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Cash back vs travel rewards credit cards

Want to collect rewards on your credit card? Find out whether you’d benefit more from a cash back or travel points card.

Looking to find out if a cash back or travel rewards credit card is the right choice for you? This comparison looks at the main differences between each type of card. It also recommends a number of suitable cash back and travel card options that might be the best fit for your unique personal situation.

Just keep in mind that the right choice for you will typically depend on what kind of lifestyle you lead and how much flexibility you want from your credit card rewards program.

Cash back vs travel rewards cards: Quick summary

Travel rewards credit cards

Travel rewards credit cards let you earn points for every dollar you spend on your card. You can earn these points in different denominations, and they’ll be worth different amounts based on which card you use. You’ll collect a higher number of travel points with a premium card than you will with a no-fee card.

The main advantage of travel cards is that they often come with extended travel benefits such as travel medical insurance, trip cancellation coverage, rental car insurance and lost baggage assistance. With more premium cards, you may also qualify for VIP treatment at the airport along with lounge access and a number of other travel perks.

The main drawback is that these types of cards are less flexible than cash back cards. This is because you’ll usually have to use your points for specific redemptions. These can include flights, hotel stays, car rentals, merchandise or gift cards. In some cases, you may be able to transfer your points to cash, but they’ll typically be worth less than what you would get for spending the same amount of money on a cash back card.

Compare travel rewards credit cards

Name Product Welcome Offer Rewards Purchase Interest Rate Annual Fee Min. Credit Score Description
American Express Cobalt Card
30,000 points
Up to 5 points per $1 spent
19.99%
$120
Min. recommended credit score: 700
Earn up to 30,000 bonus Membership Rewards points in your first year as a new Cobalt Cardmember.
Choice Card from American Express
10,000 points
1 point per $1 spent
19.99%
$0
Min. recommended credit score: 700
Earn 10,000 Bonus Membership Rewards points within the first 3 months as a new Cardmember.
HSBC +Rewards™ Mastercard®
20,000 Points
2x points per $1 spent
11.9%
$0 annual fee for the first year ($25 thereafter)
Min. recommended credit score: 630
Get 20,000 Points (up to $100 in value), plus get a 1st year annual fee waiver. Apply by September 27, 2021.
BMO Rewards Mastercard
10,000 points
Up to 2 points per $1 spent
19.99%
$0
Min. recommended credit score: 725
Get a bonus of 10,000 BMO Rewards points when you spend $1,000 in the first 3 months. Apply by October 31, 2021 . Plus, get a rate of 1.99% on balance transfers for 9 months. A 1% fee applies to transferred balances.
BMO World Elite Mastercard
30,000 points
Up to 3 points per $1 spent
20.99%
$0 annual fee for the first year ($150 thereafter)
Min. recommended credit score: 760
Get up to 30,000 points and the $150 annual fee waived in the first year. Apply by October 31, 2021
Brim Mastercard
Up to $200 worth of bonuses
1 point per $1 spent
19.99%
$0
Min. recommended credit score: 700
Earn up to $200 worth of bonus points when you shop with Brim retailers for the first time through the Brim mobile app.
American Express Aeroplan Card
15,000 points
Up to 2x points per $1 spent
30% annual interest rate applies to balances not paid in full each month
$120
Min. recommended credit score: 700
Earn up to 15,000 Welcome Bonus Aeroplan points and a bonus Buddy Pass as a new cardmember.
BMO eclipse Visa Infinite
40,000 points
Up to 5 points per $1 spent
20.99%
$0 annual fee for the first year ($120 thereafter)
Min. recommended credit score: 760
Get up to 40,000 points and the $120 annual fee waived in the first year.
American Express Business Edge Card
57,000 points
Up to 3 points per $1 spent
19.99%
$99
Min. recommended credit score: 700
Earn up to 57,000 Membership Rewards points in your first year.
American Express AIR MILES Platinum Credit Card
2,000 Miles
Up to 1 Air Mile per $5 - $10 spent
20.99%
$120
Min. recommended credit score: 700
Earn a Welcome Bonus of 2,000 AIR MILES within the first three months. That’s enough to redeem for $200 towards your purchases with AIR MILES Cash.
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Cash back credit cards

Cash back credit cards give a percentage of the money you spend on your card back to you in the form of a balance statement credit. This means that you can put the money you save directly onto your credit card balance to bring down your bill. This is usually a more practical way to use your rewards, but it isn’t as luxurious as booking your dream vacation.

