Depending on your preferred redemptions, other types of credit card rewards might be more valuable to you.
Cash Back vs. Travel Rewards
Travel rewards, such as airline miles or hotel points, can be strategically redeemed to get outsized value. Every travel program has sweet spots where a single point or mile could be worth five or ten cents each when redeemed strategically. However, this assumes you’re well-versed on the program’s strengths—and have the flexibility to take advantage of them.
Cash back, on the other hand, offers stable value. You don’t have to hunt for the most valuable redemptions and don’t have to worry about getting below-average value. It’s also much simpler and doesn’t require a time investment in order to redeem rewards.
Read more: Best Travel Credit Cards of 2024
Cash Back vs. Flexible Bank Points
Many card issuers offer proprietary points instead of traditional cash back. These programs, like Chase Ultimate Rewards or Citi ThankYou points, build in flexibility. When you earn credit card points, you can redeem them as cash back (often, but not always, equivalent to 1%) or you can redeem them for other rewards through the program. A common redemption option is to book travel through the points portal to get 25% more value with every point. You may also be able to transfer points to partnering travel loyalty programs, effectively earning travel rewards.
Once again, cash back is the easiest and most straightforward option. However, credit card points usually have one or more alternate redemption options that are still relatively simple yet provide a greater return. The flexibility of points is their greatest attribute.
Find the Best Credit Cards for 2024
No single credit card is the best option for every family, every purchase or every budget. We’ve picked the best credit cards in a way designed to be the most helpful to the widest variety of readers.
Most Credit Card Users Prefer Cash Back Rewards
In a survey conducted by OnePoll on behalf of Forbes Advisor, 72% of respondents selected that they prefer cash-back rewards compared to other common forms of credit card rewards such as airline miles or points toward gift cards and merchandise.
As of January 2024, out of Americans with credit cards that earn rewards:
- 72% prefer cash-back rewards
- 16% prefer travel rewards
- 10% prefer points to redeem toward gift cards, shopping or dining
- 2% are unsure of their preference or prefer other types of rewards
As you’ve noticed from this list, there’s no shortage of cash-back credit card options. Earning structures range from flat-rate cards, where every purchase earns at the same easy-to-understand rate, to cards that offer different rebate percentages depending on the purchase category and can help you maximize your returns with a little more effort.
One other great advantage to cash-back cards is that many of them don’t carry an annual fee. That allows every penny you earn to be reaped as a true reward and applied with incredible flexibility.
Cards with transferable points, like Chase Ultimate Rewards or Capital One Rewards, often hit the best of cash back as well as travel rewards. They can have generous welcome offers plus the opportunity to earn flexible points that can later be redeemed for cash or travel—or a mix and match—so that each cardholder can choose the best redemption for them even as life and plans evolve.
Bottom Line
Cash-back cards generally fall into one of three categories:
- Flat-rate rewards, such as 2% cash back on every purchase.
- Rotating-category rewards, such as 5% cash back on a selection of purchase categories that update every quarter, then 1% cash back on remaining purchases.
- Fixed-category rewards, such as 6% cash back on groceries, 3% cash back on gas or 2% cash back on restaurant purchases, then 1% cash back on remaining purchases.
The best type of cash-back card will vary depending on your purchase habits. If you have a large amount of purchases in a specific category such as groceries or gas, it makes sense to find a card that offers bonus cash for your frequent purchases. But if you want a “set it and forget it” card, a flat-rate cash-back card will likely make more sense for you. If you want to maximize your cash-back earnings, consider pairing a flat-rate card with one that offers a bump for where you shop most often.
To view rates and fees for Blue Cash Preferred® Card from American Express please visit this page.
To view rates and fees for Blue Cash Everyday® Card from American Express please visit this page.
¹Eligibility and Benefit level varies by Card. Terms, Conditions and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company.
²Eligibility and Benefit level varies by Card. Terms, Conditions and Limitations Apply. Please visit americanexpress.com/benefitsguide for more details. Underwritten by AMEX Assurance Company. Car Rental Loss or Damage Coverage is offered through American Express Travel Related Services Company, Inc.
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