Let’s first state that award programs are not something you should assess first when you’re looking for a new credit card. However, if you’ve found several cards that come with satisfactory operating costs, grace period and interest rates, you can compare them based on some bonuses that their users qualify for. There’s no such thing as free money, but responsible use of credit cards will gradually amount to awards which can be used for treating yourself or your loved ones, especially during holidays.
Let’s first discuss how cash rewards work. It’s easy to understand and straightforward. You make a purchase with your card and the company rewards you by returning a small percentage of the money you spent back to you. You know how much awards you’re eligible for, it’s up to you to find a card which offers the biggest bonus and then spend responsibly. This is a great option if you want to enjoy your prizes every once in a while, but you don’t have the time and energy to strategize how to get more of them. You simply know the more you spend with your card (with the timely payments, off course) the more bonuses you’ll get and you’ll be able to spend them on whatever you want. Your free miles or bonuses might expire after a while which is an argument in favor of cash-reward cards.
Choosing a travel card requires a bit more planning from you. However, if you can’t imagine your holidays without a trip to some new destination, it will probably be worth it. Of course, you can use bonuses from cash reward cards to cover some of your travel expenses, but if you have a specific travel card you can get better deals for the same amount of money spent. Travel cards come with many perks but only people who travel a lot (and spend a lot on it too) manage to use them all. If you preferred way of travel is flying, having a good travel card might mean you get to board first, upgrade for your travel class or you’ll be allowed to check in extra luggage for free.
If you travel abroad often, you should definitely get a travel reward card because you’ll be able to avoid foreign exchange fees through most of them. Try to find a company that doesn’t limit where you’re able to redeem your reward; that way you won’t end up stuck with a specific airline or a hotel company that you might not have chosen yourself. This is a big source of frustration for people who get a travel card without reading all the terms and conditions. You want to find a company that won’t award you a lot of free miles that are practically unredeemable for you. Travel cards usually come with additional promotions at the beginning to motivate you after you sign up, but they require you spend a certain amount of money in those first few months, so make sure you can afford that.