Cash back vs. rewards points: Which is worth more?

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Whether you’re a newbie or a credit card connoisseur, one of the common questions that plague those looking for new plastic is “should I go with a cash back or a rewards credit card?” 

Certainly, each card type has its own pros and cons, so how do you choose between the two? A cash back card can offer a straightforward, quick financial return; but a rewards card could net you potentially better goodies, like a free trip or hotel stay. 

It’s easy to be seduced by a big sign-up offer or a high earn rate, but to ensure you get the match that will maximize your earnings, try to go beneath the surface and consider the key factors we examine below.

Feature Cash back Rewards
Sign-up bonus Typically top out at $300 or so UP to $2,000 in "value"
Return on regular spending Evenly matched Evenly matched
Value-added features Features are usually less valuable compared to rewards cards at a similar annual fee level Value of features can be huge, particularly for upper-tier cards
Ease of use Very low maintenance Labyrinth of different transfer rules and redemption rates can be a headache
Annual fee Up to $139 Up to $799

Cashback vs rewards credit card | Offers, promotions, sign up bonuses

You can’t really beat the quick budget boost of netting hundreds of dollars’ worth of extra cash or rewards just by signing up for a card and spending the required minimum amount in the time allotted.

When comparing miles vs cash back credit cards, miles/rewards cards usually have the most generous welcome bonuses.

Cash back introductory offers commonly top out at a couple hundred dollars or so, whereas rewards cards frequently follow a “go big or go home” game plan to attract new customers with offers worth $300 or more.

Here’s a comparison between two of the biggest welcome bonus offers in Canada at the moment

Scotiabank Momentum® Visa Infinite

Apply now

10% back

Excellent

Earn 10% cash back on all purchases for the first 3 months (up to $2,000 in total purchases). No annual fee in the first year, including on additional cards.

For every $1 you spend on grocery store purchases, recurring bill payments and subscription purchases

4%

For every $1 you spend on gas and daily transit purchases

2%

Cash back on all other purchases with no cash back limit

1%

Purchase APR

20.99%

Balance Transfer Rate

22.99%

Cash Advance APR

22.99%

Annual Fee

$120

Foreign Transaction Fee

2.50%

Recommended Credit Score

Excellent

Required Annual Personal Income

$60,000

Required Annual Household Income

$100,000

Pros

  • High earn rate on everyday spending categories

  • Comprehensive travel and purchase insurance

  • Visa Infinite perks such as concierge, events, and special offers

  • 25% Car rental discounts at Avis and Budget

  • Mobile device insurance

  • Up to $200 welcome bonus

Cons

  • Income requirements are higher: $60k personal or 100k household

  • Cash back can only be redeemed once a year

You can earn up to $200 with one of the best cash back credit cards in Canada where you get up to 10% cash back for the first 3 months. While there is an annual fee, your first year is free. 

Scotia also makes a no annual fee version, where you only get 1% cash back on gas, groceries, drug store purchases, and recurring bill payments (but sometimes that no annual fee is worth the price of admission). 

TD® Aeroplan® Visa Infinite* Card

Apply now

up to 50K pts

Excellent

Earn up to $1,200 in value† including up to 50,000 Aeroplan points†. Conditions Apply. Account must be approved by June 3, 2024.

Expires

Jun 4, 2024

for every $1 spent on eligible gas, grocery and direct through Air Canada® purchases (including Air Canada Vacations®)†

1.5 points

Earn 1 point for every $1 you spend on all other purchases†

1 point

Earn points twice with Aeroplan partner brands and on the Aeroplan eStore.†

2x

Earn 50% more Aeroplan points at Starbucks when you link your card to your account.†

50%

NEXUS application fee rebate every 48 months†

1

checked bag free for you and up to 8 travel companions†

1st

Purchase APR

20.99%

Balance Transfer Rate

22.99%

Cash Advance APR

22.99%

Annual Fee

$139

Foreign Transaction Fee

2.50%

Recommended Credit Score

Excellent

Required Annual Personal Income

$60,000

Required Annual Household Income

$100,000

Pros

  • The card has a high earn rate for Aeroplan Points, generating 1.5 points† per $1 spent on eligible purchases.

