Finance: Credit Cards for Travel Rewards and Cash Back
If you love to travel and save money, you might be interested in finding the best credit cards that offer both cash back and travel rewards. These cards can help you earn points, miles, or cash on your everyday spending, and then redeem them for free or discounted travel. But how do you choose the best card for you? And how do you make the most of your rewards? In this article, we will show you how to compare cash back and travel rewards cards, how to pick the best card for your needs, how to maximize your rewards, how to avoid common mistakes, and how to use your rewards to travel the world on a budget.
How to compare cash back and travel rewards cards
Cash back and travel rewards cards are two types of rewards cards that let you earn rewards on your purchases. Cash back cards give you a percentage of your spending back as cash, either as a statement credit, a check, or a direct deposit. Travel rewards cards give you points or miles that you can use to book travel, either through the card issuer’s travel portal or by transferring them to partner airlines or hotels.
There are many factors to consider when comparing cash back and travel rewards cards, such as:
- Earning rates: How much rewards do you earn per dollar spent? Some cards offer a flat rate on all purchases, while others offer bonus categories that give you higher rewards on certain types of spending, such as travel, dining, gas, groceries, etc. You should look for a card that matches your spending habits and gives you the most rewards for your money.
- Redemption options: How can you use your rewards? Some cards offer more flexibility and value than others. For example, some cash back cards let you redeem your rewards for gift cards, merchandise, or travel, while others only let you use them as a statement credit. Some travel rewards cards let you book travel through their own portal, where you can find deals and discounts, while others let you transfer your rewards to partner airlines or hotels, where you can find more availability and options. You should look for a card that offers the redemption options that suit your travel goals and preferences.
- Annual fees: How much does the card cost you per year? Some cards charge an annual fee, while others are free. Generally, cards with higher annual fees offer more benefits and perks, such as sign-up bonuses, travel credits, airport lounge access, travel insurance, etc. You should weigh the benefits and costs of each card and see if the annual fee is worth it for you.
- Other features: What else does the card offer? Some cards have additional features that can enhance your travel experience and save you money, such as no foreign transaction fees, free checked bags, priority boarding, car rental insurance, etc. You should look for a card that offers the features that you value and use the most.
How to choose the best card for your spending habits, travel goals, and personal preferences
There is no one-size-fits-all answer to the question of which card is the best for you. It depends on your personal situation and preferences. However, here are some general guidelines to help you narrow down your choices:
- If you want simplicity and flexibility, a cash back card might be a good option for you. You can earn cash on every purchase and use it for anything you want, including travel. You don’t have to worry about points or miles, redemption values, or availability. You can also find cash back cards with no annual fee, which can save you money in the long run.
- If you want to maximize your rewards and travel more, a travel rewards card might be a better option for you. You can earn points or miles on your purchases and use them to book travel, either through the card issuer’s portal or by transferring them to partner airlines or hotels. You can also find travel rewards cards with sign-up bonuses, travel credits, and other perks that can boost your rewards and savings. However, you have to pay attention to the redemption values, availability, and fees of each card and program, and be flexible with your travel plans.
- If you want the best of both worlds, you might want to consider a hybrid card that offers both cash back and travel rewards. These cards let you earn cash back on your purchases, but also give you the option to convert your cash back to points or miles, or vice versa. This way, you can enjoy the simplicity and flexibility of cash back, but also have the opportunity to get more value and options from travel rewards. However, these cards usually have higher annual fees and more complex rules and calculations, so you have to be willing to pay and learn more.
How to maximize your rewards by using your card for everyday purchases, travel expenses, and online shopping
Once you have chosen the best card for you, you want to make sure you use it wisely and effectively to earn and redeem as many rewards as possible. Here are some tips on how to maximize your rewards:
- Use your card for everyday purchases, such as groceries, gas, dining, bills, etc. This way, you can earn rewards on every dollar you spend, and also build your credit score and history. However, make sure you pay off your balance in full every month, otherwise you will incur interest and fees that will cancel out your rewards.
- Use your card for travel expenses, such as flights, hotels, car rentals, etc. This way, you can earn bonus rewards on travel categories, and also enjoy the benefits and perks of your card, such as travel credits, insurance, lounge access, etc. However, make sure you compare prices and options before you book, and use the redemption option that gives you the best value and availability.
- Use your card for online shopping, especially through the card issuer’s online portal or partner websites. This way, you can earn extra rewards on top of the regular rewards, and also find deals and discounts on various products and services. However, make sure you shop around and compare prices and quality before you buy, and don’t overspend just to earn more rewards.
How to avoid common pitfalls such as overspending, missing payments, and paying interest or fees
Using a rewards card can be rewarding, but also risky. If you are not careful, you can end up spending more than you can afford, missing payments, and paying interest or fees that will outweigh your rewards. Here are some common pitfalls to avoid:
- Overspending: Don’t let the rewards tempt you to spend more than you need or want. Rewards are not free money, they are a fraction of what you spend. If you spend more than you earn, you will end up in debt and lose money. Always have a budget and stick to it, and only use your card for purchases that you can pay off in full every month.
- Missing payments: Don’t forget to pay your bill on time and in full every month. If you miss a payment, you will incur late fees, damage your credit score, and lose your rewards. Always set up automatic payments or reminders, and check your statements regularly for errors or fraud.
- Paying interest or fees: Don’t carry a balance on your card or use it for cash advances or balance transfers. If you do, you will pay interest and fees that will eat up your rewards. Always pay off your balance in full every month, and avoid using your card for transactions that incur fees, such as foreign transactions, cash advances, or balance transfers.
How to use your rewards to save money on travel, such as booking flights, hotels, car rentals, and activities
Using a rewards card can help you save money on travel, but you have to know how to use your rewards wisely and effectively. Here are some tips on how to use your rewards to travel the world on a budget:
- Plan ahead: Plan your travel in advance and research your destination, dates, and options. This way, you can find the best deals and availability, and also avoid peak seasons, holidays, and events that can drive up prices and demand. You can also use tools such as Google Flights, Skyscanner, or Kayak to compare prices and options, and set up alerts for price drops or deals.
- Be flexible: Be flexible with your travel plans and preferences. This way, you can find more opportunities and options to use your rewards, and also save money on other expenses. For example, you can travel during off-seasons, weekdays, or early or late hours, or you can choose alternative airports, hotels, or destinations that are cheaper or less crowded. You can also use tools such as Google Flights, Skyscanner, or Kayak to find the cheapest or best times and places to travel.
- Use the card issuer’s portal: Use the card issuer’s portal to book travel with your rewards. This way, you can find deals and discounts that are exclusive to cardholders, and also enjoy the benefits and perks of your card, such as travel credits, insurance, lounge access, etc. However, make sure you compare prices and options with other websites and platforms, and use the redemption option that gives you the best value and availability.
- Transfer your rewards: Transfer your rewards to partner airlines or hotels to book travel with your rewards. This way, you can find more availability and options, and also get more value and flexibility from your rewards. However, make sure you check the transfer rates, fees, and rules of each program, and also compare prices and options with other websites and platforms, and use the redemption option that gives you the best value and availability.
Cash back and travel rewards cards are both great options for saving money on your purchases, but they have different advantages and disadvantages that you should weigh carefully. Cash back cards are simpler, more flexible, and more affordable, but they may offer lower earning rates, fewer redemption options, or less features. Travel rewards cards are more complex, more valuable, and more beneficial, but they may require higher annual fees, more planning, or more restrictions. The best credit card for you depends on your spending habits, preferences, and goals. You should compare the earning rates, redemption options, annual fees, and other features of different cards and choose the one that suits your needs the best.