There is a cornucopia of credit cards that give rewards or cash back to their customers. What type of card is better? A card that gives points for airline miles, restaurant gift cards, or cash back credit cards?
The experts at SoFi say the easy answer is that both are fantastic products. However, they need to be for the right customers.
What is better, rewards or cash back?
1) Cash Back Are Simple Cards
Cash back credit cards generally do not have annual fees. These are simple cards that are all about giving you the most money possible.
If you pay off your card each month, then the cash back, and the lack of annual fees means that what cash you earn back is all profit for you.
2) Variety Of Cash Rewards
The key to making the most of cash back reward credit cards is understanding the rules. Understanding the fine print will make all of the difference.
For example, you may use a 2% cash back credit card, but that percentage of cash back could increase based on some variables.
However, not all of your credit card purchases may be included in the total spent for cash rewards.
You may need to purchase items from a specific vendor, buy specific products like groceries or gas, or frequent restaurants.
Sometimes, each category of item purchases gets a different percentage of cash back.
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3) Cash Reward Redemption
How do you get your cash? Some cards require a minimum amount of money accumulated. Or they will send you money with each statement.
4) Reward Credit Cards
The key to using the points reward credit cards is when you first get your card. That bonus deal is going to be how you accumulate the most possible points.
Be sure to follow the fine print. Make sure you purchase the right type of items, in the right time frame to achieve that bonus deal.
Always be sure to make your payment on time. Late payments could void your benefit.
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5) Points Worth
Points are more valuable when you exchange them for travel-related products.
6) Bonus Perks
Travel points credit cards give you that extra travel-related bonus. Some of those perks include hotel reward nights, airline seat upgrades, travel insurance, extra insurance for car rentals, and even club lounge access.
7) Credit Card Annual Fee
Whether you get a hotel or an airline points reward credit card, you will pay an annual fee.
8) How To Choose
How do you choose between a credit card with travel reward points, or cash back? If your goal is travel, then the travel rewards credit card is the way to go. The added perks will benefit travelers.
If travel is not high on your list, you will get more value from a cash back reward credit card.
Whichever credit card you choose, always make sure to pay off your monthly bill in order to get the maximum benefit from these specialized cards.
