Airline Miles Credit Cards vs Cash Back Credit Cards
It pays to know the differences, advantages and disadvantages of cash back and airline miles credit cards if you are in the market for a new card. They both are beneficial in certain situations and the points below would be able to help you make a decision.
Airline Miles Credit Cards
Over the last few years due to strategic and continuous promotions airline miles credit cards have really taken off. More and more consumers turn towards this type of card for more affordable travel. The promotions have been so widespread that if you happen to miss them in your mailbox you would certainly have heard of their benefits during inflight announcements.
The rewards have even gotten better and better into order to entice new customers to come on board. From waiving the annual fee for the first year to thousands of miles on sign up they have made it almost irresistible to consumers.
Airline miles credit cards do have their benefits. For one you can save on last minute travel. Instead of shelling out a lot of money because you are booking at the last moment you can use your miles instead and get a free flight.
The bonus miles that you get upon sign up is another feature that differentiates airline miles cards from cash back reward cards. Reduced mileage rewards are also valuable since you can redeem your miles for discounts if you do not have sufficient points for a round trip ticket.
The disadvantages of airline miles credit cards are what make some consumers back away. For instance the high interest rates could easily wipe out any incentives that you earn. This could easily be managed by paying off the balance before the grace period. Either way it is up to you the consumer to calculate the savings. If it takes you three years to earn your free flight with an annual fee of $200 then the fees that you would have paid could have been put towards purchasing that ticket on your own.
Another major disadvantage is the stability of the airline industry. Miles you earn toward could be gone tomorrow if the airline goes out of business.
Cash Back Rewards Cards
Cash back credit cards are most likely the most popular type of reward cards. They often come with no annual fees, low interest rates and rewards that you don't have to jump through hoops to redeem. The earnings range from 1% to as much as 5% cash back on all purchases although the standard rate is usually 2%.
Some programs offer a sing on bonus like $50 - $100 to after the first purchase is made on the card. Generally cash back rebates can earn consumers $250 to $900 for the year and this can applied to the credit card balance, mailed as a check or redeemed for some sort of reward.
Other advantages of cash back credit cards include fewer restrictions since blackout dates, expiration of miles, seating restrictions and other sorts of restrictions do not apply.
Disadvantages include having to abide by the program terms to redeem the rewards. For example some programs dictate an annual or quarterly payout. They may also set limits on the payout meaning your reward has to be $50 or whatever limit they set before you can redeem.
We recommend you check out the best airline miles credit card on the market.