  • Insurance offered includes coverage in the categories that travellers need, and is generally better than its Aeroplan peers at a similar annual fee level.

Cons

  • No airport lounge membership or free lounge access.

  • Aeroplan points can’t be redeemed for flights outside the Star Alliance network, nor can they be redeemed for cash credit. This makes them less flexible than some competing travel rewards programs.

TD says you can earn up to $1,200 in value^ you can derive from 50,000 Aeroplan points1 (10,000 when you get the card, 20,000 after you spend $6,000 within 180 days, and 20,000 when you spend $10,000 within 12 months of account opening). Now, 50,000 Aeroplan points are worth about $700 (depending on how you spend them and it's always best to spend them for flights).

They also give you a NEXUS application fee rebate in the form of a $100 statement credit) and a free first checked bag for the cardholder and up to 8 passengers on the same reservation which is worth about $40 per bag depending on where you're travelling from and to. 

So, yeah, that's about $1,200 if you use every perk and benefit possible. 

†Terms and conditions apply.

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This offer is not available to residents of Quebec.

The Toronto-Dominion Bank (TD) is not responsible for the contents of this site including any editorials or reviews that may appear on this site. For complete and current information on any TD product, please click the Apply Now button.

Which is better—cash back vs. rewards credit card?

In this instance, we'll take the travel rewards card. Even though you'll have to pay the annual fee twice to unlock the full welcome bonus, and your money has to be used towards travel (flights + NEXUS), the dollar value is still more valuable. However, if you prefer straight cash back with high earn rates, you can't lose with the Scotia Moment Visa Infinite.

Cashback vs. points credit card | Return on regular spending

In the battle between rewards points vs cash back there is no clear winner for the best regular earn rates.

Since both types of cards can feature accelerated earn categories, you need to assess where exactly you spend your money to figure out which card will be the biggest earner for you.

This is clear when we compare two top ranking credit cards like the American Express Cobalt® Card for travel and the Tangerine Money-Back Credit Card for cash back.

American Express Cobalt® Card

Apply now

15,000 pts

Fair

Earn up to 15,000 Membership Rewards points

Earn 5 times he points on eligible eats and drinks in Canada, including groceries and food delivery. Spend cap applies.

5x

Earn 3 times the points on eligible streaming subscriptions in Canada.

3x

Get 2 times the points on eligible ride shares, transit & gas in Canada.

2x

Earn 1 additional point on eligible hotel and car rental bookings via American Express Travel Online

1x

Earn 1 point for every $1 in Card purchases everywhere else

1x

Get up to $100 USD hotel credit to use on amenities when charged to the room for a stay of 2 or more consecutive nights through The Hotel Collection from American Express Travel.

$100 USD

Purchase APR

21.99%

Cash Advance APR

21.99%

Annual Fee

$155.88

Foreign Transaction Fee

2.50%

Recommended Credit Score

Fair

Required Annual Personal Income

$0

Required Annual Household Income

$0

Pros

  • High earn rates (up to 5% return on spending!)

  • Flexible month-by-month fee structure

  • Free supplementary cards

  • 1:1 points transfer with selected hotels, airlines and frequent flyer programs

Cons

  • Accelerated earn rates only apply to purchases in Canada (not to purchases made abroad)

  • Amex has a more limited merchant acceptance rate than Visa and Mastercard

  • Slightly higher than average annual fee

The American Express Cobalt® Card is a “lifestyle” rewards card that offers some of the most elevated earn rates possible for people that really love food and travel. Cardholders get:

  • 5 points per $1 spent on eligible eats and drinks, including purchases in grocery stores and food delivery
  • 2 points per $1 spent on eligible transit & gas purchases in Canada and eligible travel purchases
  • 1 point per $1 spent in Card purchases everywhere else (like for everyday spending)

In your first year as a new Cobalt® Cardmember, you can earn 1,250 Membership Rewards® points for each monthly billing period in which you spend $750 in net purchases on your Card. This could add up to 15,000 points in a year. That’s up to $150 towards a weekend getaway or concert tickets. Conditions apply.

