Cashback Credit Card vs Travel Credit Card

Last Updated : Feb. 28, 2025, 1:19 p.m.

Credit cards are available across all categories, and each credit card offers unique benefits in the specific category that it belongs to. Mostly, the cards are given a general nomenclature specifying the special category that they belong to. For instance - Shopping credit cards, NRI credit cards, travel credit cards, cashback credit cards, etc. In this article titled, Cashback Credit Card vs Travel credit card , let us read about the major differences between these two credit card types. After knowing and understanding their differences, you can choose the type as per your requirements. Before you apply for the credit card, check your CIBIL score on Wishfin for free and also view your CIBIL report for free.

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What are Cashback Credit Cards and Travel Credit Cards?

Let us now understand what each credit card type is. So, what are cashback credit cards?

Cashback credit cards: Cashback credit cards reward you on everyday purchases, right from groceries to dining out and online shopping to movies. They give back a percentage of the money spent on every eligible purchase to the cardholder.

Travel credit cards: Travel credit cards are designed to help frequent travelers save a considerable amount on flight and hotel bookings along with perks on travel spends. Users can save considerably on flight tickets, get discounts with popular brands, accrue air miles, enjoy complimentary lounge access, and get travel insurance. There are different types of travel credit cards, and they are:-

• Co-branded travel credit cards:
• Airline credit cards
  
• General Travel Credit Cards: These are credit cards that offer reward points and air miles which can be redeemed across a broad range of airlines. They are most suited for travelers who do not want to redeem only from specific airlines or hotel chains. It is a good card type for travelers who need some flexibility in rewards redemption.
  
• Co-branded Travel Credit Cards: Co-branded credit cards are brought out in partnership with specific airlines or travel brands. These cards come mostly with benefits exclusive to that particular partnership brand. Perks include complimentary travel tickets, premium services, and accelerated reward points or air miles.
  
• Airline credit cards: These cards credit points or miles that can be redeemed for free flights across various or specific airlines.
  
• Cashback travel credit cards: There are some travel credit cards which offer good cashback benefits as well.

Cashback Credit Card vs Travel Credit Card - A Comparison

Both cashback credit cards and travel credit cards come with their own set of unique benefits. Which card is better depends on your lifestyle and spending habits. Let us now look at the benefits and disadvantages of both the cards.

Benefits of Cashback Credit Cards

1) Cashback Credit Cards Require Zero Planning and Have a Firm Value: These credit cards are low maintenance credit cards often with no or lower annual fee. You will get a certain percentage of the money spent on all purchases as cashback. You will already be aware of what you would get back.

2) Easy and Flexible Rewards Redemption:

Redeeming cashback is easy and flexible. Cashback is usually credited to your card statement or directly deposited to your bank account. Sometimes, a gift card to your favorite store is given. Whatever be the case, accessing cashback is easy.

3) Credit Card Bonuses: Some cash back cards offer bonus reward points in specific categories like groceries, dining, utility bill payments, or even gas, enabling cardholders to maximize the savings from daily expenditures.

4) Additional Security: Some cashback cards give purchase protection options, thus covering for the loss incurred in the damage of items brought with the credit card. Thus, extra safety is offered, such as extending warranties on purchases, refunds for damaged products or products whose features are exaggerated falsely, buyer protection against damage or theft, etc.

5) Personalized Rewards: Many cashback cards give personalized rewards, enabling individuals to choose one that aligns with their lifestyle and spending patterns.

Disadvantages of Cashback Credit Cards

1) Limits on Spending: Many cashback programs have upper limits on earnings. Else, they will require users to reach certain spending milestones before redeeming the rewards.

2) Tempted to Overspend: Sometimes, individuals may be tempted to overspend due to the attractive cashback offered.

3) Fees: Some cash back cards charge high annual fees, and it is important to analyze whether the rewards are more than the costs.

4) High Interest Rates: Some cashback credit cards charge high interest rates, and hence it is always recommended to pay your credit card balance in full. Otherwise you may end up paying more interest rate than the cashback accrued, or it will reduce your cashback amount.

Benefits of Travel Credit Cards

1) Great Travel Perks: Many travel credit cards come with additional benefits like complimentary airport lounge access , travel insurance against lost luggage or accidents, priority boarding, complimentary hotel stays, elite status with hotel chains, etc.

2) Travel Upgrades: Reward points accrued on your travel credit card can be used for flight upgrades, airport lounge access with complimentary beverages and food, hotel room upgrades, and other benefits

3) Zero Foreign Transaction Fees: Every time a debit card or credit card is used in a foreign country or you transact in a foreign currency, a certain forex fee is charged. This is usually about 3% of the transaction amount. This is quite a considerable amount and will increase your credit card bills. Some of the best travel credit cards in India have a zero forex markup fee.

4) No Risk of Fraud: Carrying cash, credit or debit cards in a foreign country is a huge risk. You may become a victim of identity theft. The stolen information like account number and other bank details can be used for unauthorized transactions. However, when you use a travel credit card, you will be safeguarded against fraud liability and do not have to worry about money stolen from your bank account.

Disadvantages of Travel credit cards

1) Minimum Spending Required: For earning those attractive rewards, cardholders may have to spend a minimum amount within a specified duration of time.

2) High Annual Credit Card Fees and APR: Travel cards, especially premium ones, come with high annual fees and interest rates.

3) Credit Score Requirements: A good credit score and credit history is required for the approval of your travel credit card application, especially when it comes to those premium credit cards with luxury perks.

4) Instability in Rewards: Travel credit cards may require you to reach threshold spends in order to avail flight tickets or hotel stays. The threshold spends may not be the same over time and may increase suddenly. So, with travel credit cards, when you decide to go for a vacation, banking on your reward points, it may not work out the same way as you have planned.

5) Blackout Dates: Travel credit cards may limit the ability to redeem points or miles for specific flights or hotels during peak travel periods. These are called blackout dates.

Is it Better to Use a Travel Credit Card or a Cashback Credit Card?

The card type which you choose depends completely on your lifestyle i.e. the areas in which you are focused on spending more or require to shell out greater. If you want a card which is less expensive and offers flexible rewards across various categories, then go in for cashback credit cards. On the other hand, you should choose a travel credit card if you are a frequent traveler who can use those free trip perks, facilities for safe travel, complimentary lounge access, etc., then opt for a travel credit card. Also, before you choose a credit card type, it is important to understand the pros and cons of obtaining them, which is why we have compiled some of the essential points in this article, Cashback Credit Card vs Travel Credit Card.

Conclusion

Now you know the major difference between the Cashback Credit Card vs Travel Credit Card. Both of them have unique features and benefits that will allow you to save some extra bucks. If you are a frequent traveler then the Travel Credit Card would be a suitable option for you. On the other hand, if you want to save money from the monthly expenses then you must go through the list of cashback credit cards.