Rewards cards fall into two broad camps. Cash back cards return a percentage of what you spend as money you can use however you like. Travel cards earn points or miles that are worth the most when redeemed for flights and hotels. The better choice depends far more on your habits than on the headline offer.
When cash back wins
If you travel once or twice a year, or you value simplicity, cash back is hard to beat. Flat-rate cards pay the same percentage on everything, while category cards pay more on groceries, gas or dining. There is nothing to track and no risk of points losing value before you use them.
When travel rewards win
Frequent travelers can squeeze more value from points, especially when they can transfer them to airline or hotel partners. Travel cards also tend to carry perks like airport lounge access, travel insurance and no foreign transaction fees. Those benefits come with higher annual fees, so they only make sense if you will actually use them.
Run a quick estimate: take your typical yearly spending in each category, apply each card’s earning rate, and subtract the annual fee. The card with the higher net number is usually the right one. And whichever you choose, rewards only come out ahead if you pay your balance in full; interest charges erase them quickly.
