Are cashback credit cards better than travel credit cards?

[universetechpro]

I was researching Youtube videos comparing cashback credit cards vs travel credit cards.
Problems with travel credit cards:
1. You need to book via bank's websites to fetch/redeem discount coupons (eg: HDFC Smartbuy). If you want to cancel/reschedule flights or hotel, then it will be cumbersome. Instead, if you directly book via the airlines' website, then it is much easier to cancel/reschedule the ticket (same applies to hotels).
2. Extra costs in booking via bank's websites (extra commission fees) using travel credit card vs lower costs if you book directly via airline website using cashback credit card
3. Harder to redeem miles points, consumes a lot of time and need to calculate which airline/hotel is supported for redemption. Whereas, in cashback credit cards, it is much simple to redeem cashback points (usually 1 reward point = Rs 1) as a statement credit.
4. High annual fees for travel cards compared to low fees for cashback credit cards. If you don't travel frequently, it's much cheaper to pay out-of-pocket for lounge access and travel insurance instead of paying high annual fees for the travel credit card.

By adding the extra inconvenience of rescheduling and cancelling tickets in hotels/flights, and considering the time saved (redemption of points) and peace of mind, directly booking via actual airline website using cashback credit card is way better than via bank platforms with travel based credit card.

Please let me know if I missed anything. Thanks.

 

[tachniki]

Point 2 is definitely not true, at least for smartbuy.

Point 3 is again easier with Infinia, DCB and smartbuy.

Also, most cashback card has very low cashback limit. Will not even suffice for a 5 day trip cost.

 

[HumorSimpson]

Recently @cardio_guy is researching on this topic. Check ☑️ his threads, he is updating his thesis regularly

 

[cardio_guycardio_guy is verified member.]

Thanks for the tag, HS. @HumorSimpson

Yes, you can read some of my threads here:

• Going to take my first travel card - Axis Atlas, need some inputs.
• How did you move from cashback to reward points card? Share your story
• How are you making the best use of your existing credit cards?

I will try to answer your question as much as I know.

1. You need to book via bank's websites to fetch/redeem discount coupons (eg: HDFC Smartbuy). If you want to cancel/reschedule flights or hotel, then it will be cumbersome. Instead, if you directly book via the airlines' website, then it is much easier to cancel/reschedule the ticket (same applies to hotels).

- Not really, There are cards like Axis Atlas which gives accelerated edge miles (5EM/100) when booking from direct airlines website, and not via OTAs. As I started booking directly, I have almost ditched OTAs. There are also cards like HSBC Travel One which gives reward points on direct airline website as well as OTAs. When coming to accelerated portal like traveledge or smartbuy, book only if you are 100% sure that you won't cancel the ticket. Even if you have 1% thought about date change or cancellation, don't use it, as simple as that.

2. Extra costs in booking via bank's websites (extra commission fees) using travel credit card vs lower costs if you book directly via airline website using cashback credit card

- Not really. There are many threads by @hellowo₹ld and others comparing flight charges on various OTA platforms and accelerator sites. There is no one single answer that something is costly and some other thing is cheaper. It depends on the flight, route, etc. + there is another thought that even if you pay a little extra on smartbuy, the 5x reward point compensate for that loss, you will get more reward points worth than what you pay extra.

3. Harder to redeem miles points, consumes a lot of time and need to calculate which airline/hotel is supported for redemption. Whereas, in cashback credit cards, it is much simple to redeem cashback points (usually 1 reward point = Rs 1) as a statement credit.

-- Again, not really. It is very easy to burn points. Just use 70% of the points that you have in smartbuy or 100% in iShop and book whatever hotel or flight you want. No hassles of point transfer at all. If at all you want to transfer points, then again, almost all cards have very simple transfer ratios (1:1 or 1:2 kind of). Just link your hotel or airline account, transfer your Regalia Gold or Atlas card points to whatever hotel you want, and book the room using points.
-- Just here, I agree to a little extend that airline transfer is a bit difficult to understand for beginners, so many people redeem on hotels. If you see, like 80% people redeem for hotels, and 20% for flights, because finding an award seat is bit trickier than booking an Accor or Mariott using points. I would say airline redemption is a little advanced level. But once you know the game, it is easy. (By the way, the most easiest airline redemption is using Tata Neu coins. Just book AirIndia or AIX, burn your neu coins, LOL )

4. High annual fees for travel cards compared to low fees for cashback credit cards. If you don't travel frequently, it's much cheaper to pay out-of-pocket for lounge access and travel insurance instead of paying high annual fees for the travel credit card.

