Should You Redeem Credit Card Points for Travel Rewards or Cash Back?

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People have been pondering the best way to use credit card points for about as long as rewards programs have been around.

The internal conversation might sound something like this: “Should I be spending rewards on a lavish discounted trip to an exotic location? Or should I be ‘responsible’: take the cash and sock it away in my bank account?”

The answer most likely depends on your personal situation and the specifics of your credit card rewards program.

Still, whether you’ve accumulated a bunch of credit card points or you’re just getting started earning rewards, there are some common things to consider.

Travel vs. Cash Back: Things To Consider Before Redemption

Let’s start with the credit card spenders who are ready to cash in.

So you’ve spent the last months or perhaps years accumulating rewards points, and now you’re staring at a menu of options. Which is the best choice for you?

Here are some things to look at before committing to a redemption method.

What Are My Redemption Options?

This may seem like a basic starting question, but it’s one worth considering because each credit card rewards program is a bit different.

While most cards offer some form of cash back redemption (check, a statement credit, deposit into your bank account, etc.), there may be a variety of alternative redemption options for things like free hotel nights, discounted flights or a gift card to your favorite store.

“Travel rewards” is a broad term for the popular genre from which credit card customers often. You may have several different options within this category from which to choose, including:

  • Vacation packages offered directly from your card issuer’s rewards program (e.g., Citi ThankYou, Chase Ultimate Rewards)
  • The option to convert credit card points to points with your favorite hotel chain or airline’s loyalty program (e.g., Marriott Bonvoy or Delta SkyMiles)
  • If you have a co-branded card for a hotel or airline, you may receive direct redemption options from that business (such as Southwest Rapid Rewards from one of Chase’s Southwest Airlines credit cards).

What Is My Points Conversion Rate?

Once you know what all your redemption options are, you’ll want to do some math to figure out which is most valuable in terms of dollars.

This can be tricky for some credit cards, because they may value points redeemed for cash back rewards differently than redemption on travel or other items associated with their reward program.

If you have a card that is geared toward travel rewards, there is a good chance that the value of the points will be worth more within the card’s rewards ecosystem than it will as cash back. Let’s look at an example.

Chase Ultimate Rewards Example

If you have one of the popular Chase travel credit cards, you may find that cash back is pretty far down the list when it comes to getting the best value for your points.

The Chase Sapphire Preferred card offers a 25% boost on points redeemed for travel, while the more expensive Chase Sapphire Reserve goes a step further with a 50% boost for travel redemption over cash back.

For example, 50,000 Ultimate Rewards points are worth $500 in cash back, $625 in travel with the Preferred card and $750 toward travel with the Reserve card. To get these values on travel purchases, you must book your travel through the Ultimate Rewards portal.

You may be able to find even more value in converting your Ultimate Rewards to points with a hotel or airline, such as Hyatt or Southwest.

What Are My Goals For Redeeming These Rewards?

Now that you know your redemption options and what each option is worth within your card’s rewards system, you have the numbers necessary to make a sound decision.

But where do those numbers fit into your financial life?

For example, you may have calculated that redemption for an airline ticket is the best value for your points. But do you have a trip that you’re planning to take soon? And do the dates and the destination fit the redemption options?


If you can’t make the “optimal value” of your points make sense for your life, you may find that redeeming them for something else is a better use of the points.

The complications that can arise from trying to align the value of your points with the goals you have for your financial life is one of the reasons money expert Clark Howard often recommends that credit card users consider a card with strong cash back options.

As he likes to say, no one can tell you when or where you have to spend cash rewards. It’s the ultimate rewards flexibility.

Travel vs. Cash Back: Which Card Should You Apply For?

Next, let’s talk to the consumer who is just starting to think about earning rewards for their credit card spending. You may have aspirations of earning a free vacation.

But that may be more of a daydream than a reality for most consumers.

How Much Will I Actually Travel?

A credit card that carries special rewards for travel sounds good in theory, but will you actually travel enough for it to make more sense than a cash back credit card?

Clark says that you should be a frequent traveler, to the tune of $10,000 per month in spending on travel, to make one of the premium travel credit cards worth the annual cost.

“If you’re going to do any type of airline or hotel card, you need to understand that they’re typically going to have, at minimum, an annual fee of roughly $100. And in some cases that is actually more like $300-$500,” Clark cautions. “So you need to have a really high charge volume to make it work. I’m talking about charge volumes of a minimum of $10,000 per month to make many of these cards worth getting.”

The type of person who reaches this type of number regularly is usually either wealthy or a business traveler.

If you’re not approaching these numbers, you may be better served by a no-annual-fee credit card that maximizes rewards for everyday spending. Clark often recommends a 2% cash back card to accomplish this.

Why Clark Howard Prefers Cash Back in 2022

Clark gave his opinion on this topic during a recent episode of The Clark Howard Podcast.


He was recently shopping the difference between the cash back and travel rewards programs as his wife was considering a new credit card for her wallet.

They started the search with visions of a travel rewards card, perhaps an airline card, that would give her some nice perks during her frequent trips.

“My wife recently was looking for a new credit card and we were comparing the value of the cash back card to an airline card that would get her some privileges,” Clark said.

“And I just kept look at the value of the airline points and how crummy they are now. So the answer was: She’s going cash back. Because with the cash back, nobody tells you ‘Oh, you can only spend that on a Tuesday’ or ‘We don’t have any flights at a good mileage redemption right now, but if you want to go in the middle of winter to who knows where maybe then we can give you a seat.’ You eliminate all the games and shenanigans that the airlines are playing with the mileage valuation.”

Clark said his disappointment with the rewards programs also extends to hotel chains, where popular brands like Marriott have been devaluing their points in their rewards programs.

“Marriott is so dominant worldwide in the hotel space with all the brands they own that they’ve taken Bonvoy and they basically told the value of your points ‘bon voyage,'” says Clark. “Isn’t that a great new slogan for Marriott? ‘Bon voyage to any value for you!’ Getting plain and simple cash: That’s where I’d put my effort.”

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