Modern credit cards offer an often-dizzying number of different options for tailoring your card to suit your needs as a consumer. One of the major choices that all credit card owners face is the one between receiving cash back on purchases or receiving points for travel perks. The choice comes down to a lot of personal factors, but there are 5 major things that all people should consider when deciding between cash back and travel perks for their new credit card.
Frequency of Travel and Travel Plans
If you rarely fly domestic and have never left the country, then you are unlikely to get much real value from accruing a lot of travel perk point rewards. On the other hand, if you have more destinations you would like to visit than you will likely have time to see over the course of your life, then you really cannot have enough points available to help you see the world. Airline points will likely exceed the value of the cash back, but that only matters if you will actually get any use from the points.
Compare the Possible Perks With the Fees
Many travel perk cards have higher monthly or annual fees that are only offset if you take advantage of the available travel perks. For example, some cards allow you to waive baggage fees for airlines, which can easily exceed the cost of the fees if you travel with baggage more than once or twice a year. However, saving money on baggage fees that you will never use in the first place cannot justify paying the higher fees for the card.
Cards that offer cash-back usually require a very high credit rating and have a higher APR. If you are likely to carry a balance from month to month, than the higher APR will easily outweigh any cash-back rewards you receive.
Credit Card Use
The higher your annual fee, the better your rewards, but this only counts if you spend the required amount to earn them. One type of card may bring in a higher value to you overall, but only if you spend past a certain threshold using the card. Be sure that you know when the various rewards kick in, and try to guess whether you are likely to spend enough to earn them.
Decide What You Need More
If you are currently traveling a lot for work or pleasure, then travel perk card makes more sense. Similarly, if you are finding that you are barely making ends meet, then earning some cash back on all your expenses can mean the difference between a balanced budget and falling into debt.