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.
6 great cash back and travel rewards cards
Discover it® Miles – This travel rewards credit card is somewhat of a hybrid between a travel rewards card and a cash back card. You’ll get an unlimited 1.5 miles back for every dollar you spend, no matter where it is. So, you don’t have to spend your money on travel in order to collect rewards. When it’s time to redeem your miles, you can get them as a statement credit that applies to any travel charges you’ve made, but you can also have them deposited directly into your bank account at a value of one dollar per 100 miles. And at the end of your first year having the card, Discover will match your miles earned, essentially doubling your award provided you are a new cardmember.
Capital One® Venture® Rewards Credit Card – This credit card allows to earn miles rewards, but it is not issued in a collaboration with any airline. That means, the miles you earn can be redeemed to cover any airfare. You will earn 2x miles per dollar on every purchase as a base reward. The card also comes with a one-time bonus of 50,000 miles (equal to $500 in travel). You will qualify for the bonus once you spend $3,000 on purchases within three months from opening the account. Miles won’t expire for the life of the account and you can redeem them for an airline ticket with any airline or hotel stay at any hotel without blackout dates. Non-travel redemptions are gift cards, cash and merchandise. The Capital One Venture Rewards card has a $95 annual fee (which is waived for the first year), but does not charge foreign transaction fees, which is good for frequent travelers.
Discover it® Cash Back – This card earns up to 5% cash back in rotating categories up to the quarterly maximum, and 1% cash back after that. Categories change each quarter and require an enrolment. You will earn 1% cash back on all other purchases. This card also comes with a year-end bonus that makes it very attractive. At the end of your first year of having the card, Discover will match your cashback, which essentially means you can potentially earn 10% cash back on your purchases in rotating categories, and 2% back on all other spending in the first year of card membership provided you are a new cardmember. It also offers a 14-month 0% APR on purchases and balance transfers, no annual fee, and no foreign transaction fees – a great perk for travelers. Discover's Freeze it® protects your account in case you lose your card, or it’s stolen, and cardholders also get their FICO score for free on Credit Scorecard, so they can easily keep track of their credit health.
Capital One® VentureOne® Rewards Credit Card - This credit card is a perfect low-budget variant for travelers. If you are not comfortable with high maintenance costs for travel cards and want a standard easy-to-use card with a sign-up bonus, then it’s for you. Just like the Venture card, it offers miles and is not tied to a specific airline, the redemption process is also the same. The numbers are different, though. You get 20000 miles as a sign-up bonus (equal to $200 in travel) if you spend $1000 on purchases within 3 months from account opening. The rewards rate is 1.25 miles per dollar, but if you consider that this card has no annual fee, it pays for itself. Miles never expire and you can use them whenever you want for any airline.
Capital One® Quicksilver® Card - This is a straightforward cash back rewards credit card – you will earn 1.5% cash back for each of your purchases. No rotating categories or sign ups, you simply earn a fixed cash back reward per dollar spent. The cash sign-up bonus is also up for grabs – you can get $150 after you spend $500 on purchases within three months of account opening. Cash back rewards won’t expire for the life of the account and there is no limit to how much you can earn. In addition, you will get 0% intro APR on purchases and balance transfers for 15 months. When the zero intro period is over, your interest will rise to the standard APR. The Quicksilver card has no annual fee and no foreign transaction fees.
Citi ThankYou® Premier Card – This is also a travel-oriented credit card. It allows to earn generous rewards that can be redeemed for travel, gift cards or cash. For a start, new cardmembers can try qualifying for the card’s sign-up bonus offer – 60000 bonus ThankYou® Points. To get this offer, you will need to spend $4000 in purchases within the first 3 months of account opening. After that you can continue earning rewards on purchases. The card gives 3x points on travel purchases, including gas purchases, 2x points on dining out and entertainment, and 1x points on all other purchases. The annual fee is $0 but only for the first year, it will be $95 thereafter. But the good thing for travelers is that there are no foreign transaction fees on purchases.