Which credit card rewards are better: Cash back or points?
Rewards credit cards are a great way to get the most out of your spending habits by earning valuable cash back, points, or miles.
Cash-back credit cards tend to be easier to use due to straightforward rewards programs with simple earning and redemption rates. However, you might prefer a travel rewards card for its redemption options, such as flights and hotel stays. Many travel credit cards also have increased perks and benefits, including travel insurance or airport lounge access.
The best credit card rewards aren't a matter of cash-back vs. points — what you earn largely comes down to your spending habits, lifestyle, and personal preference.
Cash-back credit cards are rewards cards that earn cash back on eligible purchases. For example, a cash-back card with a 2% rewards rate will earn 2% back on your purchases. That might seem small, but it can add up over time.
The average American household spent over $20,000 on food and transportation in 2022, according to the Bureau of Labor Statistics. If you spent $20,000 in a year on a 2% cash-back card, you would earn $400 in cash-back rewards.
It depends on the card and credit card company, but standard cash-back redemption options include:
Statement credits
Deposits into bank accounts
Covering past purchases
Mailed checks
Gift cards
Some cards, such as the Chase Freedom Unlimited®, include travel bookings as a redemption option. That means you can use cash-back rewards for travel-related redemptions, like flights and hotel stays.
Cash rewards: You can earn valuable cash back for making eligible purchases with your cash-back card. In addition, cash-back rewards programs are often easier to use and understand than travel rewards programs.
Welcome bonuses: It's common for cash-back cards to provide a welcome offer or sign-up bonus to new cardholders. You typically have to meet a spending requirement to earn the bonus.
Low annual fees: Many cash-back cards have low (under $100) or no annual fees, keeping your yearly card membership costs down.
0% intro APR offers: Cash-back cards have some of the best 0% intro APR offers on purchases and balance transfers.
Foreign transaction fees: Most cash-back cards charge foreign transaction fees, making them poor choices for international travel.
Limited redemptions: Travel redemption options are more uncommon on cash-back cards.
Fewer perks and benefits: You typically won't find as robust travel benefits on cash-back cards, including travel insurance, airport lounge access, and annual travel credits.
We recommend cash-back credit cards if you prefer earning cash rewards on your purchases, want a low annual fee, and want to take advantage of a 0% intro APR offer.
These cards aren't great for frequent travelers because of foreign transaction fees and limited travel redemption options.
This embedded content is not available in your region.
Why we like it: The Capital One Savor is an excellent card for earning cash back in many everyday categories, including grocery stores, dining, and entertainment. If your typical spending habits align with these categories, this could be the perfect addition to your wallet.
Read our full Capital One Savor Cash Rewards review
Why we like it: If you want a simple cash-back card, look no further than the Citi Double Cash. This card has a straightforward rewards rate that works on all eligible purchases. It could be all you need if you don't want to juggle multiple cards.
Read our full Citi Double Cash review
Why we like it: The Amex Blue Cash Everyday makes sense if you want a simple cash-back card for everyday shopping. We especially like that online shoppers can earn elevated rewards on Amazon.com, Walmart.com, and other online retailers.
Read our full Amex Blue Cash Everyday review
Points and miles credit cards earn travel rewards on eligible purchases. These cards often provide various redemption options, but their rewards are designed for travel bookings, such as flights and hotel stays.
Travel rewards vary by card and credit card issuer, which can be confusing for travel card beginners. For example, 10,000 points on one card might offer a different value than 10,000 points on another.
However, it's easy to determine the value of your rewards if you have a specific redemption in mind. Suppose you want to book a flight that costs $150 or 10,000 miles. If you divide $150 by 10,000, you get 0.015.
That means your miles are worth 1.5 cents per mile for that specific redemption. Anything above one cent per mile could be considered decent value, though some rewards' standard value might already be higher than that.
Standard credit card points and miles redemption options include:
Travel bookings
Transfers to travel partners
Covering past travel purchases
Statement credits
Mailed checks
Gift cards
Note that the redemption value for available redemptions varies by credit card. However, a general rule of thumb is that you'll get the most value when redeeming points to book travel or transfer rewards to travel partners.
Travel rewards: If you're a frequent traveler, nothing beats earning valuable points or miles on your existing purchases. Turning gas station and grocery purchases into flights and hotel stays on your next trip is incredibly rewarding.
