels, you may discover that the points or miles you earn with travel cards can lead to larger rewards and some exclusive benefits.
– Category Restrictions: Cashback cards typically provide bonus rates for specific categories such as groceries, gas, or dining.
This could be great if those categories fit your spending style, but if you don’t spend much in those bonus categories, you could miss out on higher rewards offered by travel or flexible rewards cards.
– Reward Limits: Some cashback cards have limits on how much you can earn in those bonus categories each quarter or year.
Once you reach that limit, your earnings may revert to the standard rate.
Travel Rewards Credit Cards
Travel rewards credit cards are a fantastic way to earn points or miles for every dollar you spend.
You can redeem these rewards for flights, hotel stays, and all kinds of travel-related items. If you love to travel, these cards can be a total game-changer!
Benefits
– High Reward Potential: One of the greatest advantages of travel rewards credit cards is the potential to accumulate points, especially for travel-related purchases.
You could earn 3 to 5 points for every dollar spent on things like flights, hotels, or dinners while traveling.
- Benefits for Signing Up: Just imagine earning enough points just for signing up to get a free flight or a couple of nights at a hotel!
It’s a fantastic way to start your journey towards travel rewards.
Additional Travel Benefits: Travel rewards cards usually provide travel insurance, access to VIP lounges at airports, and no foreign transaction fees.
Drawbacks
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It may be necessary to browse through specific airlines or travel portals to book your rewards, which can be a bit complicated.
Limited Flexibility: The rewards you earn are mainly focused on travel-related expenses, so if you don’t travel often, you may find yourself with points that are not as useful.
It is worth considering how often you travel and if a travel rewards card fits your lifestyle.
Conclusion
In the end, the best choice really depends on your lifestyle and what you hope to achieve financially.
So, take a moment to consider your spending habits, how often you travel, and what type of rewards you value the most.
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