-- Not really again. Regalia Gold is a all rounder superstar card, Fees is just 2500. Atlas is just 5000 but the joining benefits cover the fees paid. Similarly all paid cards give more returns than the fees paid. So infact it is better than LTF cards. Another thing, there are many LTF cards that give lounge access without spending anything, so high fee should not stop you from going to lounge. Lastly, even if you travel once in 2 years, still collect and accumilate points and get a good vacation in some of those Novotel or Mariotts with your parents or family or kids,

Having said all this, I will still say if if you like cashback, please focus only on cashback cards. I will never tell that travel card is better than cashback cards. Even today, my main card is HDFC Swiggy. 10% straight cashback on Instamart is heaven. Please dont take travel card unless you really want it. 5% on Amazon pay ICICI is awesome. HSBC Live+ 10% on food and groceries offline and online is pure gold. Never loose those 5% neu coins on utility bills, insurance, gas, etc. Don't leave these things and go behind Mariott and Accor or SQ and Qatar. Just be what we are. Spend according to our needs, and take cards according to our spends. There are people who stay in Mariott for like 80-100 nights a year. More than their home, they stay in these hotels. It's all business spends, company sponsored and what not. We may be struggling hard to spend 1 or 2 night a year in these hotels after listening to all these influencers. Don't fall into that trap.

[Edit] - One is not better than other. We cannot say cashback is for beginners and point card is for experts. There is nothing like that. Even pro max people use cashback cards and vice versa. But often cashback cards are shown to be beginner friendly because it is easy to calculate and returns are fixed and sometimes capped. But there is a higher potential of earning in milestone based point cards. That's also because higher returns come in travel and hotel categories. All points that you told are valid, it finaly boils down to what each person wants.
I was an avid cashback card lover and used Amazon Pay ICICI alone for 2 years (2022-23). I was thinking that is the best card in the world. Later only I started using other cards and exploring what all these are. Will be happy to help, because as a beginner I faced a lot difficulty in understanding the whole game. Even now I am learning, with all great contributors here in the community.

 

[nh124001]

if your spends are around 5-6LPA, you don't travel much and looking for simple calculations, then cashback cards makes more sense: sbi cb, sbi phonepe black, hsbc live+, kiwi yes, axis supermoney pro, axis ace, axis airtel, hdfc swiggy, amazon pay icici are very good examples

 

[panchabhut]

Unless you travel multiple times a month, cashback cards make better sense. If you travel without check in luggage and your destination is serviced by AIX, then Tataneu card and Tataneu app makes better sense than either travel card or cashback card, particularly if you are also using Bigbasket & 1mg. If you need to book via specific corporate booking site, then only Amz Pay card makes sense.
Whether you travel or not, Airtel CC. Flipkart CC, TN CC, Swiggy CC all are good cards to have.
So its more dependent on individual situations, there cannot be a single rule for all.

 

[hellowo₹ld]

Thread 'Credit Card Redemptions: Rewards or Cashback? Let's Talk About Your Preferences!'

Nov 10, 2024

Hey everyone!

With so many changes over the years, I thought it would be great to have a discussion on how we all prefer to redeem our credit card points. Are you more into cashback or still a fan of rewards? Let’s dig into how things have changed before and after COVID and help each other make the most of our cards.

---

Pre-COVID Era: The Golden Days of Rewards

In the days before COVID, cashback wasn’t as big a player in the credit card world. Most cashback cards capped rewards at around 1.5% on everyday purchases, and you’d see up to 5% only on...

• hellowo₹ld
• Replies: 15
• Forum: Credit Card - General

• 

: )

 

[S U D O]

Thanks for the tag, HS. @HumorSimpson

Yes, you can read some of my threads here:

• Going to take my first travel card - Axis Atlas, need some inputs.
• How did you move from cashback to reward points card? Share your story
• How are you making the best use of your existing credit cards?

I will try to answer your question as much as I know.

1. You need to book via bank's websites to fetch/redeem discount coupons (eg: HDFC Smartbuy). If you want to cancel/reschedule flights or hotel, then it will be cumbersome. Instead, if you directly book via the airlines' website, then it is much easier to cancel/reschedule the ticket (same applies to hotels).

- Not really, There are cards like Axis Atlas which gives accelerated edge miles (5EM/100) when booking from direct airlines website, and not via OTAs. As I started booking directly, I have almost ditched OTAs. There are also cards like HSBC Travel One which gives reward points on direct airline website as well as OTAs. When coming to accelerated portal like traveledge or smartbuy, book only if you are 100% sure that you won't cancel the ticket. Even if you have 1% thought about date change or cancellation, don't use it, as simple as that.

2. Extra costs in booking via bank's websites (extra commission fees) using travel credit card vs lower costs if you book directly via airline website using cashback credit card

- Not really. There are many threads by @hellowo₹ld and others comparing flight charges on various OTA platforms and accelerator sites. There is no one single answer that something is costly and some other thing is cheaper. It depends on the flight, route, etc. + there is another thought that even if you pay a little extra on smartbuy, the 5x reward point compensate for that loss, you will get more reward points worth than what you pay extra.

3. Harder to redeem miles points, consumes a lot of time and need to calculate which airline/hotel is supported for redemption. Whereas, in cashback credit cards, it is much simple to redeem cashback points (usually 1 reward point = Rs 1) as a statement credit.

