In the credit card reward game, there are two teams: cash back and travel rewards.

Both are awesome perks that come with wise credit card management, but which one is better? 

While neither of these options are bad and each have their separate perks, cash back credit cards are generally viewed as the better option for three specific reasons.

Cash back cards provide tremendous flexibility. 

Of the three major benefits cash back cards provide over travel rewards cards, flexibility of usage is probably the most widely appreciated.

Where travel reward cards are very limited in the scope of how you can use your accumulated reward points, with cash the options are endless.

Not only can the reward be used on travel such as airline tickets and hotels but you also have options travel cards don’t provide such as new tires for your car or a year of Disney+ for the kids.

This increased optionality is not only extremely enticing, but also tremendously useful.

Knowing that a large store of accumulated cash is easily assessable provides many people with valuable peace of mind.

This peace of mind is even more beneficial when considering that no matter how hard one may plan, emergencies of all kinds randomly pop up that typically cost more than we’d like.

I know that my wife and I really appreciate at the end of the year having a little nest egg of money waiting for us.

While it is never life altering, it has certainly come in handy a few times over the years.

Imagine receiving a bonus from work at the end of the year. My wife and I view it as a bonus from the credit card at the end of the year and we really do appreciate it.

Cash back cards have an extremely simple reward system.

With cash back cards the reward is very simple – cash.

This can come in the form of a check, a quick and easy direct deposit, or even a statement balance to quickly knock out that growing expense number.

Another major distinction from travel reward cards, is the additional benefit of avoiding a rewards program.

Redeeming your travel reward balance is over complicated.

Most travel reward credit cards are limited in the offerings the provide and have certain relationships with specific venders which makes planning for trips and travel more complex than it needs to be.

Before signing up for a travel rewards card, take the time and look at who that card is partnered with and how those partnerships align with your travel needs and goals.

Too often, the airlines and hotels provided are not always the best options for the dates and locations of travel and can make planning a vacation harder than it needs to be.

With the simplicity of cash, all that extra headache is completely avoided!

Another extremely beneficial perk of some cash back cards is the simplicity of a straight percentage for all purchases.

Whereas many travel cards give you bonuses for different categories, causing you to remember who that card is partnered with when you are buying your expenditures, cash back cards often provide a straight 1.5-2% return on all purchases.

While these don’t always maximize the amount of return, the lack of pressure in remembering who or what you should buy from to take full advantage of rewards is often extremely beneficial.

Many times, simplicity wins. Life is hard enough. Making it harder by using certain credit cards just is not worth the hassle. 

Cash Back cards typically have fewer annual fees than travel reward cards

Another major benefit of cash back credit cards is the broader lack of annual fees in comparison to travel reward cards.

Annual fees are those pesky things that the credit card charges you once a year to simply own their card.

Even if you hardly ever use the card, you can count on a relatively substantially amount of money each year being taken for simply having that plastic card sit in your wallet.

Some people may ask why would anyone ever take a card with an annual fee?

Essentially you bought into the marketing of the credit card company!

Credit card companies sell the idea of the annual fee as worthwhile with the perks of those cards being higher and more valuable than the perks of lower annual fee cards or even no annual fee cards.

This reasoning is pretty easily debunked however with not only the two points above but also understanding the cost ratio of that card.

For some cards, the annual fee runs upward of $695, including the Amex Platinum from American Express.

The amount of money one would have to spend in order to make those annual fees worthwhile is unreachable for the vast majority of people.

When you consider the lower fee cards, you still run into the same issue of covering the expense of the fee with the perks and most of the time it just doesn’t make sense.

Additionally, for those who budget, many times its easy to forget about these additional fees for our credit card, making our budget not line up. 

At the end of the day, this is not a one size fits all situations. I understand that there are certainly times and situations where having travel cards and owning a card with fees may make sense.

But overall, considering the flexibility provided, simplicity of the program, and lack of fees, the cash back card is the best card for the largest majority of people.