Travel Rewards vs. Cash Back: Which is Right for You?

With the rise of travel rewards programs, it can be hard to decide which is right for you. Cash back programs offer a simple way to earn money back on the things you buy every day, while travel rewards programs offer more opportunities to save money on your trips. But which is the best for your spending situation? Here are a few things to consider.

What are travel rewards programs?

A travel rewards program is a type of loyalty program that allows customers to earn points for every purchase they make. These points can be redeemed for rewards, such as free flights and hotel stays. Some programs also offer exclusive discounts on travel-related products and services.

Pros of travel rewards programs:

1. Simple: Most travel rewards programs are easy to use. You simply log in to your account and start earning points for everything you buy.
2. Variety of rewards: Many travel rewards programs offer various types of reward options, such as airline miles, hotel nights, and more.
3. Flexible redemption options: Many travel rewards programs offer flexible redemption options, such as online shopping and direct transfer to airline or hotel partners. This means you can easily use your points to get the rewards you want when you want them.

Cons of travel rewards programs:

1. Points may not be enough for some rewards: Many travel rewards programs offer small rewards (such as $50 gift cards) for a significant number of points earned. This can be a limiting factor if you're looking for large rewards (such as airfare discounts).
2. Redemption fees may apply: Some travel rewards programs charge redemption fees, which can reduce the value of your rewards.

​What are cash back programs?

Cash back programs are a great way to earn rewards for your spending. They work by giving you cash back in a statement credit, which you can use to reduce your monthly debt payments.

Pros of cash back programs:

1. Easy to use: Cash back programs are easy to use. You can earn rewards simply by spending your money at the stores and websites you use every day.
2. Rewards are often higher than travel rewards: Cash back rewards tend to be higher than travel rewards because cash back programs generally offer larger rewards for a greater percentage of spending.
3. No redemption fees: Unlike travel rewards programs, which often charge redemption fees, cash back programs don't charge fees.

Cons of cash back programs:

1. Rewards are sporadic and may not always be worth the effort: Although cash back programs offer high rewards for a significant percentage of spending, they may not always be worth the effort to earn them. For example, if you're earning rewards for every $1,000 you spend, but the reward you're earning is only worth $50, it may not be worth your time to participate in the program, especially if you're accruing massive amounts of debt just to hit your spending goals. If you end up in a situation like this you should immediately stop making unnecessary purchases and consider using a consolidation loan calculator to get back on track.
2. You may lose your rewards if you stop spending: Unlike travel rewards, which often stay with you even if you stop spending, most cash back programs generally don't have any built-in protection against losing your rewards and can expire.

Which program is right for you?

​There's no one-size-fits-all answer to this question, as the best choice for you will depend on your individual needs and preferences. However, if you're looking for a more flexible rewards program that can be used to save or spend as you please, cash back may be a better option.

The bottom line

Which program is right for you depends on your goals and preferences. If you're looking for a straightforward way to earn money, a cash back program may be best. If you're interested in more opportunities to save money on your trips, a travel rewards program may be better suited.