In the battle between cash back and travel rewards, there’s a clear winner in terms of popularity. More than half (56%) of consumers have cash back cards, compared to just 16% with travel cards, according to research by The Motley Fool Ascent.
Cash back cards have their advantages, and it’s easy to save money with them. But if you travel often, there’s a good chance you’d get more out of using travel rewards cards. Here’s why.
1. Travel rewards can be worth more than cash back
With cash back cards, rewards are worth a fixed amount. If you have $200 in cash back, it’s worth $200.
Many travel cards have rewards that vary in value, depending on how you redeem them. For example, some travel cards let you redeem rewards for cash back at the standard rate of $0.01 per point. They also let you redeem rewards for travel at $0.0125 to $0.015 per point — 25% to 50% more value. While 20,000 points may be worth $200 in cash back, they could be worth $250 to $300 in travel.
Some travel cards let you transfer points to airline and hotel loyalty programs. If your card lets you transfer points to Delta, you could turn them into miles you can use to book a flight. Or maybe you’re able to transfer points to Hyatt, and then use them to book an award stay.
Transferring points is a bit more complicated, but you can get amazing value. I regularly get $0.02 to $0.03 per point or more. At that value, 20,000 points could be worth $400 to $600.
2. You’ll be able to save money on your regular travel expenses
Travel’s expensive. Airfare could cost $500 to $1,000 per person. A hotel or vacation rental might be $200 to $300 per night. Other potential expenses include activities, dining, and either a rental car or ride-hailing services.
This is where a travel card makes a big difference. You could use rewards to pay for the big travel expenses, including your flight and hotel. And even if you don’t fly or stay at hotels all that often, many cards let you redeem rewards toward other types of travel expenses, too.
For example, there are cards that earn points you can use to book vacation rentals, rental cars, and activities while you travel. Some cards let you put your points toward practically any type of travel expense, including ride-hailing services like Uber and Lyft, cruises, and even parking.
3. The right card can improve your overall travel experience
Travel cards are useful for more than just saving money. They also have perks that can make travel more enjoyable. Here are a few examples of benefits you can get from travel credit cards:
- Access to airport lounges: Instead of waiting in the boarding area before your flights, a travel card could get you free entry to a comfortable airport lounge.
- Elite status with your favorite hotel: Hotel cards normally include automatic elite status. This can get you a variety of perks, such as complimentary upgrades when available, free breakfast, and a welcome gift.
- A Global Entry/TSA PreCheck membership credit: Some travel cards cover the membership fee for either of these Trusted Traveler programs, so you can get through airport security more quickly.
- Concierge service: Quite a few cards have concierges available for cardholders. You can call for recommendations on what to do, help scoring a restaurant reservation, and any other reasonable request that comes to mind.
Travel cards aren’t right for everyone, but if they’re right for you, they can be a great addition to your wallet. If you go on at least two or three trips per year, these are most likely the best credit cards for you.
