Barry Choi: Is it time to trade in your travel rewards credit card for cash back?

With your travel plans on hold, it might be time to buy a new credit card

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Most of the time, having a travel rewards credit card is one of the best tools to help you save. As you make regular purchases, you earn points or miles which can then be redeemed for free or discounted travel expenses such as flights, hotels and car rentals.


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But with Canada under a warning to avoid non-essential travel outside the country, many people won’t be using their points anytime soon. Many travel credit cards offer travel-specific benefits. You could get free checked bags, airport lounge access and priority boarding. These perks are great when you’re traveling, but they’re worthless if you’re grounded.

So should you switch to a cash back credit card instead? There are a number of things to consider.

The arguments for switching to a cash-back credit card

Unlike travel rewards credit cards, cash back credit cards give you immediate returns. Each time you make a purchase, you receive a certain percentage in cash. It’s very appealing, especially since there are no blackout dates, reward tables, or peak prices to worry about like there are with travel rewards.


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The funds you earn from a cashback card can be used to offset the costs of your daily expenses such as groceries, gas, utilities, etc.

The case to stick to your travel credit card

To be fair, many travel credit card providers have recognized that there is less demand for travel, so they offer other perks. For example, many American Express cardholders have received various offers over the past year, including dining credits, discounts on purchases, and increased earn rates on rewards.

If you take advantage of these benefits, they are easily worth more than the annual fee you paid to own the credit card. In other words, since you’re not wasting money, you might as well keep your travel credit cards.


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Despite the appearance of new variants of COVID, the world will eventually get through this pandemic. When it is safe to do so, you will be able to travel again. By continuing to use your travel rewards credit cards, you can continue to earn points.

It could give you an important balance when you’re ready to travel again. It could allow you to take the trip you’ve always dreamed of for less. Plus, by keeping your points accounts active, your points won’t expire.

Double your rewards

If you plan to keep your travel rewards card, you should make the most of it. Many people don’t realize that you don’t have to choose between cash back and travel rewards. You can earn both without changing any of your spending habits.


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For example, PC Optimum is one of the most popular loyalty programs in Canada. To earn rewards, all you need to do is download the app and scan it at participating retailers such as Loblaws, No Frills, Real Canadian Super Store, The Mobile Shop and Shoppers Drug Mart.

Then, check your app weekly to maximize your return as PC Optimum offers you targeted offers based on your spending. That means more PC Optimum points for you. These points can then be redeemed for groceries, merchandise, beauty products, and more.

To double your rewards, simply pay with your travel rewards credit card. This way you accumulate cash back and travel rewards at the same time. You can also get a PC Financial Mastercard, which allows you to earn Optimum Points in addition to in-store and targeted offers available through the app.


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Some options for cashback cards

Since travel rewards credit cards can still offer value, there’s no reason to cancel your travel cards. Instead, you might want to consider applying for a no-fee cash back credit card so you can earn cash rewards for the time being.

A popular option is the Tangerine Money-Back Card. It gives you 2% cashback on two categories of your choice. If you choose to deposit your rewards directly into your Tangerine Savings Account, you’ll earn a third tier of 2% cash back. All other purchases earn you 0.5% cash back. The money you earn is paid monthly.

If you want a higher return on all your purchases, consider the SimplyCash card from American Express. You get a direct 1.25% return on all purchases, but the cash back is paid out as a statement credit every September.


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Make your decision based on your goals

Switching to a cash back card can be tempting when you have no travel plans, but you need to think about your goals. If you’re willing to wait out the pandemic, you might as well keep collecting travel rewards until you can cash them out.

For those who could use more flexibility with their monthly budget, switching to a cash back credit card can help.

Remember, you don’t have to choose one or the other. You can have both cash back and travel rewards credit cards. Simply pay with the card that benefits you the most when shopping.

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.



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