Welcome bonuses: Welcome offers on the best travel credit cards tend to be more significant than cash-back card bonuses.
Increased perks and benefits: The best rewards credit cards provide a wide range of benefits, including travel credits, airport lounge access, travel insurance, and more. It's also common for travel cards to waive foreign transaction fees.
More redemption variety: It's common for travel cards to have many of the same redemption options as cash-back cards, such as statement credits and gift cards. In addition, you can also have multiple travel-related redemptions.
No 0% intro APR offers: Most travel cards don't provide intro APR offers on purchases or balance transfers.
Potential for high annual fees: Premium and luxury travel cards have high annual fees, often exceeding $300 or more annually. You must determine if it's worth paying an annual fee to use a card's benefits and rewards.
More complicated rewards: Points and miles values vary depending on the rewards program and how you plan to use them. Learning can be confusing at first, but it can pay off with big savings on travel expenses.
We recommend points and miles credit cards if you want to earn travel rewards to help offset significant travel expenses, such as flights and hotels. You can use these cards to make everyday purchases and the rewards you earn can help fuel your next vacation.
In addition, travel credit cards are essential for international travel since most don't charge foreign transaction fees. They also provide travel insurance and luxury travel perks, such as airport lounge access.
Why we like it: The Wells Fargo Autograph provides an exceptionally high rewards rate for a card with a $0 annual fee. Even better, its spending categories align with many everyday expenses, including dining, gas, and transit. If you want a low-stress but rewarding travel card, the Wells Fargo Autograph could be the right choice for you.
Why we like it: The Capital One Venture Rewards makes a strong case for anyone who values simplicity. It doesn't have confusing bonus categories and earns an elevated rate on all eligible purchases. In addition, you get added perks like access to transfer partners and receiving up to a $120 credit for TSA PreCheck or Global Entry applications.
Read our full Capital One Venture Rewards review
Why we like it: The Chase Sapphire Preferred has been one of the most popular travel credit cards for years because of its low annual fee and top-notch travel benefits. That includes getting 25% more value when your points are redeemed for travel through the Chase Travel℠ portal. You can also transfer points to various travel partner loyalty programs, including Southwest Airlines Rapid Rewards, World of Hyatt, and Virgin Atlantic Flying Club.
Read our full Chase Sapphire Preferred review
With cash-back cards, you typically get exactly what the earning rate says. If a card earns 2% cash back on everything, that's what you'll get for making purchases. With points and miles, your rewards value might vary by redemption. For example, 10,000 points could equal $125 toward travel or $100 cash back.
Booking travel through Chase Travel℠ is one of the best ways to use your Chase Ultimate Rewards points with certain Chase cards. For example, 60,000 points on the Chase Sapphire Preferred are worth $750 toward travel redeemed through Chase Travel, whereas those points would only be worth $600 if redeemed for cash back.
Depending on the redemption, some credit card rewards are worth over $0.01 per point, offering more value than most cash-back cards. That's often the case when transferring points to travel partners with valuable rewards programs. For example, you can typically get more than $0.01 per point on redemptions you make with Air Canada, Southwest Airlines, and Virgin Atlantic.
