How to choose between cash back and travel rewards



If you are among the majority of the population who is not aware of the benefits and disadvantages of both travel rewards and cash backs, then you have come to the right place. Here, in this article we note the particular differences between travel rewards and cash backs, and will also try to tell you what will work best for you.  So, here are the ways through which you can choose between cash backs and travel rewards for your credit card.

Why to opt for Travel Rewards

Travel rewards are the redeeming awards that you receive from your hotel or airline credit card, after getting a certain amount of travel points. This kind of travel rewards work best for frequent flyers, who spend almost their entire time travelling from one place to another.  And if you are lucky than along with rewards, sometimes these travel rewards can also get you free flights and hotel stays!

But of course that is something that happens very rarely. Still, you have a really high chance of attaining good value for every point you get while traveling with travel rewards. But it is still more profitable for those who spend their travels in business class, heavily expensive last minute bookings, and the people who stay in luxury hotel rooms. And by doing this, you can avail 3% to 5% of value per every single point, and that makes it really better than the average of cash back rewards.

Image courtesy: Pixabay
Image courtesy: Pixabay

And unfortunately, these points become less valuable if you prefer to travel in inexpensive domestic flights, economy class, and if you book your flights way in advance.  Many of these cards do have no blackout dates, or give any restrictions on booking flights and hotels.

But of course, there are still some numbers of travel reward providers that only give a restricted number of seats to those people who redeem their reward points. So, you should always read the fine print before accepting a travel reward plan of a credit card.

Still, there happens to be some airline and hotel credit cards that are co-branded with banks that allow you to limitlessly redeem your travelling miles into travel rewards. This makes the whole program hassle free, and you can also become a part of their loyalty program. And the best reasons for having a travel rewards type of credit card is that, the holders receive many perks including free checked bags, priority lounge access, and VIP boarding.

Why to opt for cash back

Image courtesy: Flickr
Image courtesy: Flickr

Cash back is a reward system that is used by other type of credit cards to give perks to its holders. In this scheme, you get a certain amount of your money back after you redeem the particular number of purchase points. And in full contrast to the travel rewards, where you only get points for your hotel stays and travels; in cash back programs, you are able to receive points on several types of purchases you make.

Not only that, you also are able to use the cash backs directly on your other purchases and paying bills of all types. And that option is not possible with travel rewards. So, even for frequent travelers, using the cash back option can be more rewarding than travel rewards.

The next point where cash backs can be more rewarding that travel rewards is that, travel rewards can lose their value over time, as the airlines and hotels change their point charts. But, cash back points never lose their value and can be accessed and used any time. And while you earn the travel points earnestly over your several travels, but if for some reason you are unable to travel, you also begin to lose your already earned points, which is impossible in the case of cash backs.

Cash back also gives you bonus points in their specified spending categories that may include groceries, gas station payments, departmental store shopping, certain restaurant dining, etc. These cash points become even more rewarding when you use them over partnered up online shopping portals and use internet based purchase services.  Here’s a cash back credit card that you should definitely try.

Image courtesy: Max Pixel
Image courtesy: Max Pixel

But the set back between travel rewards and cash back is that cash back a 1% per point value, while travel rewards have somewhere between 3% and 5%. Still, even with a lower value, it is easier to earn cash back points than it is earn the travel reward points.

Also, with cash back, you are completely sure of an average gain of points while the same is not possible with travel rewards.  And in cash backs, redemption of cash back points is direct and simple in comparison to that of travel rewards.

So, we hope you now understand what in between cash back and travel rewards is better for you, and which one you should choose for your credit card.