Cash Back vs. Travel Rewards: Choose the Best Credit Card for You

by Bridget Casey March 1, 2017 / No Comments

When it comes to choosing a credit card, the way to get the most bang for your buck is to pick the one that will give you the most rewards for your spending. A cash-back or a travel rewards credit card is the easiest way to use everyday purchases to give your budget a boost.

Cash-back credit cards give a percentage of your spending back to you as a reward. You can typically choose to have the cash back credited directly to your credit card bill, or receive a mailed cheque or direct deposit to your bank account. Some cards pay out monthly, others quarterly, or when you hit a certain threshold of cash-back earned. The best cash-back credit cards often provide other perks, such as extended warranties or purchase assurance.

Travel rewards credit cards let you earn points for every dollar spent, which can be redeemed for travel-related purchases later, such as flights, hotels, and car rentals. Sometimes you can redeem your travel points no matter how you book, but otherwise, your travel has to be booked directly through the credit card website, so make sure to verify it covers your favourite airlines or hotel chains, so you’ll point your points to use. The best travel rewards credit cards also offer other travel-related perks, such as travel medical insurance, trip cancellation, and coverage for lost baggage.

Making the most of cash-back credit cards

A cash-back credit card is best if you want flexibility with your credit card rewards and you’re focused on financial goals, such as saving or paying off debt. Direct your cash back into a dedicated savings account, or back onto the credit card itself to pay off debt. It’s an easy way to painlessly boost your bank account without changing your everyday spending habits.

The no-fee Tangerine Money-Back Credit Card offers 2% cash-back in up to three spending categories of your choice, and 0.5% cash-back on all your other purchases. There are 10 categories to choose from: groceries, gas, drugstore, furniture, hotels and motels, home improvement, parking, recurring bills, and restaurants. You’ll receive your cash-back reward monthly, as a statement credit or deposit to your bank account. Best of all, there’s no limit to the amount of cash-back you can earn, so make sure to use this card for big and small purchases.

Tangerine Money-Back Credit Card

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  • No annual fee
  • Earn 2% cash back on purchases in two categories of your choice, and 0.5% cash back on everything else
  • Get a third category earning 2% cash back when you deposit your rewards into a Tangerine Savings Account
  • No limit on how much cash back you can earn

With the Scotia Momentum Visa Infinite Card you can earn up to 4% cash-back on grocery and gas purchases, 2% on drug store purchases and recurring bills, and 1% on everything else. The card has a $99 annual fee, but if you sign up now, you can get a bonus of 5% cash-back on the first $3,000 of purchases made in the first three months.

Scotia Momentum VISA Infinite

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  • Annual fee: $99
  • Earn 4% cash back on gas and groceries, 2% cash back on drug store purchases and recurring bill payments, and 1% cash back on all other purchases
  • Receive VISA Infinite benefits
  • For new accounts opened by April 30, 2017: Earn 5% cash back on purchases for the first three months (up to $3,000)

The best perks of travel rewards credit cards

A travel rewards credit card is the best card for you if you have wanderlust to satisfy and you want to make it affordable. To make your globetrotting more luxurious, take advantage of other benefits such as access to airport lounges.

The MBNA Rewards World Elite MasterCard lets you earn two points per dollar from all your purchases. Each travel rewards point has an approximate value of $0.01 There is no limit to the number of points you can earn in a year, and your points never expire. Furthermore, you can redeem points retroactively, meaning if you’ve already spent on travel, you can go back and credit the purchase with points.

MBNA Rewards World Elite

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  • Annual fee: $89
  • Earn 2 MBNA points per $1 spent (2% cash back)
  • 10,000 bonus points with first eligible purchase (value: $100)

With the BMO World Elite MasterCard, you’ll earn two points per dollar spent which can be redeemed for travel related purchases like flights, hotels, cruises and vacation packages. Every 10,000 points are worth $10 when redeeming for travel expenses. Don’t have enough points to cover the cost of your flight or hotel? No problem, you can use what points you have and charge the difference to your credit card.

BMO World Elite MasterCard

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  • Annual fee: $150
  • 2% back in travel rewards on all purchases
  • Earn 20,000 bonus points (value: $200) on your first purchase
  • VIP airport lounge access with the included Priority Pass membership, plus 4 complimentary passes per year
  • Points can be used to cover all flight charges and taxes

When it comes to choosing a cash-back or travel rewards credit card, pick the one that offers the best return on your purchases and the best rewards for your lifestyle. Still undecided? You can always get one of each.

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