Simplii Financial™ Cash Back Visa* Card

Apply now

20% back

Good

about new welcome offers by email

on eligible restaurant, bar and coffee shop purchases, up to $5,000 per year.†

4%

on eligible gas, groceries, drugstore purchases and pre-authorized payments, up to $15,000 per year† - after that 0.5% unlimited.

1.5%

on all other credit card purchases with no limit on how much you can earn.†

0.5%

Purchase APR

20.99%

Balance Transfer Rate

22.99%

Cash Advance APR

22.99%

Annual Fee

$0

Foreign Transaction Fee

2.50%

Recommended Credit Score

Good

Required Annual Household Income

$15,000

Pros

  • Extremely high cash back on bars and restaurants

  • Solid cash back on groceries, drug store, gas and prepayments

  • No annual fee

  • Up to three additional cards free of charge

Cons

  • Cash back applied as year-end statement credit

What makes the Simplii Financial™ Cash Back Visa* Card so valuable is that it not only has no annual fee but also has excellent earn rates on everyday purchases making it the perfect shopping companion for restaurants, bars, and coffee shops as well as a pretty solid earn rate on gas, groceries, drugstore, and recurring bills. 

*Terms and Conditions apply

Check out our respective lists of the best rewards cards and the best cash back cards in Canada to find out which other cards offer particularly high earn rates in the purchase categories where you spend the most.

Which is better—cash back vs. rewards credit card?

The American Express Cobalt has a high earn rate across many categories where you earn Membership Rewards (MR) points. The MR points are super flexible and can be transferred 1:1 to Aeroplan or in cash back. You can earn over $800 a year in value (when considering the annual fee).

The Simplii Cash Back Visa, after its first year welcome bonus that'll net you $92.50 extra, will earn $330 every year in cash back.

So, if you use your Amex points to transfer to Airline partners, you could earn nearly $1,200. However, if you redeem for cash, or statement credits, the dollar figure drops to less than $500 based on an average spend.

But let's not forget the Cobalt's annual fee, which brings it inline with the Simplii Cash Back. The Cobalt wins here for its flexibility.

Cashback vs. points credit card | Value-added features

Most basic cash back or rewards cards include purchase security and extended warranty, with things like insurance and concierge service commonly offered among higher-end cards.

The key main difference between perks offered by miles vs cash back cards manifests in premium travel rewards cards. Travel cards tend to kick the value-added features up a notch: in an effort to win the loyalty of big-spending jet setters, the best travel cards of the lot offer comprehensive insurance packages and/or free airport lounge access. You can see what I mean by comparing the features offered by a travel rewards and cash back credit card, both from the same issuer and with comparable annual fees.

Scotiabank Passport® Visa Infinite*

Apply now

up to 40K pts

Good

Earn up to $1,300* in value in the first 12 months, including up to 40,000 bonus Scene+ points and first year annual fee waived

Expires

Jul 2, 2024

Scene+ points on every $1 you spend at Sobeys, Safeway, IGA, Foodland and participating Co-ops and more

3x

Scene+ points for every $1 you spend on other eligible grocery stores, dining, eligible entertainment purchases and eligible daily transit options (including ride shares, buses, subways, taxis and more)

2x

Scene+ point for every $1 spent on all other eligible everyday purchases

1x

Purchase APR

20.99%

Balance Transfer Rate

22.99%

Cash Advance APR

22.99%

Annual Fee

$150

Foreign Transaction Fee

0.00%

Recommended Credit Score

Good

Required Annual Personal Income

$60,000

Required Annual Household Income

$100,000

Pros

  • No FX fees means the card saves you significant expenses on foreign transaction fees

  • Earn up to 3x Scene+ points per $1 spent on eligible purchases

  • Flexible and straightforward redemption program

  • Visa acceptance globally compared to American Express, especially outside major cities.

