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this week’s episode Part of our new series called “This or That,” where the NerdWallet Travel team compares different ways to travel.
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Travel credit cards typically earn points that you can redeem for travel, while cash-back credit cards earn cash that you can often use toward your next credit card statement. For those who want simple, straightforward rewards, a cash-back card offers more flexibility to redeem for almost any type of purchase. Cash-back cards often have low or $0 annual fees, so cardholders don’t need to be diligent about using the benefits to justify the cost of holding the card.
Travel credit cards, on the other hand, often charge an annual fee, but they also usually have more perks. In addition to earning more points on certain spending in categories like travel or dining, travel credit cards can come with free hotel night certificateautomatic elite status, airport lounge access, Credit toward TSA PreCheck or Global Entry Application Fee, and many more. If you travel frequently and intend to use lots of benefits, a travel credit card — even one with an annual fee — may be useful to you.
To determine what type of card is right for youBe realistic about how much you plan to travel, and use one of NerdWallet’s calculators (like this one) to determine whether the card will be worth its annual fee.
Keep in mind that you can have both types of cards if it fits your budget and you want to maximize your rewards.
- Know yourself: If you’re optimizing every benefit — for example a free night certificate on a hotel stay that would otherwise cost $500 — and you transfer points like a pro, a travel card is probably better. But if you want to keep it simple, a cash-back card is A-OK. Besides, there’s nothing wrong with having both!
- shop around: There are dozens of cash-back and travel credit cards. Check out the NerdWallet site for up-to-date reviews to make it easy to find the right one for you.
- Make the most of your card: No matter which one you go with, make sure you’re maximizing your value by using all the benefits available – especially if your card has an annual fee.
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The article Smart Money: Travel Credit Card or Cash-Back Credit Card originally appeared on NerdWallet.
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