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Should You Choose a Cashback or Rewards Credit Card During COVID-19?

TORONTO - January 26, 2021 - (Newswire.com)

Choosing the right credit card during the COVID-19 pandemic to get the best bang for your buck may seem tricky. If you're willing to wait, you could load up points on a travel card and reap the benefits whenever jet setting returns to "normal." But if you're looking for more of an immediate impact, a cashback card may be the way to go.

Either way, evaluating the different types of credit cards and comparing the benefits of a cashback card with the benefits of a rewards card is a good place to start.

Benefits of a cashback credit card

Additional cash back in certain categories

Some cashback cards offer a higher percentage of cash back in different categories like on grocery or gas purchases than on other everyday spending. With many travel restrictions and social distancing guidelines still in place, you may not be driving as much, so your gas spending may be down. With more time at home, your grocery spending may be on the rise, so a boost in that category could be helpful.

Try using a cashback tool to calculate how much cashback you could potentially earn in a year based on your monthly spending in certain categories.

Lower or no annual fee

Many cashback cards come with no annual fee, which can help you save down the line. And even if the card does come with an annual fee, it's typically much less than an annual fee on a higher-end rewards card. Plus, you may be able to get an annual fee rebate for the first year.

Benefits of a rewards credit card

Welcome offers

Many travel rewards cards come with welcome offers of a significant number of points (often enough for a short-haul flight) when you make your first purchase or spend a certain amount within the first few months of opening your account.

Perks

The higher annual fees on rewards cards can be worthwhile if you make the most of the added perks. With travel rewards cards, for example, you might be able to save on baggage fees, get comprehensive travel insurance, get complimentary access to airport lounges, and more.

Like cashback cards, rewards cards typically come with rewards for spending in certain categories — often those related to travel, like dining, entertainment, and transportation.

The bottom line

Rewards cards can potentially offer the best of both worlds with cashback rewards typically combined with additional offers and perks, but keep in mind you'll likely spend more on an annual fee.

Ultimately, the right choice for you depends on your financial goals and how you spend, especially if you've noticed changes in your spending during the COVID-19 outbreak. If you don't already have a budget, create one to get a better sense of what you're spending most of your money on. This should make it more obvious which type of credit card is best for you.




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Original Source: Should You Choose a Cashback or Rewards Credit Card During COVID-19?
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