The main advantage of cash back cards is that they give you real cash to play with instead of points that may have differential values. For example, the cash back you earn may be worth three cents for every dollar you spend. Travel points, on the other hand, could only be worth a fraction of that per dollar (again, based on which card you choose).

You’ll also usually get a base level of benefits with cash back cards – most of which are also included with travel cards. These can include less specific forms of coverage such as purchase protection and extended warranty coverage. Many cash back cards also come with rental car insurance, mobile phone insurance, roadside assistance and other non-travel related benefits.

Compare cash back credit cards

Name Product Welcome Offer Cash Back Rate Purchase Interest Rate Annual Fee Min. Credit Score Reward Description
Tangerine World Mastercard
1.95% rate on balance transfers for 6 months
Up to 2% cash back
19.95%
$0
Min. recommended credit score: 680
Earn 2% cash back in two categories of your choice (or three categories if you open a Tangerine Savings Account and directly deposit your cash back into the account), and 0.5% cash back on everything else.
BMO CashBack Mastercard
5% cash back
Up to 3% cash back
19.99%
$0
Min. recommended credit score: 660
Earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases.
SimplyCash Card from American Express
1.25% cash back
Up to 2.5% cash back
19.99%
$0
Min. recommended credit score: 700
Earn 1.25% cash back on all eligible purchases.
Tangerine Money-Back Credit Card
1.95% rate on balance transfers for 6 months
Up to 2% cash back
19.95%
$0
Min. recommended credit score: 680
Earn 2% cash back in two categories of your choice (or three categories if you open a Tangerine Savings Account and directly deposit your cash back into the account), and 0.5% cash back on everything else.
SimplyCash Preferred Card from American Express
10% cash back
2% cash back
19.99%
$99
Min. recommended credit score: 700
Earn 2% cash back on all eligible purchases
BMO CashBack World Elite Mastercard
Up to 10% cash back
1% cash back
20.99%
$0 annual fee for the first year ($120 thereafter)
Min. recommended credit score: 760
Earn 5% cash back on groceries, 4% on transit including ride sharing, taxis and public transportation, 3% on gas and electric vehicle charging, 2% on recurring bill payments and 1% unlimited cash back on all eligible purchases.
Shell CashBack Mastercard from BMO
$50 in cash back + 1% cash back
Up to 1.5% cash back
19.99%
$0
Min. recommended credit score: 660
Get 1.5% cash back at participating Shell locations in Canada (up to a maximum spend of $2,500 in any monthly billing period), and get 0.5% cash back everywhere else.
BMO Cashback Business Mastercard
10% cash back
Up to 1.75% cash back
19.99%
$0
Min. recommended credit score: 650
Earn 1.5% cash back on eligible gas purchases, office supplies and on cell phone and internet recurring payments, earn 1.75% cash back at participating Shell stations, and earn 0.75% on all other eligible card purchases.
BMO CashBack Mastercard For Students
5% cash back
Up to 3% cash back
19.99%
$0
Min. recommended credit score: 660
Earn 3% cash back on groceries, 1% on recurring bill payments and 0.5% on all other eligible purchases.
Shell CashBack World Mastercard from BMO
N/A
Up to 3% cash back
19.99%
$79
Min. recommended credit score: 760
Get 3% cash back per $1 spent at Shells stations, 1.25% cash back on all other spend.
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Travel rewards vs cash back credit cards: Features to compare

You’ll want to take a number of factors into consideration when you’re deciding whether to choose a cash back or travel rewards credit card:

  • Annual fees

You’ll typically need to think about how much you can afford to pay in annual fees to have a credit card. For the most part, travel cards and cash back cards have similar rates for basic vs premiums cards. You usually won’t have to pay an annual fee for a basic card that lets you earn a small percentage of cash back or a limited number of travel points.

You’ll usually pay around $120 for a premium travel or cash back card. These are the cards that let you earn accelerated rewards and often come with fairly high annual income requirements. It’s up to you to decide how much you want to spend to collect cash back or travel points each year – which means weighing out whether the rewards are worth the extra fees.

  • Rewards value

As mentioned above, you’ll usually get a higher rate of return if you have a high-value cash back card. This is because you can earn up to four cents per dollar on some cards, which can be difficult to match in points value with the majority of travel cards. That said, some travel rewards cards can be paired with frequent flyer programs to let you earn accelerated rewards.

