Advertiser Disclosure

What’s the Point of Getting a Credit Card That Offers Rewards Other Than Cash Back?

Aug. 14, 2014
Credit Cards
At NerdWallet, we adhere to strict standards of editorial integrity to help you make decisions with confidence. Many or all of the products featured here are from our partners. Here’s how we make money.

Some people value simplicity above all else. If this sounds like you, you probably wonder why anyone would choose a credit card with a rewards program other than cash back. After all, what could be easier than earning money every time you spend money? But there are some good reasons to consider credit cards that offer other types of rewards — five, in fact. Take a look at our list below.

1. Higher rewards rates

Probably the most compelling reason to opt for a credit card that offers travel rewards as opposed to cash back is that these cards generally offer higher rewards rates. It’s common for cash-back cards to provide 1% back on all purchases and 5% back in rotating quarterly bonus categories. That 5% boost is nice if your spending aligns with the featured retailers, but for the most part you’ll be earning 1 cent back for every dollar you spend.

However, there are many good travel credit cards on the market that carry a rewards rate of 1.5% or more. Some even earn over 2%! This is definitely something to think about when you’re choosing your next card.

Nerd note: Stellar rewards rates are great, but remember that many of these cards carry an annual fee. That’s not necessarily a problem if you’ll earn enough in points or miles to outweigh the fee, but it is something to keep in mind.

MORE>> How to Pick the Best Credit Card for You: 4 Easy Steps

2. Fringe travel perks

Travel isn’t as relaxing as it used to be, and some co-branded airline and hotel credit cards seek to minimize common frustrations by providing fringe travel perks. Free checked bags, complimentary hotel breakfasts and priority boarding are common extras that come with using this type of card. If you travel a lot and will get a lot of value out of them, it might be worthwhile to think beyond the cash-back card.

3. Bigger signup bonuses

Although many cash-back credit cards provide a modest signup bonus ($100 for spending at least $500 within three months is common) travel credit cards frequently offer signup bonuses worth hundreds of dollars.

Typically, you’ll have to spend around $3,000 within three months of opening the account to earn a bonus this big, but this is often a breeze for heavy credit card users. If you fall into this category and travel frequently, you could get a lot of value out of the signup bonus offered by a dedicated travel card.

4. Fulfilling other financial goals

Earning rewards that you can use for a vacation or as a little extra spending money is one thing, but if you have other financial goals, it’s time to think outside the box. For example, if you’re trying to pay off credit card debt with a balance transfer, a card with a long 0% period and a low balance transfer fee is probably more valuable than any cash-back program.

5. Funding an expensive hobby

If you have a passion for travel and need a way to fund your hobby, racking up rewards on a travel credit card will help you satisfy your wanderlust. Cash back is great, but there’s nothing like scoring a killer deal on airfare by transferring points earned with their credit cards to a frequent flyer program.

Real travel junkies get a rush out of planning the trip of a lifetime at a bargain price. If you consider yourself a serious traveler, you should strongly consider a credit card that will support your favorite pastime! Reaching for credit card image via Shutterstock