When it comes to choosing a credit card, there are many options available, each with its own rewards program. Cashback and Travel credit cards are two popular options that can offer great benefits for Indian consumers. However, choosing the right credit card can be overwhelming, especially if you’re not sure what type of rewards program would be best for you. Let’s discuss the major differences between cash back and travel credit cards to help you decide which one is the right fit for you.
Cashback credit cards
Cashback credit cards are a great option for those who want to earn rewards for their everyday spending. Additionally, these cards offer a percentage of cashback on all purchases. With some offering
higher cashback rates for specific categories like dining or fuel.
Pros:
● Easy to Understand: Cashback credit cards are easy to understand, with rewards earned as a percentage of the total purchase
amount. This makes it easy to keep track of your rewards and use them to save
money on future purchases.
● Flexibility: Cashback rewards can be used for anything, making them a flexible option for those who want to earn rewards without restrictions.
● No Annual Fees: Many cashback credit cards in India have no annual fees, which can make them a cost-effective option for those who want to earn rewards without paying extra fees.
Cons:
● Lower Rewards: Cashback credit cards may offer lower rewards compared to travel credit cards in terms of the value of the
rewards earned. However, they can still be a good option for those who want to
earn rewards on everyday purchases.
● Limited Perks: Cashback credit cards may not offer many additional perks or benefits beyond the cashback rewards.
● No Travel Perks: Cashback credit cards in India generally do not offer travel perks such as airport lounge access or free
checked bags, which can be valuable for frequent travelers.
Travel Credit Cards
Credit card companies design travel credit cards specifically for frequent travelers. As a result, these cards typically offer rewards in the form of airline miles or hotel points that can be redeemed for travel-related expenses.
Pros:
● High Rewards: Travel credit cards often offer higher rewards compared to cashback credit cards in terms of the value of the rewards earned. Consequently, this can make them a great option for frequent
travelers who want to earn rewards for their travel expenses.
● Travel Perks: Travel credit cards often come with travel perks such as airport lounge access, free checked bags, and travel insurance, which can be valuable for frequent travelers.
● No Foreign Transaction Fees: Many travel credit cards in India do not charge foreign transaction fees, making them a great option for those who travel abroad frequently.
Cons:
● Annual Fees: Many travel credit cards in India come with annual fees, which can be a significant expense if you're not using the card frequently enough to justify the fee.
● Complicated Redemption Process: Redeeming travel rewards can be complicated, especially if you're not familiar with the travel rewards program. You may have to navigate blackout dates, points conversions, and redemption rules, which can be time-consuming and frustrating.
● Limited Redemption Options: Travel credit cards in India often limit redemption options to travel-related expenses, which means you may not be able to use your rewards for other purchases.
Conclusion
Choosing between a cashback or travel credit ultimately depends on your spending habits and lifestyle. If you prefer simplicity and flexibility, a cashback credit card may be the best option for you. On the other hand, if you enjoy traveling and want to take advantage of travel perks and higher rewards, a travel credit card may be a better option.
