Travel credit cards generally earn points that you can redeem for travel, while cash-back credit cards earn cash that you can often use toward your next credit card statement. For people who want simple, straightforward rewards, a cash-back card offers more flexibility to redeem for almost any kind of purchase. Cash-back cards often have low or $0 annual fees, so cardholders do not have to be as diligent about using benefits in order to justify the cost of holding the card.
Travel credit cards, on the other hand, often do have an annual fee, but they usually have more perks as well. In addition to earning more points on certain spending in categories like travel or dining, travel credit cards may come with free hotel night certificates, automatic elite status, airport lounge access, credit toward TSA PreCheck or Global Entry application fees, and more. If you travel frequently and intend to use a lot of the benefits, a travel credit card — even with an annual fee — could make sense for you.
To determine which type of card is right for you, be realistic about how much you plan to travel, and use one of NerdWallet’s calculators (like this one) to determine whether the card would be worth its annual fee.
Keep in mind that you could have both types of cards if that fits within your budget and you want to maximize your rewards.
Our tips
Know yourself: If you’re optimizing every benefit — for instance staying at a hotel on a free night certificate that would otherwise cost $500 — and you transfer points like a pro, a travel card is probably better. But if you want to keep it simple, a cash-back card is A-OK. Also, there’s nothing wrong with having both!
Shop around: There are dozens of cash-back and travel credit cards. Check out the NerdWallet site for up-to-date reviews to make finding the right one for you easy.Â
Make the most of your cards: No matter which one you go with, make sure you’re maximizing your value by using all available benefits — especially if your card has an annual fee.
