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Cash Back vs. Travel Rewards

Cash Back vs. Travel Rewards

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This article was last updated Apr 23, 2020. Terms and conditions may have changed. For the most accurate information, please consult the issuer website.

If you’re in the market for a new credit card, it may be difficult to know which type of card to choose.

While you’ll want to consider interest rates, annual fees and benefits, many consumers are swayed by the type of rewards a card offers. For example, does the idea of getting discounts on your daily card purchases make you happy or do dreams of free airfare to exotic lands take precedence?

A 2018 TSYS Consumer Payment study found that 79% of respondents determine which credit card to use based on the type of rewards the card offers.

When choosing between a travel rewards or a cashback credit card, it ultimately comes down to the following: If you want to earn rewards to use toward future travel and plan to take advantage of benefits the card offers, such as trip cancellation and rental car insurance, a travel rewards card is generally the way to go. But if you aren’t a big traveler and are looking for a way to offset the cost of purchases, cashback rewards, which can be redeemed for cash, checks or statement credits, may be a better fit.

Based on our research of cards available through CompareCards, as well as top cards offered by major issuers, we compiled a list of the best cashback and travel rewards cards for the following categories:

Cashback credit cards

According to the TSYS study, cash back is the preferred type of reward among all credit cardholders. The survey found that 80% of respondents had redeemed credit card rewards for cash back, compared with 33% who redeemed rewards for travel.

Depending on the type of cashback card, you can earn anywhere from 1% to 6% cash back per dollar you spend using the card. Elevated rewards rates are typically offered in popular spending categories, such as dining, groceries or gas, while all other purchases earn a 1% cashback rate.

There are also flat-rate cashback cards that do not offer bonus categories. Instead, cardholders can earn up to 2% cash back on every purchase made with the card.

Cashback rewards ⁠— which are typically worth 1 cent each ⁠— can be redeemed for cash or checks, or directly applied to your account balance as a statement credit. Because these cards generally don’t offer premium travel benefits, like airport lounge access, their annual fees tend to max out at $99 per year.

Best cashback credit card for groceries: Blue Cash Preferred® Card from American Express

Blue Cash Preferred® Card from American Express

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on American Express's secure site

Terms and Conditions apply

Rates & Fees

  • $250 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.*

  • 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%). 6% Cash Back on select U.S. streaming subscriptions and 1% Cash Back on other purchases.

  • 1% back on other purchases*

Highlights
  • Earn a $250 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.
  • 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%).
  • 6% Cash Back on select U.S. streaming subscriptions.
  • 3% Cash Back at U.S. gas stations and on transit (including taxis/rideshare, parking, tolls, trains, buses and more). 1% Cash Back on other purchases.
  • Low intro APR: 0% for 12 months on purchases from the date of account opening, then a variable rate, currently 13.99% to 23.99%.
  • Plan It® gives the option to select purchases of $100 or more to split up into monthly payments with a fixed fee and no interest.
  • Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit.
  • $95 Annual Fee.
  • Terms Apply.
  • See Rates & Fees

See additional details for Blue Cash Preferred® Card from American Express

More Info

The Blue Cash Preferred® Card from American Express offers one of the most generous cash back rates at U.S. restaurants currently available. However ⁠— as is typical with cards that offer high cashback rates ⁠— there is a cap on how much you can earn at the elevated rate. The card also charges an annual fee of $95.

Cardholders earn 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%). 6% Cash Back on select U.S. streaming subscriptions and 1% Cash Back on other purchases. Plus, earn 3% cash back on transit (e.g., taxis/ride-share, parking, tolls, trains, buses and more), and 3% cash back on gas at U.S. gas stations.

Cardholders also earn a $250 statement credit after you spend $1,000 in purchases on your new card within the first 3 months.

Cash back is earned in the form of Rewards Dollars, which can be redeemed for statement credits when your available balance reaches 25 Rewards Dollars or more.

How much can you earn?

If you max out the $6,000 spending cap at U.S. supermarkets, you can earn $360 cash back on those purchases alone each year. Once you factor in the welcome bonus and annual fee, that amount jumps to $515 during the first year of card membership.

To see rates & fees for Blue Cash Preferred® Card from American Express please click here.

Read our Blue Cash Preferred® Card from American Express review.

Best cashback credit card for rotating categories: Discover it® Cash Back

  • Intro APR of 0% for 14 months on purchases and Balance Transfers, then 11.99% - 22.99% Variable.

  • Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically. *

  • Get a dollar-for-dollar match of all the cash back you've earned at the end of your first year, automatically*

Highlights
  • INTRO OFFER: Unlimited Cashback Match – only from Discover. Discover will automatically match all the cash back you’ve earned at the end of your first year! There’s no minimum spending or maximum rewards. Just a dollar-for-dollar match.
  • Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate.
  • Plus, earn unlimited 1% cash back on all other purchases - automatically.
  • Redeem cash back in any amount, any time. Rewards never expire.
  • Use your rewards at Amazon.com checkout.
  • Get an alert if we find your Social Security number on any of thousands of Dark Web sites.* Activate for free.
  • No annual fee.
  • See Rates & Fees

See additional details for Discover it® Cash Back

More Info

The Discover it® Cash Back card offers cash back in a variety of popular spending categories that rotate quarterly and comes with a $0 annual fee.

Earn 5% cash back on everyday purchases at different places each quarter like Amazon.com, grocery stores, restaurants, gas stations and when you pay using PayPal, up to the quarterly maximum when you activate. Plus, earn unlimited 1% cash back on all other purchases – automatically.

For the 2020 calendar year, the Discover cashback calendar includes gas stations, restaurants, Uber, wholesale clubs and PayPal.

Additionally, Discover will match all of the cash back you’ve earned at the end of the first year of card membership.

You can redeem your cashback rewards as direct deposits, statement credits, gift cards, instant e-certificates or charitable donations. You can also use cash back to pay for merchandise at Amazon.com and PayPal.

How much can you earn?

If you make $1,500 in purchases in the 5% bonus category each quarter, you’ll earn $300 cash back in one year. Once you factor in the cashback match sign-up bonus, that amount jumps to $600 in the first year of card membership.

Read our Discover it® Cash Back review.

Best cashback credit card for simple rewards: Chase Freedom Unlimited®

Chase Freedom Unlimited®

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(272)
Apply Now

on Chase's secure site

  • 0% Intro APR for 15 months on purchases

  • Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening. And earn 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 spent in the first year.

  • 14.99% - 23.74% Variable

Highlights
  • Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening.
  • Earn 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 spent in the first year.
  • Earn unlimited 1.5% cash back on all other purchases.
  • Earn 5% on travel purchased through Chase, 3% on dining at restaurants and drugstores, and 1.5% on all other purchases.
  • No annual fee
  • 0% Intro APR for 15 months from account opening on purchases, then a variable APR of 14.99 - 23.74%.
  • No minimum to redeem for cash back. Cash Back rewards do not expire as long as your account is open

See additional details for Chase Freedom Unlimited®

More Info

The $0 annual fee Chase Freedom Unlimited® card is a great option for those who don’t want the hassle of dealing with rotating bonus categories or spending caps. Cardholders earn a Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening. And earn 5% cash back on grocery store purchases (not including Target® or Walmart® purchases) on up to $12,000 spent in the first year.

Cash back can be redeemed for statement credits, direct deposits, travel, gift cards or merchandise.

How much can you earn?

With the Chase Freedom Unlimited® card, there is no limit on the amount of cash back you can earn. But, for example, if you spend $12,000 each year on gas, groceries and other everyday purchases, you’ll earn $180 cash back at the end of the year. After factoring in the sign-up bonus, that amount increases to $330 for the first year of card membership.

Read our Chase Freedom Unlimited® review.

Travel rewards credit cards

Although not quite as popular as cashback rewards cards, travel rewards cards allow you to earn miles or points that can be used to cover or at least offset the cost of future travel.

In addition to offering an elevated rewards rate on travel purchases, these cards often offer 2 points/miles per dollar or more in bonus categories, such as dining and transit, and 1 point/mile per dollar on general purchases.

Travel rewards can typically be redeemed for airfare, hotel stays, car rentals and other travel purchases or transferred to airline and hotel loyalty partners ⁠— which can make determining the value of your rewards a bit trickier than cashback rewards. That said, according to a 2019 study by Statista, American consumers earned an average of $1,400 in travel rewards.

Additionally, travel rewards credit cards provide a variety of travel benefits, such as lost luggage reimbursement and priority boarding. Depending on how premium the benefits are, annual fees can range anywhere from $0 to $550.

Best overall travel credit card: Chase Sapphire Preferred® Card

Along with travel benefits, including trip cancellation insurance and trip delay reimbursement, the Chase Sapphire Preferred® Card card offers a valuable sign-up bonus and rewards on a variety of travel purchases. Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 toward travel when you redeem through Chase Ultimate Rewards®. Plus, 2X points on travel and dining at restaurants, eligible delivery services, takeout and dining out & 1 point per dollar spent on all other purchases worldwide.

