Credit card rewards are a common way to earn money and points for travel. Travelers in search of a free flight or hotel night, however, often get the wrong card. Are airline or hotel cards the smartest choice? Maybe not. Frequent Flyer TravelingMom explains why cash back credit cards might be the better bet for casual travelers looking for easy travel rewards.
Disclosure: TMOM may earn a commission on credit cards approved via links on this page. Opinion is solely that of the author.
Choosing the Right Rewards Credit Card
Want free travel? Sure, we all do. Over the past decade or so, one of the easiest paths to getting travel “for free” has been credit cards. There are now hundreds, if not thousands, of credit cards out there promising travel rewards. Whether it be airline miles or hotel points, there is a card for that.
These credit cards offer benefits in a variety of different ways. Some come with points as a signup bonus just for getting the card. Other cards earn points for regular spending. Still others offer increased points for certain categories of spending, some of which are fixed and some of which rotate quarterly. Then there are the cards that come with specialized travel rewards like free checked bags or airport lounge access. The combination of benefits and rewards is quite extensive.
Travel Rewards vs. Cash Back Credit Cards
What travelers often overlook in the hunt for free travel, however, is the tried and true cash back credit card. We have all heard the mantra “cash is king.” Credit card users sometimes ignore this when thinking about travel. Instead, if they want a free flight, they get a credit card affiliated an airline to earn frequent flyer miles. If they want a free hotel, maybe a hotel’s branded card will do. Savvier travelers might opt for one of the flexible point rewards cards that are becoming increasingly popular.
Each type of card has its place. In fact, frequent travelers often carry more than one for different types of uses.
The right first choice for casual traveling families, however, may well be a cash back credit card.
Does a cash back credit card make sense for you? Here are the things to think about when making your selection.
3 Reasons Cash Back Credit Cards Can Be a Better Choice
The Risk of Airline Devaluations
The value of cash declines in relation to inflation. But airline frequent flyer miles decline in value all the time. The same is true of hotel points. Airlines and hotel brands manipulate the programs so they work for the company – not for you.
That means while you are patiently accruing miles for your next vacation, the airlines may quietly increase the number of miles you need to get there. Delta Airlines has even stopped publishing an “award chart.” Those charts help travelers know how many miles they need to accrue for the trip they’re eyeing.
Hotels do the same, regularly shifting categories in their awards charts, meaning it suddenly costs more points for that resort you always wanted to visit.
While cash prices can and do fluctuate, they are much less likely to outstrip your cash-earning potential with cash back credit cards.
Easier to Redeem
One of the biggest frustrations of frequent flyer miles is the challenge of finding award seats to book with airline miles. For families looking for 3, 4, 5 or more award seats, this challenge is even greater. Award seats, particularly those at the lowest level “saver” awards, are in increasingly short supply. For families that need to travel around popular holidays and school breaks – forget it! Why would you want to earn more miles with an airline through its credit card if you can’t reliably use the miles when you want?
Cash, of course, is easy and flexible to redeem. Find a good flight deal and pay with the dollars you’ve earned. Travelers are not locked into a specific airline either and can chase the best fare to save even more money.
Lower Fees (Usually)
Most families on a limited budget prefer a credit card with a low or no annual fee. For families that don’t put a lot of spending on credit cards, it is far more important to have a card that doesn’t charge fees that will ultimately offset the value of the rewards earned. Having a no annual fee card also makes it easier to assess each year whether you’ve gotten your money’s worth in rewards compared to the fee charged.
Travelers are much more likely to find these kinds of low fee cards in the cash-back credit card space. Of course, there are exceptions to every rule. There are a few cash back cards that have hefty annual fees. Conversely, there are plenty of regular travel rewards cards that don’t have any fees at all or at least have fees that are waived for the first year. Choose the right one in either category that works for your spending habits.
When Might Travel Rewards Cards be Better than Cash Back Cards?
Better Signup Bonuses
Although I am a big fan of cash back cards, the reality is that they are not always the smartest choice. Cash back credit cards rarely come with significant signup bonuses. The bonuses instead come with the rewards you earn for putting everyday spending on the cards. This process can take time.
Travel rewards cards with hefty signup bonuses definitely come with more instant gratification. These cards may be better for the traveler looking to quickly add to their mileage bottom lines and travel sooner. Some of these cards regularly have 50,000 or even 100,000 miles or point signup bonuses just for getting a single card. Many of these cards wave the annual fee for the first year so you can try them out first.
More Value Per Dollar Spent
When it comes to travel rewards, the big question is always how much in rewards do you get per dollar spent on a credit card? Frequent flyer pros know how to eek the value out of their airline miles by looking for award chart sweet spots. These are places where the cash cost of an airplane ticket is incredibly high but the cost in frequent flyer miles is quite low. If you are the kind of traveler who has a lot of flexibility to chase the cheap award seat, then you may well get more value out of a traditional miles card than a cash back card.
Usually travelers get the best value for airline miles when they can redeem for first or business class travel at non-peak times. If you are the kind of traveling family who is normally hanging out in coach or traveling over summer or winter holidays, then you likely won’t be able to tap into these kinds of incredible value redemptions. You should probably stick with a cash back card.
Other Travel Perks
For travelers who are not just looking to save money but also to travel better, cash back cards may not be as good of a fit as a traditional travel card. Some travel cards come with perks like airline lounge access that are not common with cash back cards. Still other cards like some premier cards from hotel loyalty programs may grant hotel elite status.
Many airline cards these days also come with a free bag checked benefit. If you travel a specific airline regularly and often check a bag, the value of those freebies can make an airline card a better deal than a cash back card.
Best Cash Back Credit Cards
Ready to get started? Check out these great cash back credit card deals from our partners.