  • Enjoy six annual visits to airport lounges

  • Robust insurance offerings, including extended travel emergency medical coverage

  • Access to Visa Infinite Program benefits, with added advantages like a free supplementary card

Cons

  • High annual fee

  • Limited rewards categories for earning reward max rate on purchases

  • Primarily best for travel within Canada

The lineup of features on this frequent flier favourite is outstanding and could save globetrotters hundreds to several thousands of dollars on common flight expenses. To start off with, the Scotiabank Passport® Visa Infinite* Card offers a far-reaching insurance package that includes:

  • Hotel burglary: If you charge a hotel or motel stay anywhere in North America to your Scotiabank Passport® Visa Infinite* Card, you, your spouse and dependent children are eligible for coverage against theft of personal property from your room, up to a maximum of $1,000.
  • Baggage lost/delayed: If you or eligible companions on the same trip (when you charge the full cost of your airplane, train, bus or cruise ship tickets to your Card) lose your bags or if your bags are stolen, you’ll all be covered up to a combined max of $1,000. If your/your eligible companions’ bags are delayed for four or more hours, you’ll also net up to a maximum of $1,000 for the cost of replacing eligible essential items.
  • Travel emergency medical insurance: A vital feature for those who travel often, the Scotiabank Passport® Visa Infinite* Card covers you, your spouse and dependent children for up to $2 million toward emergency medical coverage for up to 25 consecutive days. If you are 65 years of age or over, you’ll be covered for up to three consecutive days. This may not sound like much, but some credit cards in Canada don’t offer any coverage at all for those 65 or over.

Travellers also save because the card doesn’t charge foreign transaction fees and airports will be much more bearable with the card’s complimentary six free airport lounge visits. There’s no cash back card that offers those kinds of perks.

¹ Conditions Apply. Visit here for the Scotiabank Passport® Visa Infinite* Card to learn more.

Scotiabank Momentum® Visa Infinite

Apply now

10% back

Excellent

Earn 10% cash back on all purchases for the first 3 months (up to $2,000 in total purchases). No annual fee in the first year, including on additional cards.

For every $1 you spend on grocery store purchases, recurring bill payments and subscription purchases

4%

For every $1 you spend on gas and daily transit purchases

2%

Cash back on all other purchases with no cash back limit

1%

Purchase APR

20.99%

Balance Transfer Rate

22.99%

Cash Advance APR

22.99%

Annual Fee

$120

Foreign Transaction Fee

2.50%

Recommended Credit Score

Excellent

Required Annual Personal Income

$60,000

Required Annual Household Income

$100,000

Pros

  • High earn rate on everyday spending categories

  • Comprehensive travel and purchase insurance

  • Visa Infinite perks such as concierge, events, and special offers

  • 25% Car rental discounts at Avis and Budget

  • Mobile device insurance

  • Up to $200 welcome bonus

Cons

  • Income requirements are higher: $60k personal or 100k household

  • Cash back can only be redeemed once a year

For a cash back card the Scotiabank Momentum® Visa Infinite* Card offers some impressive value-added features, such as Visa Infinite* Concierge Service and Visa Infinite* Dining and Wine Country program. The most attractive extra is its up to $1,000 new mobile device insurance—and it’s one of the few cards in the country to offer this (Scotiabank Passport® Visa Infinite* Card doesn’t have this feature).

But while that insurance bonus is wonderful, you can see by comparing it with the Scotiabank Passport® Visa Infinite* Card that its other insurance offerings aren’t as outstanding:

  • Hotel burglary: Unlike the Scotiabank Passport™ Visa Infinite* Card, the Momentum® Visa Infinite* Card doesn’t feature hotel burglary insurance.
  • Baggage lost/delayed: The coverage is the same as the Scotiabank Passport™ Visa Infinite* Card, but the maximum reimbursement amount for each circumstance is $500 (rather than $1,000)
  • Travel medical insurance: The Scotiabank Momentum® Visa Infinite* Card offers less maximum medical insurance than the Scotiabank Passport™ Visa Infinite* Card (you, your spouse and dependent children are covered for up to $1 million in emergency medical expenses), and coverage only lasts for up to 15 consecutive days if you’re under age 65. There’s no coverage for those 65 years of age or over.