-- Again, not really. It is very easy to burn points. Just use 70% of the points that you have in smartbuy or 100% in iShop and book whatever hotel or flight you want. No hassles of point transfer at all. If at all you want to transfer points, then again, almost all cards have very simple transfer ratios (1:1 or 1:2 kind of). Just link your hotel or airline account, transfer your Regalia Gold or Atlas card points to whatever hotel you want, and book the room using points.
-- Just here, I agree to a little extend that airline transfer is a bit difficult to understand for beginners, so many people redeem on hotels. If you see, like 80% people redeem for hotels, and 20% for flights, because finding an award seat is bit trickier than booking an Accor or Mariott using points. I would say airline redemption is a little advanced level. But once you know the game, it is easy. (By the way, the most easiest airline redemption is using Tata Neu coins. Just book AirIndia or AIX, burn your neu coins, LOL )

4. High annual fees for travel cards compared to low fees for cashback credit cards. If you don't travel frequently, it's much cheaper to pay out-of-pocket for lounge access and travel insurance instead of paying high annual fees for the travel credit card.

-- Not really again. Regalia Gold is a all rounder superstar card, Fees is just 2500. Atlas is just 5000 but the joining benefits cover the fees paid. Similarly all paid cards give more returns than the fees paid. So infact it is better than LTF cards. Another thing, there are many LTF cards that give lounge access without spending anything, so high fee should not stop you from going to lounge. Lastly, even if you travel once in 2 years, still collect and accumilate points and get a good vacation in some of those Novotel or Mariotts with your parents or family or kids,

Having said all this, I will still say if if you like cashback, please focus only on cashback cards. I will never tell that travel card is better than cashback cards. Even today, my main card is HDFC Swiggy. 10% straight cashback on Instamart is heaven. Please dont take travel card unless you really want it. 5% on Amazon pay ICICI is awesome. HSBC Live+ 10% on food and groceries offline and online is pure gold. Never loose those 5% neu coins on utility bills, insurance, gas, etc. Don't leave these things and go behind Mariott and Accor or SQ and Qatar. Just be what we are. Spend according to our needs, and take cards according to our spends. There are people who stay in Mariott for like 80-100 nights a year. More than their home, they stay in these hotels. It's all business spends, company sponsored and what not. We may be struggling hard to spend 1 or 2 night a year in these hotels after listening to all these influencers. Don't fall into that trap.

[Edit] - One is not better than other. We cannot say cashback is for beginners and point card is for experts. There is nothing like that. Even pro max people use cashback cards and vice versa. But often cashback cards are shown to be beginner friendly because it is easy to calculate and returns are fixed and sometimes capped. But there is a higher potential of earning in milestone based point cards. That's also because higher returns come in travel and hotel categories. All points that you told are valid, it finaly boils down to what each person wants.
I was an avid cashback card lover and used Amazon Pay ICICI alone for 2 years (2022-23). I was thinking that is the best card in the world. Later only I started using other cards and exploring what all these are. Will be happy to help, because as a beginner I faced a lot difficulty in understanding the whole game. Even now I am learning, with all great contributors here in the community.

@cardio_guy 🙇‍♂️

+ 3 words

 

[Aniket Sharma]

I was researching Youtube videos comparing cashback credit cards vs travel credit cards.
Problems with travel credit cards:
1. You need to book via bank's websites to fetch/redeem discount coupons (eg: HDFC Smartbuy). If you want to cancel/reschedule flights or hotel, then it will be cumbersome. Instead, if you directly book via the airlines' website, then it is much easier to cancel/reschedule the ticket (same applies to hotels).
2. Extra costs in booking via bank's websites (extra commission fees) using travel credit card vs lower costs if you book directly via airline website using cashback credit card
3. Harder to redeem miles points, consumes a lot of time and need to calculate which airline/hotel is supported for redemption. Whereas, in cashback credit cards, it is much simple to redeem cashback points (usually 1 reward point = Rs 1) as a statement credit.
4. High annual fees for travel cards compared to low fees for cashback credit cards. If you don't travel frequently, it's much cheaper to pay out-of-pocket for lounge access and travel insurance instead of paying high annual fees for the travel credit card.

By adding the extra inconvenience of rescheduling and cancelling tickets in hotels/flights, and considering the time saved (redemption of points) and peace of mind, directly booking via actual airline website using cashback credit card is way better than via bank platforms with travel based credit card.

Please let me know if I missed anything. Thanks.

In simple words i will say don't compare cashback with travel cards.

Both are for different purpose.

cashback have various limitations of getting cashback and also limited to certain amount and travel cards have no limitation of earning rewards points if you have genuine spends also for lounge access & travel insurance that you asked can't be paid by whatever cashback you can earn in a year.

2.5k for lounge & for 2 crore insurance minimum amount maybe 20k and lets assume you travelled atleast 5 times in a year then 1 lacs will be wasted, now calculate on which card you will be able to get 1 lacs cashback and here isn't the end you still need to sponsor that 5 time flight/hotel charge.