The choice between a cash-back and travel rewards credit card is dependent on one’s spending habits, desired benefits and travel preferences.
However, the following are the pros and cons of cash-back and travel rewards credit cards:
Cash back
This is the best credit card for the person who doesn’t travel often, value simplicity, or want a low annual fee. It is easy to redeem, with 1%-point equals to one cent per every dollar spent.
However, in some instances, these cards have limited benefits as compared to travel cards, and some have high APRs for those with poor credit. They as well have limits on bonus categories, such as a maximum spending amount per year.
Travel rewards
This is a good option for those travelling frequently or make purchases that are travel related. Points and miles cards can be more valuable than cash back, with one point or mile often worth more than one cent. Points can also be transferred to various travel partners, which can offer more value.
However, travel cards often have high annual fees and stringent credit score requirements. You may not earn many points if you don’t spend much on travel.
You can also have both a cash back and travel rewards card and use them for different purposes. For example, you could use a travel card for vacations and a cash back card for groceries.
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