Who wins? Travel or cash back credit card?

The Scotiabank Passport gives you lounge access and great insurance, but less than $200 in value after your first year. The Scotia Momentum's value is a little bit more in its cash back offering (~$250) based on an average spend. So, if you're looking for perks, you may need to go with the Scotiabank Passport for its airport lounge access.

Travel card vs. Cash back credit card | Ease of use

Cash back credit cards throttle rewards cards when it comes to ease of use. With a cash back card you usually don’t have to worry about what time of year to redeem points, minimum point redemption limits, whether or not your points/miles are transferrable or expire, and the real-world value of your points (check out our Loyalty Points Bible for an explanation about redemption values).

Take a look at these two top cards to see which you think would be easier to manage:

Scotiabank Gold American Express®

Apply now

up to 40K pts

Very Good

Earn up to $650* in value in the first 12 months, including up to 40,000 bonus Scene+ points.

Expires

Jul 2, 2024

Scene+ points on every $1 you spend at Sobeys, Safeway, Freshco, Foodland and more

6x

Scene+ points for every $1 you spend on dining, food delivery and other eligible grocery stores. Includes popular food delivery and food subscriptions.

5x

Scene+ points for every $1 you spend in Canada eligible entertainment purposes. Includes movies, theatre and ticket agency stores.

5x

Scene+ points for every $1 CAD you spend in Canada on eligible gas and daily transit options. Includes ride shares, buses, subway, taxis and more.

3x

Scene+ points for every $1 CAD you spend in Canada on eligible select streaming services.

3x

Scene+ point for every $1 spent on all other eligible everyday purchases.

1x

Purchase APR

20.99%

Balance Transfer Rate

22.99%

Cash Advance APR

22.99%

Annual Fee

$120

Foreign Transaction Fee

0.00%

Recommended Credit Score

Very Good

Pros

  • Lots of daily spend options to earn multiplied point bonuses

  • Swanky Amex perks like Front of the Line presale concert tickets

  • Save on foreign transaction fees when abroad

  • Fantastic insurance coverage, especially for travel

Cons

  • Relatively low-value welcome bonus

  • $120 annual fee that chews into your point value substantially

  • Scene points redeem poorly for travel

To highlight just how much more complicated rewards redemption can be, we’ll look at the Scotiabank Gold American Express® Card.

This card is hands-down one of the easiest and most transparent rewards programs to use. Rewards act almost like cash with one of its Scene+ points equaling $.01—but only if you put your points towards travel. If you don’t use your points for travel expenses, however, the reward system becomes much more complicated and loses value (as is the case with many a travel rewards card).

For example, you earn 5X Scene+ points points for every $1 CAD spent on a variety of categories, including eligible dining. So, if you spend $500 in that tier of categories in a month you get 2,500 points, equivalent to $25 that you can put toward any travel spending (like baggage fees, plane ticket, seat fees, etc.) on your Scotiabank credit card statement within a year of the transaction date.

Of course, your travel points are not automatically redeemed for you, unlike with most cash back cards where the cash back points are applied to your statement every month or once a year without any effort on your part.

Point redemption gets more complicated and less valuable if you want to redeem Scene+ points on things like a statement credit or a gift card/donation. In these cases, point value goes down from $.01 (on travel. If this all seems too complicated (and remember Scene+ are among the easiest to redeem) then a rewards card may not be for you.

SimplyCash® Card from American Express

Apply now

up to $100

Good

Earn up to $100 in Statement Credits in your first 10 months as a new cardmember

Earn 2% cash back on eligible gas purchases in Canada, 2% cash back on eligible grocery purchases in Canada (up to $300 cash back annually)

2%

Earn 1.25% cash back on all other eligible purchases—the only stuff that won’t get cash back are non-purchases, like cash advances, balance transfers, etc.