This article was edited by Rebecca McCracken
Editorial Disclosure: The information in this article has not been reviewed or approved by any advertiser. All opinions belong solely to Yahoo Finance and are not those of any other entity. The details on financial products, including card rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the bank's website for the most current information. This site doesn't include all currently available offers. Credit score alone does not guarantee or imply approval for any financial product.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Forbes
19 minutes ago
- Forbes
Taiwan's 50 Richest 2025: Strong Demand For Chips Helps Drive Double-Digit Growth In Wealth To Record High
Daniel Tsai. This story is part of Forbes' coverage of Taiwan's Richest 2025. See the full list here. Taiwan's thriving semiconductor industry continues to boost its economy, which grew at an annual rate of 4.6% in 2024, the highest in three years. Despite the jolt from U.S. President Donald Trump's tariff threats, which left the benchmark Taiex index up only slightly since we last measured fortunes, the rising New Taiwan dollar powered a 13% increase in the combined wealth of Taiwan's 50 richest to $197 billion from $174 billion last year. ss A total of 36 listees are more well-off in this round, resulting in a shuffle in the top ranks. Siblings Daniel & Richard Tsai were the biggest dollar gainers with a $3.2 billion boost, which took their wealth to $13.9 billion and earned them the No. 1 spot after a year's gap. Shares of their Fubon Financial Holding jumped 16% from last year, thanks partly to its expanding banking operations. Quanta Computer chairman Barry Lam, who was last year's richest, slipped to second place, despite an 8% uptick in his net worth to $12.6 billion. In February, the maker of laptops and AI servers teamed up with American quantum processing firm Rigetti Computing to develop superconducting quantum computing technology. Brothers Tsai Hong-tu & Cheng-ta of Cathay Financial Holdings, cousins of Daniel and Richard, climbed two places to No. 3, with $10.9 billion. In November, a wind power unit of their group's insurance arm agreed to invest $1.65 billion for a 50% stake in an offshore wind farm in Taiwan, to be constructed and run by Danish energy company Ørsted. Siblings Jeffrey Koo Jr. and Angelo Koo, who own stakes in CTBC Financial Holding and KGI Financial Holding, respectively, are the biggest gainers in percentage terms. Their separately listed fortunes more than doubled to $4.7 billion and $3.3 billion, thanks partly to new information about their holdings. There are three newcomers this year, including two minted from the red-hot sector of AI servers: Lin Tsung-Chi, founder and chairman of King Slide, a maker of rails for servers, enters the ranks with $2.9 billion; brothers Chao Chung-Hsin & Yung-Tsang join the list as their Jentech Precision Industrial, a supplier of semiconductor cooling components, reaped the benefits of the frenzied AI data center buildout. The third new entrant is Chang Chung-Hsing, founder and chairman of Apex Dynamics, which supplies gearboxes for products such as industrial robots. The net worth of footwear magnate Zhang Congyuan, who was Taiwan's richest person three years ago, shrank by $1.8 billion to $8.3 billion, registering the biggest decline in dollar terms. Shares of his Guangdong-based Huali Industrial Group fell by more than a fifth amid U.S. tariff threats. Four listees from last year dropped off. Notable among these are brothers William & Wilfred Wang, whose fortune drawn from Formosa Plastics Group was impacted by global headwinds in the chemicals sector. The minimum net worth to make the list rose to $1.3 billion from $1.1 billion last year. Full Coverage of Taiwan's Richest 2025: Editing assistance by Phisanu Phromchanya. Reporting by Shu-Ching Jean Chen, Gloria Haraito, Enyi Hu, Shanshan Kao, Chengbo Liu, Catherine Wang and Yue Wang. Methodology: The list was compiled using information from individuals, analysts, government agencies, stock exchanges, databases and other sources. Net worths were based on stock prices and exchange rates as of the close of markets on May 9 and real-time net worths on may reflect different valuations. The ranking lists both individual and family fortunes, including those shared among relatives. Private companies were valued by using financial ratios and other comparisons with similar companies that are publicly traded. The list can also include foreign citizens with business, residential or other ties to Taiwan, or citizens who don't reside in Taiwan but have significant business or other ties. The editors reserve the right to amend any information or remove any listees in light of new information. Acknowledgements: Special thanks to CBRE Taiwan, Euromonitor International, Market Intelligence & Consulting Institute, TrendForce and the other experts who helped us with our reporting and valuations, including Wei-Jiun Hung, L&C Attorneys-at-Law; Parsley Ong, J.P. Morgan; Hung Ou Yang, Brain Trust International Law Firm; and Sophie Perret, HVS.
