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Yahoo
10-04-2025
- Business
- Yahoo
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 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.
Yahoo
27-02-2025
- Business
- Yahoo
Best credit card sign-up bonuses for 2025
A credit card sign-up bonus can help you quickly earn valuable rewards as a qualified new cardholder, whether you prefer cash back, points, or miles. Your bonus could be worth up to $750 or more, depending on the offer. These limited-time credit card offers provide better deals than the standard offers, but they're only here for a limited time, so act quickly if one meets your needs. Why we like it: The Amex Blue Cash Preferred has one of the most rewarding cash-back rates available for common expenses, making it easy to earn cash-back rewards on purchases you already make. If you want an everyday rewards earner, this could be your we like it: The Capital One Quicksilver makes sense if you want a straightforward, no-frills cash-back card. With no annual fee, foreign transaction fees, or bonus categories to worry about, this can be the only card you need in your we like it: The Chase Freedom Unlimited is a heavy-hitter rewards earner and 0% intro APR card, all with no annual cost. Even better, you have flexibility with your redemption options, with complete control over redeeming your rewards for cash back, travel, gift cards, and we like it: The Capital One Savor has an excellent 0% intro APR offer for new cardmembers, and it also checks multiple other boxes to ensure it provides lasting value. It has no foreign transaction fees, no annual fee, and one of the best rewards rates available for earning unlimited cash back on everyday we like it: The Chase Sapphire Preferred is one of the best cards for travelers because it earns valuable Chase Ultimate Rewards points and has a low annual fee. You also have flexibility with your redemption options, including redeeming points for airfare, hotel stays, rental cars, transfer partners, and we like it: If you want a straightforward card for earning travel rewards on all your eligible purchases, look no further than the Capital One Venture Rewards. This card doesn't have confusing spend categories, making it the perfect addition to your wallet if you want one card for we like it: The Discover it Student Cash Back is a dual threat, allowing you to earn valuable rewards while building a positive credit history. If you compare this card with the non-student version, you'll find you don't lose out on its high rewards rate or generous welcome we like it: The IHG One Rewards Premier is one of our favorite hotel cards because you get a free anniversary night each year and automatic elite status. The free night benefit alone can offset the annual fee, so any other value you get from rewards and benefits is just icing on the cake. Why we like it: The Delta SkyMiles Reserve Amex makes sense if you frequently fly Delta and want premium travel benefits, such as access to Delta Sky Clubs and up to $240 annual Resy credit (up to $20 back per month on eligible Resy purchases). It's also an excellent way to boost your Medallion Status yearly, as it boosts Medallion Qualification Dollars (MQD) we like it: The Amex Gold Card is excellent for earning points in the Membership Rewards program on everyday shopping and dining trips. It's also one of our favorite cards for foodies because of its multiple dining-related perks where you can receive statement credits to more than cover the annual membership we like it: The Capital One Venture X is our pick for a premium travel credit card with a reasonable annual fee. You still get the airport lounge access benefits and an annual $300 travel credit for bookings through Capital One Travel, but you don't have to pay as much as you would with certain competitor cards.A credit card sign-up bonus is a reward you can earn as a new cardholder on a rewards credit card. You usually must meet a spending requirement to earn a welcome bonus, often rewarded as cash back, points, or miles. For example, earn 60,000 bonus points after spending $4,000 in the first three months after account opening. The requirements can vary by the welcome offer, credit card issuer, and credit card, but you typically have to spend a certain amount of money on your card within a specific period to earn a bonus. It's common for welcome offer spending requirements to give you a three-month period to earn the bonus, but some periods can last for six months or more. The amount of money you must spend for the bonus can vary, but often ranges from $500 to $4,000. Many business credit card card welcome offers have higher spending requirements, sometimes reaching $15,000 or more in the same amount of time. You won't earn the welcome bonus if you don't meet the spending requirements within the given timeframe. One thing to be aware of is that having any of your expenses credited back because of canceled or returned purchases could affect whether you qualify for a bonus. The most common types of credit card sign-up bonuses include rewards in the form of: Cash back Points Miles Cash-back credit cards reward cash back, while travel credit cards reward you with points or miles. Credit card sign-up bonus requirements can include: Approval: You must apply and be approved for a card to qualify for its welcome offer. This could include having a sufficient credit score to be eligible for approval. Previous bonus requirements: You might not qualify for a bonus offer if you've earned a similar offer recently, such as within the last 24 or 48 months. Similar card requirements: You might not qualify for a bonus offer if you have or have had the same or a similar credit card. Spending requirements: To earn a welcome bonus, you must spend a certain amount on your card within a specific timeframe. Consider these factors when reviewing credit card sign-up bonuses: Type of reward: Cash back, points, and miles are the most common reward types. If you're interested in travel, consider points or miles. Otherwise, cash back is the recommended option. Rewards value: Not all rewards currencies are the same, so it's worth researching the estimated value of a currency when researching different welcome offers. For example, 100,000 points on one card could equal $1,000, but the same number of points on another card might be worth $1,500 toward travel on another card. Your monthly budget: Going beyond your usual spending habits to earn a welcome offer doesn't make sense in most situations. For this reason, you should calculate your everyday expenses, such as buying groceries and filling up at gas stations, to see if your typical budget can help you meet the spending requirements for a bonus. It's worth looking into the best sign-up bonuses if you have large upcoming purchases. This strategy lets you earn valuable rewards without overspending. However, it's also worth considering a card's other perks and benefits to see if they can bring you long-term value. You typically aren't taxed for earning a credit card welcome bonus. You might incur taxes if you earned a bonus without spending money or earned rewards in other ways, such as referral bonuses, without spending anything. These credit cards provide bonus rewards to qualifying new cardmembers: Blue Cash Preferred® Card from American Express Capital One Quicksilver Rewards Credit Card Chase Freedom Unlimited® Capital One Savor Cash Rewards Credit Card Chase Sapphire Preferred® Card Multiple credit cards provide welcome bonuses that could be worth at least $750, including: Chase Sapphire Preferred® Card Chase Sapphire Reserve® Capital One Venture Rewards Credit Card Capital One Venture X Rewards Credit Card Citi Strata Premier® Card We researched nearly all available rewards credit cards with sign-up bonuses from major card issuers to find the best sign-up bonuses. We did not research every available credit card from every credit card company or include business cards in our research. We added over 100 credit cards to a rubric to compare current welcome offers, including their bonus values and spending requirements. We also included card types for each card, such as 'cash back,' 'travel,' and more. We determined which cards had the best sign-up bonuses according to the amount of value you could receive from them, as well as the best sign-up bonuses according to card type. Our final list is based on our rubric, research, and expert opinion. 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.
