Before you succumb to the lure of the hefty loyalty bonuses often on offer for signing up for travel-rewards credit cards, take a moment to consider cash-rewards cards instead.
There's a strong argument to be made that the average consumer gets better value from using a cash-back credit card than from a travel-rewards card. Sure, the prospect of a free trip paid for with miles or points sounds alluring. But in dollars-and-cents terms, redeeming loyalty-program miles and points for free travel often amounts to a rebate of just over 1%. There are cash-back cards that return more than that. And cash easily trumps points for flexibility and convenience. It can be used to buy anything, including travel, with no restrictions or capacity controls.
So the question becomes: Which cash-back card is the best? Until recently, there were two contenders for the title:...
The Citi Double Cash Card
- Annual fee: $0
- Cash back: 2% (1% when you buy, the second 1% when you pay your credit-card bill)
- Disclosure: Citi is an Airfarewatchdog advertiser
The Fidelity Rewards Visa Signature Card
- Annual fee: $0
- Cash back: 2%
- Comment: The cash rebate must be deposited initially in a Fidelity account, so cardholders must be Fidelity customers.
There is now a third card that offers consumers a simple, reliable 2% cash rebate:
The PayPal Cashback Mastercard
- Annual fee: $0
- Cash back: 2%
- Comment: Cash rebate is initially deposited into cardholders' PayPal accounts. From there, it can be transferred to a user's bank account.
None of the three cash-back cards is a good candidate for spending when traveling overseas—they all charge foreign transaction fees. But for everyday spending, any one of the three (The Citi Double Cash Card, The Fidelity Rewards Visa Signature Card, or the The PayPal Cashback Mastercard) will deliver a solid return.
Which card is the best? Unless you're already a Fidelity customer or a regular PayPal user, The Citi Double Cash Card enjoys a convenience advantage, because the rebate can be taken either as a check or a statement credit. But at the end of the day, all the cards provide a solid 2% cash back.
Consider that 2% return a line in the sand: If you're getting less value than that, you might want to reconsider your choice of credit card.
Editor's Note: This content is not provided by any bank, credit card issuer, airline, or hotel chain. Any opinions, analyses, reviews or recommendations expressed here are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by the aforementioned entities.
