Many travel credit cards come with a great sign-up bonus and high travel rewards rates. But if you’re hoping those lucrative rewards will translate well into cash back, you’ll probably be disappointed. Here’s why, along with a few cards for travelers that can put cash back in your wallet.
Great on travel, weak on cash
Most travel credit cards are naturally geared toward travelers, so they typically give you a poor redemption value when you redeem rewards for cash back. Let’s use the Barclaycard Arrival Plus™ World Elite MasterCard® to explain.
Travel buffs love this one because it offers 2X miles on all purchases and a hefty sign-up bonus. When redeeming for travel in the form of a statement credit, each mile is worth $0.01. But if you redeem your miles for plain old cash back, you get only half as much.
For example, let’s say you’ve earned 50,000 miles with the Barclaycard Arrival Plus™ World Elite MasterCard®. Those miles are worth $500 when redeemed for a statement credit against a recent travel purchase, such as a plane ticket or a hotel booking. Plus, you’ll receive another 2,500 miles in your rewards account because the card provides a 5% bonus on miles redeemed for travel purchases.
But if you choose to get a cash back — meaning, a statement credit against your overall balance as opposed to against a travel expense — you receive only $250 in addition to the 5% rewards bonus. You get a statement credit either way, but one’s larger.
Consider these cash-back heavyweights
Travel credit cards are attractive because of their high rewards rates. But as we just saw, redeeming for cash instead isn’t as worthwhile. If you’re not a globetrotter but want a high-rewards card, here are some cash-back options to consider.
Get 1.5%, every day: Capital One® Quicksilver® Cash Rewards Credit Card
The Capital One® Quicksilver® Cash Rewards Credit Card’s strength lies in its simplicity. It offers unlimited 1.5% cash back on every purchase with no limit on how much you can earn, and no changing bonus categories. You can also earn a sign-up bonus: One-time $100 bonus after you spend $500 on purchases within the first 3 months.
If you’re fee-averse, you’re in luck. The Capital One® Quicksilver® Cash Rewards Credit Card has a $0 annual fee and no foreign transaction fees. It also has an introductory 0% APR period if you want to score cash back on a large purchase: 0% intro on purchases until June 2016 and 0% intro on balance transfers until June 2016, and then the ongoing APR of 12.9% - 22.9% (Variable).
All in all, the Capital One® Quicksilver® Cash Rewards Credit Card is a great choice. It’s simple, predictable and affordable.
Nerd note: If you need more time to pay off purchases, there are better 0% APR cards to choose from.
Earn now and later: Citi®Double Cash Card
Plenty of credit cards reward you for making purchases, but cards that reward you for paying off your balance are rare. The Citi®Double Cash Card is one of them, giving you unlimited 1% cash back on every purchase you make and an additional 1% cash back when you pay for those purchases in full or over time. That’s one of the highest ongoing rewards rates for cash-back credit cards.
The Citi®Double Cash Card also has a $0 annual fee and a solid introductory APR offer in case you need to finance a large purchase: 0% for 15 months on purchases and balance transfers, and then the ongoing APR of 12.99% - 22.99% Variable . The Nerds love the Citi®Double Cash Card’s rewards/introductory APR combination because the faster you pay off your big-ticket item, the sooner you’ll earn the second 1% cash back.
With its high cash-back rate and incentive to pay your balance quickly, the Citi®Double Cash Card gets high marks.
Cash, travel and more: Wells Fargo Propel 365 American Express
The Wells Fargo Propel 365 American Express is unique in this comparison because it’s a travel card with rewards points that are worth $0.01 each if redeemed for cash back (you might get a higher value if you redeem for travel). It offers 3X points at U.S. gas stations, 2X points at U.S. restaurants and 1X points on all other purchases.
The Wells Fargo Propel 365 American Express comes with a sign-up bonus: 20,000 points when you spend $3,000 in net purchases in the first 3 months. To compete with cash-back competitors, it also offers an introductory 0% APR promotion: 0% for 12 months on purchases and balance transfers, and then the ongoing APR of 13.99% - 21.99% Variable .
Frequent travelers like the Wells Fargo Propel 365 American Express because it offers discounts on things like hotels and rental cars, and it has no foreign transaction fees. But if you travel infrequently, you still have the option to redeem for cash back without losing any value.
One downside to consider: The Wells Fargo Propel 365 American Express’s annual fee is waived the first year and $45 every year thereafter. However, Wells Fargo customers with a qualifying checking or savings account or a PMA package could earn an annual points bonus of 10% to 50%, which could potentially make up for the annual fee.
If you’re an existing Wells Fargo customer and aren’t bothered by the annual fee, you might want to consider the Wells Fargo Propel 365 American Express.
The bottom line
With a few exceptions, travel credit cards don’t typically provide cash-back rewards with the same value as their travel rewards. If you’re ever in doubt, a straightforward cash-back card is usually a safe bet.
Ben Luthi is a staff writer covering personal finance for NerdWallet. Follow him on Twitter @benluthi and on Google+.
Image via iStock.
from NerdWallet Credit Card Blog
http://www.nerdwallet.com/blog/credit-cards/travel-rewards-cash-back/
No comments:
Post a Comment