The first step in choosing the perfect credit card is deciding what type of card you want – cash back or travel?

Do you want rewards that will help you travel the world, or do you want rewards you can use for whatever you want?

Choosing between a cash back card and travel rewards card depends on a few things:

  • your spending habits,
  • your travel patterns, and
  • how much flexibility you want with rewards.

When it comes to simplicity and flexibility, a cash back card can’t be beaten.

There are no complicated point systems you need to wrap your head around, so earning and redeeming your cash back is usually super simple.

Plus, you can usually budget for the amount you’ll get each year and use that money for whatever you need (or want) at the time.

When cash back cards make sense

Still not convinced?

Cash back cards might not be for everyone, but sometimes, and for some people, they really do come out on top.

Here are 8 reasons why I think cash back credit cards can be better than travel:

Plus a $150 travel bonus.
Offer ends December 21, 2018.

Easy to earn

One of the things I like best about cash back cards is that they’re very simple to understand.

The amount you can earn is tied directly to how much you spend, which means it’s easy to quickly calculate how much a card will pay you based on your spending habits.

For instance, if I spend $2,000 per month on the , knowing the card will pay me 2%, I can easily calculate that I’ll earn $480 per year.

$2,000 * 12 = $24,000 * 2% = $480

Subtract the $99 annual fee, and I’m looking at $381 to spend on whatever I want – that’s a pretty sweet deal.

Easy to redeem

Another reason I like cash back cards is that they’re not tied to any complicated, constantly-changing rewards programs.

With programs like AIR MILES, you’d need to estimate how much a mile is worth and then try to figure out if your annual spend can earn you enough miles to let you travel where you want.

For a more accurate estimate, you’d need to call AIR MILES to go through with a travel booking to see how much the taxes and fees would be if you were to use your miles.

It’s the same thing with other travel rewards programs – you can’t be certain exactly how much you’d be earning or what the taxes and fees will be for the trip you’re planning to take.

With cash back, I don’t have to worry about any of that:

  • no blackout dates,
  • no hidden taxes/fees, and
  • no major changes that may come up in the future.

Related: How To Maximize The Air Miles Rewards Program

Nice and flexible

Cash can be used anywhere, for anything, and isn’t restricted to travel.

If you have some lifestyle changes in the upcoming years and don’t travel as much as you used to, or you’re just someone who’d rather stay close to home, a travel rewards card might not make the most sense, since the rewards won’t really be of use to you.

On the other hand, cash can be used for any purchase and can help you earn money to spend on anything – including travel.

Cash will always be relevant regardless of any lifestyle changes you make.

Less likely to overspend

Big companies are great at marketing their travel rewards programs, and sometimes we end up chasing more rewards even if it means we end up spending more overall.

For example, if there’s a deal on at your grocery store for 100 AIR MILES with $100 spend, and you typically spend $80 per week on groceries, you might be tempted to spend the extra $20 just to get the additional miles, even if it means buying things you might not need.

Cash back keeps your spending low because there aren’t as many incentives to spend additional money like travel rewards programs.

That being said, it’s easy to fall into “the spending trap” no matter what credit card you have. Someone might be tempted to try to hit spending caps to maximize their cash back, so even with a cash back card, you’ll need to set a budget and stick to it.

Related: Do You Overspend When Tipping With Plastic?

Helps you save for financial goals

The nice thing about cash back cards is that you can work towards getting an annual cash payment that can be used for savings, paying down debt, or any other financial goal.

Being able to predict when the cash payment is coming means you can budget for it.

For example, I have a that I use for all gas and grocery purchases because it pays 4% cash back in these categories.

Each year I get a cash payout of around $350 that I typically put towards savings or other purchases like auto insurance.

Maximize your earnings with category spending

Some cash back cards even give you the ability to earn more cash based on the spending category.

As mentioned above, my allows me to earn a generous 4% cash back on all gas and grocery purchases.

I can even funnel other types of spending towards the gas/grocery category by purchasing various gift cards at grocery stores. For example, if you buy a gift card for a clothing store at Sobeys, you’ll get 4% cash back on that purchase, even though it’ll be going towards clothes.

The also gives me 2% on recurring bills and 1% on everything else.

If you’re looking for more from other categories you may want to create a dynamic duo by pairing your Momentum with a , which pays 2% cash back on all purchases.

Use your Scotiabank card for all gas/grocery purchases and the AMEX card for everything else, and you’d get a minimum of 2% cash back on every purchase you make – giving you more cash back than you would earn with just one card.

Related: Amex Cash Back Credit Cards Review and Head-to-Head Comparison

Great for non-travellers

If you’re a traveller and love saving on flights and hotels, a travel card would make sense.

But what if you don’t travel?

What if cooking is more your thing? Or collecting comic books? Or buying work-out equipment?

Cash back cards allow you to get whatever you want out of your credit card.

Whether you want to pay down debt, save for a house, or buy a miniature pony – with a cash back card the possibilities are endless.

Lower annual fees

One of the biggest difference between a premium travel card and a cash back card is the amount of money you’re going to spend on the annual fee.

The 5 best cash back cards on the market have an annual fee of $99 or less.

But when it comes to premium travel cards, the annual fee increases by quite a bit – you’ll be looking at $120 or $150…and could spend up to $400 – $700 annually.

So, if you’re looking for a premium credit card, your cash back options will allow you to pay a much lower price tag.

Related: Top No Fee Credit Cards with 1% Cash Back (or More) On All Purchases

Leave us your feedback

Well, there you have it…

The 8 reasons why I think cash back credit cards can be better than travel credit cards.

Do you agree?

Share your thoughts in the comments below and let us know if you prefer cash back or travel.