The content on this page is accurate as of the posting date. Please see the bank’s website for the most current version of card offers.
Credit card reward points earned in airline and hotel programs are great for booking plane tickets and accommodations for nearly free travel, but cash back cards are a reward traveler’s secret weapon for funding off-the-grid travel and adventures.
Why are cash back cards a traveler’s secret weapon? Consider these three common reward-traveler challenges:
Challenge 1: You’ve used credit card points and miles to book free tickets to your dream destination and to cover your hotel. Once you land, however, you still need to foot the bill for car rentals, transfers, meals, activities and excursions. How can you also cover these expenses with rewards points?
Challenge 2: You’re dreaming of a destination that is off the grid, such as a remote Polynesian island that can be reached only by an unusual airline. Or it doesn’t have any of the big hotel chains that your rewards points will cover. Can you still use points for this type of trip?
Challenge 3: You want to do something altogether different like take a transoceanic cruise, hire a van to drive cross country, or book an all-inclusive package tour. How can you pay for these types of trips with points?
Your solution to each of these can be found in a cash back rewards credit card.
Cash back cards offer more options
First, the basics about cash back credit cards. Instead of getting one (or multiple) point(s) back per dollar for purchases made on a travel rewards credit card, a cash back card earns a percentage of money back on every dollar charged.
The Chase Sapphire Preferred, a typical points-earning credit card, for example, earns you 1 Ultimate Rewards point per dollar spent on everyday purchases and 2 points per dollar on travel and dining expenses. Its sister card, the Chase Freedom Unlimited – a cash back card – earns unlimited 1.5 percent cash back on every charge.
The big difference between these two cards? You are earning a cash-value currency on one and a points-value currency with the other.
Depending on the rules of the specific cash back card you’re carrying, you can use the cash back rewards you accrue to be reimbursed for purchases you make on the card, or have that money deposited back into your bank account.
The 1.5 percent earned on the Chase Freedom Unlimited, for example, can be applied as a statement credit to cover an expense you’ve already purchased, or you can choose to direct deposit the cash back into your U.S. checking or savings account. Cha-ching.
Other travel-centric cash back cards, like the Barclaycard Arrival Plus World Elite Mastercard and the Capital One Venture card, are intentionally designed to reimburse you for travel expenses.
For every 10,000 miles you earn with a Barclaycard Arrival World Elite Mastercard, for example, you can get $100 in travel credits that you can use to reimburse yourself for any travel expense in the past 120 days — including cruises, car rentals, tours, hotels, time-shares and boutique hotels.
Solving reward travel challenges with cash back
How could you use cash back cards if you are facing one of our travel challenges?
Challenge 1: After you’ve earned enough points on a traditional rewards card to cover your airfare and hotel, shift your spending to cash back to earn credits you’ll be able to use for transportation, meals and activities.
If these expenses are specifically travel-related, such as a car rental or a tour booked through a travel operator, opt for a travel-specific cash back card.
If you’re hoping to cover incidentals such as food or local activities (that wouldn’t appear on your statement as travel specific), focus your spending on a general cash back card.
Challenge 2: Off-the-grid destinations are a cash back travelers playground.
Many odd destinations are served by airlines that aren’t partners of any alliance – such as Air Tahiti around French Polynesia, or Druk Air which happens to be the only way in and out of the elusive Himalayan Kingdom of Bhutan.
To land the currency to get unusual flights for free (or nearly free), you’ll want to focus spending on a travel-specific cash back card. The same goes for boutique hotels, hostels and private islands where there aren’t any chain hotel groups.
Challenge 3: If you want to do something altogether different, you have to have a different rewards earning strategy.
Cruises, campervan rentals and all-inclusive package tours booked through travel companies are easily paid for with travel reward cash back credits.
Do beware: If you’re booking through a local tour operator for something like an African safari or trek to Everest Base Camp in Nepal, you may actually have to pay with a wire transfer or via Paypal – in this case, you’d want a card that earns cash rewards you can transfer directly back into your bank.
Premium travel: When cash back cards don’t work well
As you can see from our challenges, there are many cases in which cash back cards work well, but this isn’t always the case.
Cash back rewards are never the best option if your travel goal is business or first-class international award travel or nights at very expensive high-end brand hotels such as the Ritz-Carlton or Park Hyatt.
In both of these cases, you’ll want to stick to redeeming you airline miles or hotel points directly through the carrier’s mileage plan or hotel’s loyalty program.
Take, for example, a one-way, business-class ticket on United Airlines from Los Angeles (LAX) to Tokyo (NRT) that costs an average of $4,000 if purchased outright.
To earn enough cash back rewards at a rate of 1.5 percent per dollar of spending to purchase this United ticket you’d have to spend $266,667 on your cash back credit card. I’m not sure about you, but I don’t normally spend more than a quarter mill on my credit card each year.
To purchase that same ticket with credit card rewards points through United, however, you’d pay only 80,000 miles + $15 taxes. That’s a much more reasonable stash of miles to accumulate if you’re earning 1-3x Ultimate Rewards points per dollar from a Chase Sapphire card, which can be transferred to United.
Sure, $40,000 of credit card spending to earn a free business-class ticket is still a hefty haul of points, but don’t forget that you can often earn a chunk of these points through a credit card sign-up bonus.
More tips for using cash back credit cards
Before you rush to apply for a cash back credit card, consider these two additional tips for most effective earning.
1. Category bonuses can rake in rewards.
Take note of which cash back cards have category earning bonuses that match your biggest buckets of spending.
Families, for example, spend a large portion of their weekly budget at the grocery store and will likely be able to max out earning on a card like the Blue Cash Preferred card from American Express that awards 6 percent cash back at U.S. supermarkets on spending up to $6,000 a year.
That’s $360 a year in free groceries – or enough cash back to pay for your Hawaiian car rental or Disney tickets on your family vacation.
2. Special offers can bump up your rewards.
Watch for special offers from banks where you already have a points-earning credit card account.
For example, if you are a Chase credit card holder and have both an Ultimate Rewards points-earning credit card like the Chase Sapphire Reserve and a cash back card like the Chase Freedom Unlimited, Chase gives you the additional option to turn your cash back rewards dollars into Ultimate Rewards points.
Pairing your cards to earn Ultimate Rewards points makes for extra flexibility when it comes time to turn your rewards into trips.
With cash back cards, the options are endless. Even if you primarily use other rewards credit cards, it’s always wise to carry at least one cash back card on your travels to pay for items that your rewards points cards won’t cover.
You never know when you might need your cash back card rewards to escape to an un-named hotel on a remote island. You’ll thank me then.
See related: Our best cash back credit cards, Cash back credit card reviews, Cash back cards become more generous with rewards