Editor’s note: This is a recurring post, regularly updated with new information and offers.
I started my credit card journey as a new teacher on a shoestring budget. I quickly realized I needed to keep my card strategy simple while adjusting to adulthood’s harsh realities, so I set my sights on cash-back rewards.
I got the Citi Double Cash® Card (see rates and fees), which allowed me to earn 2% cash back on purchases (1% when you buy and 1% as you pay). Then, I could redeem my rewards for whatever expenses I faced, from my share of a group beach trip to an unexpectedly high electric bill.
The simplicity and flexibility of cash-back earning and redeeming were perfect for me then. But even now, after a decade of traveling on credit card rewards and with almost 20 cards in my wallet, I still love the versatility of cash-back rewards.
Here’s why you might want to take a page from my cash-back book: Are cash-back credit cards worth it?
Related: Why I chose the Chase Sapphire Preferred as my next credit card
Increase cash flow
It’s easy to get caught up in the glamor of aspirational travel that travel rewards credit cards make possible. Who wants to talk about electric bills when we can talk about flying across the world in a lie-flat seat?
However, when you’re on a limited budget and an unexpected expense comes up, having a stash of cash rewards you can redeem is just as exciting as booking a dream trip to Europe.
If you’re in a season of tight finances, a cash-back card is a perfect way to build in some cushion and be prepared for whatever comes up, as long as you follow our first commandment of credit cards: Pay off your balances in full each month.
Keep things simple
We understand if you want to use your rewards to book complicated multi-stop, open-jaw international airline award redemptions using airline award chart sweet spots. We can help you reach that goal.
But figuring out how to maximize your travel rewards can feel overwhelming when life gets chaotic. For those times, cash-back cards are the way to go.
Each cash-back card is different, but they almost always have more straightforward earning structures and redemption options than their travel rewards counterparts. Typically, you can use the rewards to offset charges on your credit card statement, so you can use them without having to spend hours checking for award availability.
Related: How to redeem cash-back rewards from your credit card
Complement your points and miles
Trip costs can add up even when you’re using points and miles to travel. In many cases, you still have to pay cash for taxes and fees on award redemptions, and you’ll need to pay for your meals, transportation and activities while you travel.
Those expenses are harder to cover with points and miles, but you can put them on your cash-back card and redeem your rewards for a statement credit to cover these expenses. This way, you can use credit card rewards to cover even more of your trip and minimize out-of-pocket costs.
Related: Are cash-back credit cards worth it?
Maximize your purchases
Sometimes, you can add a cash-back card to your portfolio to supplement your travel rewards cards. For instance, the Chase Freedom Flex® is a cash-back card earning 5% back on quarterly categories when you activate (up to $1,500 per quarter).
If you also have a card that earns transferable Chase Ultimate Rewards points, like the Chase Sapphire Preferred® Card, you can combine your rewards from both cards and transfer them to Chase’s 14 transfer partners.
This combination maximizes your earnings since the Freedom Flex often earns bonus points on purchases that would only earn 1 point per dollar on the Sapphire Preferred.
Capital One and Citi also allow you to transfer your cash-back rewards to points and miles with the right card pairings, so you have several options to use cash-back cards to boost your travel rewards balances.
Related: Better together: The ultimate guide to the best credit card combinations
Infrequent travel
There could be several reasons travel might not be a focus for you right now, such as being between jobs or caring for loved ones. While it can be great to stockpile some travel rewards for when you’re ready to hop back on a plane, cash-back cards give you rewards you can use regardless of your life circumstances.
If you’re grounded for a bit, cash-back rewards offer flexibility that might work better for your current lifestyle.
Related: The best credit cards for everyday spending
Bottom line
Regardless of your current spending habits and goals, you’ll benefit from keeping a cash-back card in your wallet. Whether you’re looking for simplicity or ready to level up your current portfolio, cash-back cards offer the flexibility you need.
If you’re interested in applying for a cash-back card, check out our picks for the best cash-back credit cards.
Related: Cash back vs. travel rewards
