by Lyle Daly | Dec. 12, 2018
Not sure if you should go with cash back or points? Find out the advantages of each and how you can choose the right type of credit card.
The first big decision to make when you’re picking a new credit card is whether you want to earn cash back or points on your purchases. You can’t exactly make a bad choice either way, because both mean you’re getting something back on the money you spend, but you’ll get the most value by choosing the right credit card for your lifestyle and needs.
Cash back and points are different types of reward currencies that credit cards can earn every time you use them.
Cash back is exactly what it sounds like. When you use a cash-back card, you build a cash balance. You could get that cash in the form of a statement credit, a deposit to your bank account, or a check in the mail, depending on the credit card and the redemption method you choose, but it’s cash, all the same.
When you have a credit card that earns points, you can redeem those points through the card issuer’s rewards program. Potential options include:
Some rewards cards offer one of those options, and others offer several.
Each type of credit card has its advantages and disadvantages. The key areas where cash-back cards have an edge are:
Rewards cards also have some important selling points:
First things first -- if you aren’t traveling at least once or twice a year, then you should look at cash-back cards. Rewards cards are best for travel rewards, and if you don’t travel much, then you’ll struggle to get much value from your points.
Even if you’re a frequent traveler, you may still be better off with a cash-back card if:
One way to look at rewards cards is that you get out what you put in. Here’s what I mean by that:
If you travel multiple times per year, have high spending, or you’re willing to learn how to stretch your points, then you’d probably get more out of a travel rewards card than a cash-back card.
As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.
But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases into 2022, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.
That’s why our expert – who has reviewed hundreds of cards – signed up for this one personally. Click here to get free access to our expert’s top pick.
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