I write about credit cards for a living, so at least twice a day, someone will ask me what card they should get, what sign-up bonuses are the best or which points currencies I favor. Even though I work at The Points Guy (emphasis on “points”), the two cards I recommend most often are actually cash-back cards — the Capital One® Savor® Rewards Credit Card and the Blue Cash Preferred Card from American Express®.
Let me be clear: I love points and miles and the cards that earn them. I love how they reward you for everyday spending, I love how easy it is to rack up points and I love how people can use them to hit their travel goals, myself included. Traveling and learning about other cultures is my favorite hobby, and my travel credit cards are the only reason I’ve been able to afford to do that over the past few years. However, I think cash-back credit cards get overlooked when they are actually an invaluable part of any credit card strategy.
Why I love cash-back cards
Even though there is no way to get added value out of cash back like you can with points and miles, I still love cash-back cards and use them frequently.
For starters, cash back is super-simple to earn and use. You don’t have to worry about transferring rewards or subpar redemption options — you’re getting the same value no matter what you use the cash for. Digging into award charts, learning the ins and outs of certain programs, researching different routes to maximize points spent on a trip … a lot of beginners can find it overwhelming. Personally, I don’t mind going down the rabbit hole of points and miles to find amazing flight redemptions. Like many TPG readers and fellow TPG staffers, the points-and-miles game is a hobby that I genuinely enjoy. But cash back can be an excellent introduction to the rewards game, and that’s why these cards are often what I recommend to friends and family.
I also use cash-back cards for another reason. You can get a lot of bang for your buck out of each point or mile when you redeem them for points or miles, but you are leaving value on the table if you redeem them for almost anything else. What about the cost of eating out while traveling? Or the cost of transportation and tourist attractions? If you’re a young professional and budget traveler like me, the day-to-day expenses of a trip can be a make-or-break factor in whether you can afford to go. That’s where my cash-back cards come in.
Throughout the year, I’ll save up the rewards I earn from my cash back as an unofficial travel fund. Points and miles help me get from point A to point B (and in style too), but my cash-back fund is what I use for amazing dinners and unforgettable experiences while I’m on the ground. For example, I recently took a two-week trip to Croatia with my best friend. I used points from my Chase Sapphire Preferred to book my flights there and back, and cash back to pay for my food, transportation costs and my half of our Airbnb stays. I maybe paid $100 out of pocket for 12 days exploring Croatia.
Zlatni rat beach, Bol, Brac island, Dalmatia, was one of my favorite spots when I visited Croatia this past September. (Photo by mbbirdy / Getty Images.)How I maximize cash back with my points-and-miles cards
I use a combination of cash-back and travel cards and put pretty much all of my spending (outside of rent and my car payment) on my credit cards.
My most frequently-used cards right now are the:
Chase Sapphire Preferred – Earn 2x on dining and travel American Express Gold Card – Earn 4x at restaurants and U.S. supermarkets (up to $25,000 a year) and 3x on flights booked directly with airlines or on amextravel.com Amex Blue Cash Preferred Card – Earn 6% cash back at U.S. supermarkets (up to $6,000 a year) and select streaming services, 3% on transit and at U.S. gas stations Capital One Savor Card – Earn 4% on dining and entertainment, 2% at grocery stores, and 8% on Vivid Seats through December 2019 The Cap One Savor is one of my favorite credit cards because it earns 4% back on entertainment — a category I spend a ton on each month. (Photo by The Points Guy.)
Here’s how my credit-card strategy plays out and how cash-back cards fit into it:
I use my Chase Sapphire Preferred to pay for ride-shares, hotel and Airbnb stays, and other travel expenses that don’t earn me 3x with through my Amex Gold. My Amex Gold is used for dining (with the exception of large Postmates orders), groceries and airfare. My Blue Cash Preferred is used on my extensive portfolio of streaming service subscriptions and at gas stations. My Capital One Savor is used for large Postmates orders (the Savor reimburses me a monthly Postmates Unlimited membership through the end of this year) and all of my entertainment purchases — concerts, movies, sporting events (Go, Carolina Panthers!), bowling alleys, tourist attractions and just about everything in between. (I don’t spend much beyond these categories, but anything that doesn’t earn bonus rewards gets put on either my Amex Gold or Chase Sapphire Preferred so that I’m at least getting 2 cents of value per point earned.)
This strategy works for me because these cards cover essentially every purchase I make each month and offer benefits that I know I’ll use throughout the year. I don’t currently have elite status, so my Amex Gold pays for my checked bags when I travel. I host movie nights at my apartment often and the dining credit from my Amex Gold plus the Postmates Unlimited membership on my Savor help me save money and maximize rewards on those nights. I make a point of going to at least one concert, sporting event or musical at least once a month and the Savor also rewards me for that. I’m obsessed with multiple TV shows across multiple streaming services, and my Blue Cash Preferred helps me save on subscription costs. These cards have turned my guilty pleasures into how I fund my travel throughout the year, and the annual fees combined are still less than the fee on one top-tier credit card like The Platinum Card® from American Express®.
Bottom line
Cash back is a great tool that helps you save money — whether you use that saved money for travel or other financial goals. I completely understand the draw of cards like the Chase Sapphire Reserve and Amex Platinum that earn high-value currencies, but I also believe that cash-back cards deserve a spot in everyone’s wallet. When you use both cash back and points-and-miles credit cards, you can save up to pay for every aspect of your travel, both in the air and on the ground.
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