Credit Cards: Cash Back vs Travel Rewards

One of the questions I get asked a lot is “I get my cash back, why would getting points be more beneficial?”.  My answer is usually that it depends on what you want to get out of your credit card benefits.  I was just about to write about this topic but The Points Guy beat me to it.

If you would rather not read through his blog post since you’re already here, this is what he says:

With most cash back cards you know exactly what percentage (usually 1-5%) of each dollar you are spending that you will get back, like with Discover cards.  With the Capital One Venture card, you’ll get 2 points per dollar and those points can be redeemed for travel at 1 cent per point.  So, for example, a $250 flight would require 25,000 points.

On the other hand, a card like the Chase Sapphire Preferred where you can transfer your points to an airline, such at United, and then redeem for frequent flyer awards.  A coach seat typically is 25,000 points but a business class seat is 50,000.

With the Capital One card, you might only want to get tickets in coach since a business class ticket can be upwards of $4,000 which means you’ll need 400,000 points.  As  I mentioned, that same business class seat could be had for 50,000 points. So it just takes some thought… would you rather always fly on the cheapest flight (or close to it) in coach, or redeem for a premium level seat; which may be a once in a lifetime opportunity for some people (hopefully not me).

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