Should you opt for cash back cards like I did?
- Some credit cards offer cash back on purchases, while other cards offer travel rewards.
- I prefer cash back cards because of the flexibility they offer.
Credit cards can be broadly divided into a few different categories. Some are travel cards that offer bonus rewards for purchasing travel and which often encourage you to use those rewards to pay for more trips. Others are cash back cards that give you money back for all of your purchases.
While I’ve had both travel and cash back cards, I greatly prefer those that offer cash back. Here’s why.
This is the big benefit of cash back cards over travel cards
The main reason I prefer cash back cards over travel credit cards is because of the increased flexibility these cards offer.
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In most cases, if you have a travel card, you get the best value for your rewards points or miles if you redeem them for vacations. You usually have to book through a special portal established by your credit card company in order to get the maximum value for your points. And you often have to use your rewards points or miles for specific kinds of travel-related expenses, such as flights or hotels.
Now, if you are absolutely confident that by the time you earn enough rewards to redeem that you’re going to want to use those rewards to pay for trips, then this may not bother you. But, as the past few years of COVID-related uncertainty has demonstrated, it can be hard to know what direction your life will take and if you’ll still be able and willing to use your points for a vacation in a few months or a few years when you’ve amassed enough of them.
I have two small children, so it can be especially hard to predict what types of trips we’re going to be taking and when, since a lot depends on how my children are developing at the time and whether they can handle going on a plane without disturbing fellow passengers too much. I don’t want to be tied into booking trips just to get the most benefit out of my credit card, so cash back cards work better for me.
With a cash back card, I can choose to use the cash I get back from my credit card company to pay for vacations if I want to. But I can also opt to do other things with the funds (for example, most often, I invest the money in a brokerage account to save for my future). I’m simply not willing to give up the flexibility that a cash back card provides.
What type of cards are right for you?
Figuring out what credit card is best for you can be complicated since it depends both on the types of things you tend to spend money on and your preferences for how you want to redeem your credit card rewards.
If you want to defray the cost of your trips by using credit card points to pay for them, then a travel credit card could be the ideal choice. But if you’re like me and want a broader choice of how to use your rewards without feeling like you have to book trips to maximize their value, then a cash back card may be the better bet for you, too.
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