If you’re trying to find the perfect rewards credit card, you might feel like you’re drowning in options. There are just so many out there, and many of them look similar. This can make it tough to decide on a card. One thing people often struggle with is whether to go for a cash back credit card, or a travel rewards credit card. These are the two most common types of rewards credit cards, so understanding the differences between them, and the advantages of each kind, can go a long way to helping you determine which rewards card is the right one for you.
Once you know what type of card you’d like, you can choose from our recommendations listed below.
Cash back credit cards explained
A cash back credit card offers a pretty straightforward deal. Make a purchase, and get a set amount back per dollar spent. Usually this is a percentage, with 1% on every dollar being standard, and 6% per dollar being the biggest cash back offer in most cases. Some cards offer a standard amount back on all purchases in every spending category, while others offer more cash back in certain categories, like restaurants or supermarkets. Still others give bonus cash back in categories that shift each quarter, allowing you to maximize your rewards earning based on the season. For these rotating category cards, you’ll need to sign up each quarter in order to qualify for the extra cash back, which is usually 5%, and limited to the first $1,500 you spend each quarter. That means your maximum quarterly reward will be $75. But you’ll also continue to earn 1% back for every dollar spent in all categories, and that award is unlimited.
The advantage of travel rewards credit cards
A travel rewards card isn’t that different from a cash back credit card. But rather than earning points or cash back, you will generally earn miles that can be redeemed for a statement credit. This statement credit may be used toward travel purchases on your credit card, including gas, airfare, hotel charges, and train or bus fare. Usually, these cards give a bigger reward for travel purchases. If you choose a co-branded credit card, you’ll earn rewards for purchases at the specific airline or hotel the card is branded with, and you’ll be able to redeem your rewards there. Travel rewards cards won’t offer rotating categories; the rewards will be the same year round. For this reason, some people may find them easier to use. But the choice between a co-branded card and a straight travel rewards card can be tricky for some people. The advantage of a regular, non co-branded card is that you can redeem your rewards on any airline, any hotel brand, or any other travel expense – and there won’t be blackout dates or other restrictions on redemption.
Great cash back and travel rewards cards
The Citi® Double Cash Card – 18 month BT offer (Citi is a Credit-Land.com advertising partner) features an unlimited 2% cash back on ALL purchases. The cash back rewards are the best we’ve seen so far for a card that offers a fixed cash back percentage on everything you buy. There are two steps of getting the full 2% cash back. Use your card to purchase the items to earn the first 1% cash back. You’ll receive the second 1% cash back after you’ve paid for your purchases for a total of 2% effective cash back. As long as you’re paying the minimum due each month, you can take as long as you want to pay off your balance and get the additional 1% cash back (aka, 2% total effective cash back). In addition to this high cash back percentage, you’ll enjoy generous 18 months of a 0% intro APR on balance transfers (13.99% – 23.99% (Variable) and the balance transfer fee is 3% of each balance transfer; $5 minimum). And to top it all off, there’s no annual fee and no caps on the amount cash back rewards you can earn.
If you like traveling, check out the American Airlines AAdvantage MileUp℠ Card. It is a no annual fee co-branded airline credit card that allows earning miles towards free flights with American Airlines and its partners. First of all, the card will allow you to earn 10,000 American Airlines AAdvantage® bonus points after spending $500 in purchases within the first 3 months of account opening. You will also receive a $50 statement credit for meeting this requirement. All your everyday purchases will also earn miles rewards. You will earn 2 AAdvantage® miles for every $1 spent at grocery stores (including grocery delivery services) and on eligible American Airlines purchases. All other purchases will earn 1 mile per $1. In addition to earning miles, the card also allows saving 25% on inflight food and beverage purchases onboard American Airlines flights.