Rewards Cards: The Difference Between Cash Back And Travel Rewards

Rewards cards
Cashback and travel rewards cards all sound the same, but they aren’t. If you're in the market for a credit card or looking for one that will get you the best “benefits,” the better choice depends on many factors. These factors include your spending habits, short and long-term goals, and most importantly, your credit history. For example, frequent travelers tend to go for rewards cards to receive travel bonuses and other perks. Others who like a variety of rewards may opt for the cash back.

"Keep in mind that rewards cards and cash back cards encourage spending and are only beneficial if you pay off your balance in full each month."

What's the difference? Let’s get into it, shall we? By the end of this blog post, you will understand the difference between cash back and travel rewards cards.

Cashback credit cards

Without a doubt, I'm sure you receive many credit card offers that promise you 5% cash back at your local grocery store, coffee shops, movie theaters, retail stores and gas stations. If you receive credit card offers along those lines, know that these are cash back credit cards.

Cash back credit cards essentially work like store loyalty and rewards cards such as DSW shoes or CVS Pharmacy. As a customer, you are rewarded for charging purchases on that specific card. Each company offers different options with retailers and percentages, but for the most part, it's usually a small percentage ranging from 1–5%.

For example, if during the course of a billing statement month you made $100 in purchases, with 5% cash back you would receive $5 toward your bill or in your cash back “bank” where you can cash out over time. While some companies offer a variety of percentages, each does offer extra cash back depending on what promotion they're offering during a given period.

Travel rewards cards

If you see credit card companies advertising bonus airline miles for signing up or points and discounts at hotels, these are most likely travel rewards cards. One of the main things you’ll notice when you read the fine print is that interest rates are much higher than other cards because of the benefits, of course.

Besides the high-interest rates, there’s so much to love about travel rewards cards. These benefits include complimentary lounge access in airports, exclusive events including concerts, upgrades at resorts and luxury hotels, priority boarding, discounts on in-flight refreshments and snacks, flight upgrades and more. The list can go on.

When deciding which travel rewards cards are right for you, it's important for you to put in the time and effort to understand what the companies are offering. You should see if the card aligns with your spending activity habits and your goals. For example, if you are a frequent flyer and find yourself taking JetBlue almost always, take the time to research cards that provide you with JetBlue and partnering airline benefits.

Financial responsibility

Enticing perks right? Yes and no. When it comes to credit cards and rewards cards alike, you should always read all the fine print. Companies always get you with the awesome sign-on bonuses, which is when you'll find yourself struggling to gain the same benefits the following year.

Other key things to look out for with cash back cards are when companies offer cash back off of points instead of the standard rebate based off of your purchases. Basically, you receive the points and it’s up to you to redeem the points to get the cash back.

For travel rewards cards, you need to pay attention to the annual fees. They can range from $90 to $500+ a year. If you don’t travel that much, consider finding cards with no annual fee.

Cash back and rewards cards encourage spending and, frankly, don’t care if you mess up your credit. These cards are only beneficial if you pay off your balance in full each month. Otherwise, you will find yourself, like many people, drowning in credit card debt with zero rewards.


If you’re searching for the top cash back or travel rewards cards, one of the best places to help you get started with your search is NerdWallet. It provides you with all the details you need to know about the different credit cards and also lets you compare and contrast different card options based on your credit score.

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