Borrowers come in all shapes and sizes. Some of them are looking for a credit card with cash back, while others want one that offers travel rewards. Which should you get? The answer to this question depends mainly on your lifestyle and what you value the most. In this article, we will explore both options to make an informed decision about which type is best for your needs!
What is a travel credit card?
A travel credit card is designed for people who like to go on vacations and enjoy traveling. It allows you to earn points that you can redeem for flights, hotels, car rentals, cruises, or even free nights at luxury resorts! You need enough points before your trip to get the goodies that interest you most.
Airline and hotel partners are the key to earning points with your travel card. These companies allow you to use your rewards for their services, so it is essential to find one that works best for what you’re looking for.
Travel cards are very flexible, making them an excellent choice if you like exploring new places and don’t want any limitations on how (or where) you use your travel rewards. They also come with no foreign transaction fees, allowing international travelers to avoid additional costs while abroad too!
Travel rewards credit cards can be extremely rewarding for people who travel often, but they aren’t the best option if you only plan on taking one big trip in your lifetime. If you’re not sure that travel is your thing, then opting for a cashback credit card might be the better choice. Airline credit cards can also be costly if you don’t pay your bill in full every month.
The pros and cons of a travel credit card
- No foreign transaction fees
- Flexible rewards
- No blackout dates
- High interest rates if you don’t pay your bill on time or carry a balance from month to month. They can be costly for casual travelers who only take one big trip in their lifetime!
- High annual fees are associated with them, which means less money in the borrower’s pocket every year!
- Travel cards are not ideal for borrowers who take several short trips throughout the year because they get fewer points.
- Different travel rewards cards offer different types of redemption options, which can make it challenging to choose one if you have specific experiences or interests that matter most to you.
What is a cashback credit card?
Cash back credit cards pay you a percentage of every purchase that you make. So that means if you spend $100/month on groceries, for example, and your card offers 20% cashback then in one year, you will earn an extra $240 just by using this specific credit card rather than another!
You can use the money however you want: put it in savings to prepare yourself for emergencies or splurge with shopping sprees – regardless of what spending habits suit your lifestyle best. It increases your credit score, gives you more value, and you can spend it any way you like!
Cash back credit cards are best for people who don’t travel often and want to take advantage of their credit card’s perks. You may be able to earn a sign-up bonus if your bank account is opened within the first few months (which could equal up to $200 or more depending on how much money you’re spending every month), but even if that offer has expired, using this type of card will save you hundreds over time without any extra work required from your side!
The pros and cons of a cash back credit card
- You can spend no annual fees any way you like, and your credit score will increase.
- You don’t often travel, and redeeming rewards for all your purchases is more important than free flights or hotel stays.
- It can be used on student loans, car loans, emergency funds, personal finance, and investments.
- You cannot redeem rewards until the amount is $25 or more (which means smaller cashback amounts for lower value purchases), and they don’t typically come with sign-up bonuses.
- There is a minimum balance requirement to get started using this type of card.
- There are no travel benefits associated with owning one, so borrowers who enjoy traveling should consider other options first!
- People who only occasionally go on trips should also consider other types of cards since these have higher rates than other alternatives do!
How to choose the best one for you?
Before you apply for a credit card, it’s essential to consider your situation and what exactly do you need one for since this will help lenders choose the best offer available on the market!
If having flexibility is more important than earning rewards, then opt for cards with higher rates instead of those that come with an annual fee. On the other hand, if getting free flights or hotel stays are among your top priorities then start by looking at travel reward offers too to compare benefits provided by each type. By doing this simple exercise first, borrowers will pick up their perfect match in no time without wasting any additional money either!
When choosing which offer suits them better, try not to get overwhelmed by the number of options available on the market since there are many ways borrowers can make this process easier. First, check out some reputable sites online to see which one offers better rates or more benefits before comparing them with other cards!
Is another thing worth considering is whether or not you can pay off any debt fast if needed? If yes, then opt for a card that comes with no interest charges as well because otherwise, those fees could quickly add up over time and become harder than ever to manage! However, if repaying outstanding balances isn’t possible right now, then it’s a good idea to look for cards with lower rates instead and try paying them off as soon as you can so that your cashback payments aren’t wasted on unnecessary fees.
The influence of credit score on cash back vs travel credit cards
The amount of money you earn in cashback is not treated as interest by your credit card company. This means that when you’re ready to make a big purchase, such as an apartment or car (for example), the amount you spent on groceries and other purchases will not reduce the size of your loan like it would with travel rewards credit cards.
Cashback credit cards will help you to build a strong credit score. The reason for this is because your spending routines are analyzed every month, and the resulting data is used as proof that you can manage money responsibly – which means your lender might offer you lower interest rates on future loan applications!
This, in turn, saves both time and money (and reduces stress) since it allows borrowers to get the best deals possible when applying for loans or mortgages. Furthermore, building good financial behavior now may also boost your creditworthiness if an emergency happens down the line and you need extra cash right away.
The critical difference between travel rewards vs cashback credit cards: flexibility. Let’s say that one day someone steals $1500 from your bank account due to a hack. Since this happened, your bank account is overdrawn, and you’ll need to pay $35 in fees for using an ATM (in addition to the money that was stolen).
Travel rewards credit cards will not help you with any of those problems. You can’t use them as backup funds, nor would they be able to cover such expenses – which means you’d have no choice but to take out another loan or cut down on spending until your next paycheck arrives.
It’s much easier if we compare cash back vs travel reward credit cards: because it has more perks than other credit card options! This makes it perfect for people who like having one single card that works everywhere and doesn’t come with too many limitations.
Should I get both or just one?
You could get both cashback and travel rewards cards if you want to make sure that going down this road is worth it for you first because some lenders will give borrowers better rates on the same types of credit cards without offering any other benefits along with their card so be careful how much value they are giving up in exchange for what. This way, there won’t be as many issues later on when borrowers start having trouble paying off their balances each month, leading to unnecessary spending.
Though one important thing to keep in mind is that you should never get more than one credit card, this, combined with the fact that lenders will often offer better rates on different types of cards (without any other perks), makes it a no-brainer: there’s absolutely no reason for borrowers to get multiple cash back and travel rewards credit cards!
Instead of doing this, make sure your money goes towards paying off whichever debt has the highest interest rate first because otherwise, you’re wasting all those benefits. Finally, always remember how much time and effort will go into each decision before applying – especially since some people end up getting rejected by their lender due to such mistakes as forgetting monthly fees or not realizing they’ve reached the limit.
In conclusion, if you are ready to spend the money necessary to get a travel credit card offer, then definitely go for it. However, if you’re not sure how much time and effort will be required in the end, then perhaps cashback cards would be better suited for your needs because they can help borrowers save more money without having to worry about things like late fees or additional costs.
Borrowers should keep in mind that the best card for them will depend on what they’re most interested in getting out of it. This means that if borrowers are interested in travel credit cards, then these offers might be perfect for their needs but only as long as users manage to pay off any outstanding balances before incurring additional fees or paying more than expected because otherwise, cashback cards could end up being a better option!