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Should You Choose a Travel or Cash Back Card?

By: Hannah Logan

When it comes to choosing a new credit card many of us want to prioritize perks and rewards. But, we often struggle over the decision over what approach to take when it comes to choosing a travel credit card or a cash back credit card. So, what do you choose? Well, that depends on your lifestyle and wants but to help make the decision easier we are breaking down each type of card to help you better select the best option for you.

What you need to know about travel credit cards

Travel credit cards offer more than just travel points

When we talk about travel credit cards, we immediately think of collecting points that we can redeem towards flights, hotels, or vacation packages. While these are a huge draw for this type of credit card, it’s not the only reason why travel credit cards are such a good option. Many travel cards, especially the high tier cards, offer some pretty impressive bonuses and perks as well. With a travel credit card, you can expect to see perks such as insurance coverage, airport benefits (including lounge access!), and roadside assistance. The benefits will depend on the specific credit card you choose but, overall, you can count on travel credit cards to offer some of the best perks when it comes to credit cards in Canada. Of course, these benefits usually means that the card has a high annual fee.

Travel points can be redeemed for more than just travel

One of the things that people get stuck on is the belief that points collected on travel credit cards can only be redeemed for travel. This is not the case at all. In fact, most travel credit cards will let you redeem your points for the same categories as traditional rewards cards. This includes travel (airfare, hotel, vacation packages, car rentals), merchandise (including electronics, kitchenware, and fashion items), and gift cards. Some will even let you use your points to pay back your balance. 

Now, disclaimer, the best value for your points on a travel credit card is travel. If you want to get the most bang for your buck, then you should be saving them to use on travel purchases. That being said, should you want to, you absolutely can use your travel rewards points for non-travel purchases. 

Your travel points might be transferable 

Depending on which travel credit card you choose, you may be able to transfer your points to a partner program which gives you more ways to redeem your points. Sometimes, by transferring your points, you can find better deals. Transfer partners are often airlines and hotels.

Points vary in value and you may face limitations

One of the downsides to travel cards is that their points value can vary drastically. Yes, redeeming for flights is your best bet but you also need to then factor in several variables that will impact the value of your points. This can include your destination, popularity of the route you are taking, what airline you are flying with, and time of year you are travelling. Additionally, depending on the travel credit card you have, you may face some restrictions including blackout periods and seat restrictions. This is something to keep in mind and look for when choosing your travel credit card.

What you need to know about cash back credit cards

Cash back cards require zero planning & have a firm value

Cash back cards are the most low-maintenance type of credit card rewards out there. You use the card to make a purchase, you get a certain percentage back as cash back. You don’t have to worry about trying to stretch your points to get the best value. You know exactly what you are getting back and it’s worth.  

Many cash back cards are free

Part of why cash back cards are so popular is because there are many options that have no annual fee. Granted, they don’t have the hefty welcome bonuses and perks that we see with travel credit cards but, if you don’t need those benefits, then it doesn’t really matter.

You may have to wait a year to see that cash back 

One of the things to keep an eye on as you are looking through cash back card options is when you will actually see your cash back. Some cash back credit cards pay out monthly while others may only do it annually. 

Which option is better?

Most credit card enthusiasts and finance experts agree that travel credit cards have the best value overall thanks to all the perks and benefits and their flexibility. Plus, it’s nice to feel like you are collecting to contribute to something, especially if that something is a dream trip. However, if you aren’t a big travel enthusiast then those perks and benefits are probably wasted and you may get more value out of a cashback card. 

Hannah Logan is a freelance writer based in Ottawa, Canada. She specializes in finance and travel writing and has bylines at Greedy Rates, Young and Thrifty, Fodor's Travel, O Magazine, and more. She also runs two travel blogs, Eat Sleep Breathe Travel and Ireland Stole My Heart. You can find her on Instagram and Twitter @hannahlogan21