1.25%

Purchase APR

21.99%

Cash Advance APR

21.99%

Annual Fee

$0

Foreign Transaction Fee

2.50%

Recommended Credit Score

Good

Required Annual Personal Income

$0

Pros

  • No annual fee for primary or additional cardholders

  • Big welcome bonus

  • Solid regular cash back rate on all eligible purchases - up to 2% cash back on all eligible purchases

  • No limit to the amount of cash back you can earn at the base rate

Cons

  • Cash back is only applied as a statement credit once a year

  • Amex cards aren’t accepted by every merchant

In your first 10 months as a new SimplyCash® Preferred Card from American Express Cardmember, you can earn a $40 statement credit for each monthly billing period in which you spend $750 in purchases on your Card.

This could add up to $400 in statement credits in the first 10 months. Conditions apply.  The card also offers competitive cash back: Earn 4% cash back on eligible gas station purchases in Canada, 4% cash back on eligible grocery store purchases in Canada (up to $1,200 cash back annually) and 2% cash back on all other purchases. The annual fee is $9.99/month (equals a total fee of $119.88 annually).

Who wins in travel vs. cash back?

Both Amex cards are great. The Scotiabank Gold Amex gives you a first year value of nearly $900 based on an average spend (~$500 for each year thereafter). The SimplyCash Preferred gives you a first year value of just under $800 and just under $400 for each year thereafter.

But, the best value comes from booking travel with the Scotia Gold Amex (the value drops significantly if your'e buying gift cards). The SimplyCash is just that, simply cash. So, if its ease of use, maybe the SimplyCash is the better bet.

Cash back vs. travel cards | Annual fee

Overall, the annual fees for cash back and rewards cards are comparable, ranging from $0 for basic no-frills cards, to $120 or $150 on average for higher-end cards, to $500+ for truly premium cards.

The basic idea is that the higher your annual fee, the more earn power and extra goodies you get.

Let's look at the highest cost annual fee cards from each category to see which one comes out on top.

The Platinum Card

Apply now

70,000 pts

Excellent

Earn 70,000 Membership Rewards® points1*

Earn 2 points for every $1 in Card purchases on eligible dining and food delivery in Canada

2x

points for every $1 in Card purchases on eligible travel

2x

point for every $1 in all other Card purchases

1x

Purchase APR

21.99%

Annual Fee

$799

Foreign Transaction Fee

2.50%

Recommended Credit Score

Excellent

Pros

  • Earn 5X Rewards Points for flights and on prepaid hotels booked with American Express Travel

  • Access to a wide range of luxury perks, including premium concierge service

  • Complimentary lounge membership providing access to over 1,200 airport lounges worldwide

  • Annual statement credits: $200 airline fee credit, $200 hotel credit, $240 digital entertainment credit

  • Special insurance coverages like trip cancellation/interruption, flight delay, lost or stolen baggage and rental car theft & damage.

  • Provides extended warranty (2 years) and purchase protection (120 days).

Cons

  • High annual fee of $799, one of the heftiest among Canadian cards

  • The rewards system can be complicated, especially for users not familiar with maximizing credit card points

  • Requires good to excellent credit for eligibility

TD Cash Back Visa Infinite* Card

Apply now

10% back

Excellent

Earn up to $500 in value†, including 10% in Cash Back Dollars in the first 3 months on Bonus Eligible Purchases up to a total spend of $3,500†. Conditions apply. Account must be approved by June 3, 2024.

Expires

Jun 4, 2024

Earn 3% cash back on groceries, gas, and recurring bill payments†

3%

Earn 1% cash back on all other purchases†

1%

Earn 50% more Starbucks Stars when you link your TD card to your Starbucks account.†

50%

Purchase APR

20.99%

Balance Transfer Rate

22.99%

Cash Advance APR

22.99%

Annual Fee

$139

Recommended Credit Score

Excellent

Required Annual Personal Income

$60,000

Required Annual Household Income

$100,000

Pros

  • Solid welcome offer

  • High earn rate for 3 popular categories

  • Can use cash back right away

  • useful automotive benefits

Cons

  • Maximum spend limit for 3% cash back

  • High annual fee for a cash back card

The Platinum's $799 annual fee is steep, but it's an easier pill to swallow when you're looking for the top end privilege (and the $200 annual dining and $200 annual travel credit don't hurt, either). 