Getting a travel card will typically make the most sense for you if you leave the country regularly since you can earn a ton of bonus points for booking flights and hotels. In this situation, you may want to get a travel card that you can pair with Aeroplan or AIR MILES. You could also benefit from paying an annual fee to get the highest number of points available.

  • Benefits on offer

The main advantage of travel cards is that they often come with tons of travel perks and benefits such as travel medical insurance, trip cancellation, rental car insurance, common carrier insurance, lost baggage assistance and hotel burglary coverage. You could also get airport perks such as priority boarding, lounge access and cabin upgrades.

You’ll usually get a base level of benefits with cash back cards – most of which are also included with travel cards. These can include less specific forms of coverage such as purchase protection and extended warranty coverage. Many cash back cards also come with rental car insurance, mobile phone insurance, roadside assistance and other non-travel related benefits.

  • Bonus categories

Many travel points and cash back credit cards offer bonus rewards when you spend money on certain types of purchases. For cash back cards, these points are often handed out when you purchase gas and groceries. These bonuses can be worth up to four cents for every dollar you spend (which equals 4% cash back).

Travel rewards cards typically give you more points per dollar when you book flights, hotels, car rentals and other travel rewards. That’s why it makes the most sense to opt for a travel rewards credit card if you have a really big trip coming up or you travel regularly. You’ll usually want to choose a cash back card if you tend to spend more on everyday purchases.

  • Flexibility and ease of use

Cash back cards are much more flexible than travel rewards cards in most cases. This is because you can redeem your cash back for just about anything you want. You just need to make a purchase on your credit card and apply your cash back to clear up the outstanding balance. You can also use your rewards almost anytime you want – though you may need to meet a minimum threshold to withdraw cash (for example, $25 on some cards).

Travel points can be much more difficult to use if you don’t have enough of them saved up. This is because many travel rewards programs will only let you book with the required number of points (and not just a portion of points with the rest of your flight paid in cash). In addition, most travel points should only be used to book travel since they’ll typically lose value if you redeem them for merchandise or gift cards, among other things.

  • Welcome bonuses

Welcome bonuses are one of the best perks of signing up for a new credit card. They can often be worth as much as the annual fee you have to pay and can be used for different purposes based on which type of card you choose. For example, you can earn between 5% and 10% cash back in your first 3 months if you sign up for certain cash back cards. This can be exceptionally lucrative if you plan to make big purchases on your card during that time.

Travel cards are also well-known for offering generous welcome bonuses in the form of flight credits and large deposits of points. For example, you might get a $150 flight credit plus between 15,000 and 65,000 points when you sign up for a travel card. If each point is worth 1 cent, that’s a total reward of between $150 and $650 plus your travel credit. Just be aware that you may need to meet certain spending thresholds to qualify for these bonuses.

  • Interest rates

Interest rates for cash back and travel rewards cards are usually on-par. Most cards come with an annual rate of 19.99% for purchases (though you may pay a little bit more for cash advances). That said, certain cash back cards may come with a low interest rate as well. This is not typically the case with travel rewards cards.

The interest rate you’ll pay won’t typically matter with either type of card if you pay your balance off in full each month. If you can’t manage to do so, it could make sense to forego a rewards card and look for a low-interest credit card that sits between 9% and 12% instead. This is because you could save more on interest than you’d earn in rewards in some cases.

  • Lifestyle

One of the biggest deciding factors between whether you should get a cash back or travel rewards credit card boils down to lifestyle. If you’re a jet setter or you regularly travel across the border between the US and Canada, it could make sense to take advantage of a premium travel card.

If you’re more of a homebody and you’d prefer to have more flexibility with your credit card rewards, you’ll likely want to sign up for a cash back card. This will let you earn cash that you can spend on just about anything you want – even travel if you’re so inclined. This type of card may also let you earn more for spending money on everyday purchases (such as gas and groceries) or setting up recurring bill payments on your credit card.

Bottom line

There are a number of ways that you might benefit from signing up for a cash back or travel rewards credit card. The best way to pick which one is best for you is to think about what makes the most sense for your lifestyle. For the best of both worlds, you can look at finding a card that combines cash back with travel benefits. You could also consider taking out one card for each category and then maximize your rewards by using them strategically to make purchases.

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