Yahoo
28 minutes ago
- Yahoo
The 'Big Beautiful Bill' Will Add $2.4 Trillion to the Deficit
In March, President Donald Trump stood before a joint session of Congress and vowed to "do what has not been done in 24 years: balance the federal budget." The first major legislative package of Trump's second term, however, will throw the federal budget farther out of balance, the Congressional Budget Office (CBO) concluded in an updated assessment of the bill. The CBO estimates that the One Big Beautiful Bill Act, which cleared the House late last month and is awaiting a vote in the Senate, will increase deficits by $2.4 trillion over the next 10 years. The bill will reduce tax collections by an estimated $3.75 trillion over that period, while reducing government spending by an estimated $1.3 trillion. The budget deficit is the gap between how much the federal government spends and how much tax revenue it collects in a single year. If spending is higher than revenue—as has been the case in every single year since 2001—then the government must borrow to fill in the gap. The "Big Beautiful Bill" will, in effect, force the federal government to borrow more heavily in the future. And all that extra borrowing comes with more costs, since interest must be paid. The Committee for a Responsible Federal Budget, a nonprofit that advocates for reducing the deficit, estimates that the bill will add about $3 trillion to the deficit once interest costs are included in the calculation. The bill would also double the federal government's interest payments from nearly $900 billion in 2024 to $1.8 trillion by 2034, the group estimates. The bill's actual impact on the deficit is likely to be even larger than what the CBO estimates, due to several provisions that are meant to game the number-crunching agency's scoring process. Several of the tax breaks in the bill—such as the higher standard deduction, an expanded child tax credit, and tax exemptions for tips and overtime pay—are temporary and will expire by 2029. But those policies are clearly not meant to be temporary, and if extended, they would further widen the deficit in 2030 and beyond. The extension of the 2017 income tax cuts is essential to avoid a massive tax hike that would hit nearly all American households. And many of the spending cuts included in the bill—such as new work requirements for Medicaid and food stamps—are worthwhile efforts. But the problem with the bill, as the CBO's report outlines in stark terms, is that the spending cuts and tax cuts do not offset one another. That would be an imprudent decision even if the federal government was not deep in debt and already on course to see borrowing increase in future years. Given its current fiscal situation, piling more borrowing costs on future American taxpayers seems utterly foolish. Could revenue from tariffs help to offset the budgetary impact of the tax bill? The CBO released an assessment of Trump's tariffs on Wednesday showing that those higher taxes on imports would reduce the budget deficit by about $2.8 trillion over the next decade. In a statement, the White House touted that report as proving that Trump's policies, as a whole, would reduce rather than expand the budget deficit. The first problem with that is that those tariffs might not remain in place long enough to matter. They have been in constant flux for months as Trump has raised, lowered, paused, and altered them on a nearly weekly basis. Two federal courts have also ruled that the tariffs were unlawfully imposed—and if those decisions are affirmed on appeal, then the tariff revenue could vanish entirely. (The CBO's assessment did not take into account the court rulings or any changes made to the tariffs since May 13.) The other problem is that the White House is effectively admitting that its tariff policies will offset the economic benefits of the tax cuts it is trying to pass through Congress—which the White House is also arguing will boost economic growth. In short, the Trump administration is trying to have its tax cuts and eat them too. Here's a better plan: Draft a tax bill that doesn't add to the deficit, so that the tariffs don't need to be a part of the picture at all. The post The 'Big Beautiful Bill' Will Add $2.4 Trillion to the Deficit appeared first on
Yahoo
28 minutes ago
- Yahoo
Trump's China Tariffs Are Backfiring in Funniest Way Possible
Donald Trump's tariffs on China have sent automakers scrambling to keep production lines moving—and their main solution is the exact opposite of what the U.S. president intended. When Trump announced his sweeping 'reciprocal' tariffs on almost every country (and a few uninhabited islands) in April, he promised that 'jobs in factories will come roaring back into our country.' Apparently, part of his goal was to make it so expensive to import certain products that companies would simply start manufacturing them in the U.S. But so far, the opposite is coming true. Four major automakers are rushing to find a way to keep procuring rare-earth magnets, a key component of car motors, which are primarily made in China. Without the magnets, the companies fear car production could shut down in a matter of weeks. Several carmakers, both traditional and electric, are considering moving part of the manufacturing process to China, The Wall Street Journal reported Wednesday. This could include building electric motors in Chinese factories or shipping American-made motors to China to have the magnets installed, according to the Journal. Trump's restrictions only cover the Chinese-made magnets, not finished parts such as a fully built motor. 'While efforts are under way to bolster supply chains and suppliers of these elements outside of China, this will take additional time and will not alleviate the immediate shortage of elements vital for automotive components used to produce vehicles here at home,' the heads of the Alliance for Automotive Innovation and MEMA, the Vehicle Suppliers Association, warned in a letter. China had agreed to reduce export controls on rare-earth magnets as part of a 90-day tariff pause with the United States. Trump has since accused China of dragging its feet on license approvals for magnets, while broader trade talks between the two nations appear to have come to a total standstill. Trump complained about the state of trade talks at 2:17 a.m. Wednesday. 'I like President XI of China, always have, and always will, but he is VERY TOUGH, AND EXTREMELY HARD TO MAKE A DEAL WITH!!!' he wrote on Truth Social.