The TD Cash Back Visa Infinite annual fee is $139, steep for a cash back card (but TD gives you the first year free). 

After the welcome bonus and waived annual fee, based on average spending, you stand to earn around $450 in cash back from TD. 

The Platinum? Its earn rate isn't enough to really get "cash" value out of it. It's just about its perks like unlimited airport lounge access and Amex concierge services. 

†Terms and conditions apply.

Sponsored Content

This offer is not available to residents of Quebec. 

The Toronto-Dominion Bank (TD) is not responsible for the contents of this site including any editorials or reviews that may appear on this site. For complete and current information on any TD product, please click the Apply Now button.

Who wins? Premium travel cards vs. cash back credit card?

I guess the point of this article is that it all depends what you're looking for. So while we may gives this one to TD, you're not getting The Platinum card because of its annual fee, but rather its privileges and perks.

And that's just it. To answer the question: cashback vs points credit card, well, points are better, but less flexible and mainly are "soft" bonuses for the perks. In terms of ease of use, cash back may just be the better bet.

How to compare rewards vs cash back credit cards

One misconception about travel rewards cards is that there are many restrictions. While that may have been the case in the past with some programs, just about every travel loyalty program now gives you a lot of flexibility. When comparing travel rewards credit cards to cash-back rewards, you need to choose cards and programs that line up with your spending and travel preferences. Even though you may enjoy travel rewards, the current program and credit card that you’re using may not be ideal. When this happens, you may not find your points as useful and be tempted to switch to a cash-back card instead. You need to occasionally analyze what’s in your wallet and what your points are worth. Switching to a different program or credit card may still be more valuable than making a switch to a cash-back product.

It’s more than the first-year benefits

Cash-back cardholders like to point out that the generous welcome bonuses that come with travel rewards cards are only available for the first year. Once your first anniversary date comes up, the value decreases significantly.

While that has some truth to it, you do need to factor in the additional benefits that come with the card. Depending on which travel card you get, it may come with free checked bags, airport lounge access, a NEXUS rebate, comprehensive travel insurance, and no foreign exchange fees. These extra perks could save you hundreds of dollars a year, which is more than what the annual fee is for most cards.

Some cash-back cards offer travel and mobile device insurance, but it’s not that common. The argument could be made that cash-back cards are worth even less in the second year once you’ve maxed out the welcome bonus and annual fee rebate.

Choose whether cash back or rewards makes sense to you

There can be an emotional attachment when it comes to cash-back credit cards. When grocery and gas prices are on the rise, people will naturally look for a way to save. While a cash-back card that gives you an increased earn rate for groceries and gas could help, you might end up spending more on travel since you won’t have any points to redeem later.

For some people, the decision between loyalty points and cash back comes down to mental accounting. Admittedly, it can be hard to keep track of different earn rates and perks. However, instead of thinking about your money in different buckets, think of the whole picture. If you’re maximizing your points, travel rewards cards will give you more value than a cash-back credit card. That said, if you don’t like to travel, it doesn't make sense to be collecting travel rewards, so go ahead and switch to a cash-back card.

Is one better than the other?

No single card can meet the needs of all consumers, and whether cash back or rewards oriented, different cards emphasize different types of spending and consumer needs. Rather than trying to determine categorically if a cash back or rewards card will be the best fit for you, you need to look at each card individually to find the best match for your lifestyle.

American Express is not responsible for maintaining or monitoring the accuracy of information on this website. For full details and current product information click the Apply now link. Conditions apply.

Sandra MacGregor Freelance Contributor

Sandra MacGregor has been writing about finance and travel for nearly a decade. Her work has appeared in a variety of publications like the New York Times, the UK Telegraph, the Washington Post, Forbes.com and the Toronto Star.

Tyler Wade Content strategist & writer