Ultimate Rewards points can be redeemed for travel, cash, statement credits, gift cards or merchandise.

You can also transfer points to several airline travel partners, including JetBlue TrueBlue, Southwest Airlines Rapid Rewards and Marriott Bonvoy, at a rate of 1:1.

How much can you earn?

The Chase Sapphire Preferred® Card card does not limit the amount of points you can earn. Points are typically worth 1 cent each. However, when you redeem rewards for airfare, hotels, car rentals or cruises through Chase Ultimate Rewards, they are worth 1.25 cents each ⁠— making the current sign-up bonus worth $1,000.

Keep in mind, though, that the card charges an annual fee of $95.

Read our Chase Sapphire Preferred® Card review.

Best for general travel rewards: Capital One® Venture® Rewards Credit Card

  • Earn 100,000 bonus miles when you spend $20,000 on purchases in the first 12 months from account opening, or still earn 50,000 miles if you spend $3000 on purchases in the first 3 months

  • 2 Miles per dollar on every purchase, every day

  • Receive up to $100 application fee credit for Global Entry or TSA Pre✓®

Highlights
  • Earn 100,000 bonus miles when you spend $20,000 on purchases in the first 12 months from account opening, or still earn 50,000 miles if you spend $3000 on purchases in the first 3 months
  • Earn unlimited 2X miles on every purchase, every day
  • Miles won't expire for the life of the account and there's no limit to how many you can earn
  • Receive up to $100 application fee credit for Global Entry or TSA Pre✓®
  • Redeem on travel—from vacation rentals to car rentals and more. Plus transfer your miles to over 10+ travel loyalty programs
  • No foreign transaction fees

See additional details for Capital One® Venture® Rewards Credit Card

More Info

If you aren’t loyal to a particular airline or hotel brand, a card that offers a flat rewards rate on every purchase, such as the Capital One® Venture® Rewards Credit Card, may be a good fit. Cardholders earn a flat 2 miles per dollar on every purchase, every day. Additionally, earn a earn 100,000 bonus miles when you spend $20,000 on purchases in the first 12 months from account opening, or still earn 50,000 miles if you spend $3000 on purchases in the first 3 months.

Venture miles can be redeemed for flights, hotel stays, car rentals, ride-sharing apps, cruises and more. Additionally, Venture miles can be transferred to a number of airline and hotel loyalty partners, including Accor Live Limitless (ALL) and Wyndham Rewards, mostly at a rate of 2:1.5.

Read: Capital One Adds Hotel Transfer Partners, Increases Transfer Value for JetBlue

How much can you earn?

Capital One® Venture® Rewards Credit Cardholders can earn unlimited miles on general purchases. Venture miles are valued at 1 cent each — meaning, the card’s current sign-up bonus is worth $500. That said, once you factor in the $95 annual fee, that value essentially drops to $405.

Read our Capital One® Venture® Rewards Credit Card review.

Best travel credit card for everyday purchases: Wells Fargo Propel American Express® card

The Wells Fargo Propel American Express® card offers several travel benefits, including lost luggage reimbursement and car rental insurance, as well as an elevated rewards rate in popular spend categories, such as dining and gas. Earn 3X points on eating out, ordering in and popular streaming services, 3X points on gas stations, rideshares and transit, and 3X points on travel including flights, hotels, homestays and car rentals. Earn 1X points on other purchases.

The $0 annual fee card also lets cardholders earn 20,000 bonus points when you spend $1,000 in purchases in the first 3 months - that's a $200 cash redemption value.

Points can be redeemed for travel, cash, merchandise, physical and electronic gift cards or charitable donations. Travel redemption options include airline tickets, car rentals, cruises, experiences, Goodwill travel, hotel stays, sporting and special events, vacation packages or custom travel packages.

How much can you earn?

Like the other travel rewards cards in this post, there is no cap on the amount of points you can earn. Because each point is worth 1 cent, the current sign-up bonus is valued at $200.

Read our Wells Fargo Propel American Express® card card review.

Whether you travel on a regular basis or planning an upcoming family vacation, a travel rewards credit card could help save you a lot of money. In addition to offering travel benefits, like trip delay insurance, these cards let you earn miles or points that can offset the cost of flights, hotel stays, car rentals and more.

But if you value simplicity and money in your pocket, a cashback card may be a better choice. Because rewards are earned in the form of cash back — which can typically be redeemed for cash, checks, statement credits or direct deposits into an eligible bank account — you’ll most likely have an easier time tracking the value of the rewards you’ve earned.


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