What are the pros and cons of cash-back cards vs points rewards cards vs airline miles cards? I have an excellent credit score, we pay our balance monthly, and we fly 6-8 times a year.

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    Rewards credit cards have surged in popularity over the past few years, with research from Mintel Comperemedia showing that about three in five new credit card applications include some kind of reward or bonus. Cash back cards may tempt you with special deals, but loyalty to a single airline could bring you the biggest savings.

    Miles: Airline credit cards tend to offer huge signup bonuses, but rarely produce big long-term savings for anyone other than true road warriors on almost-endless business trips. In the past few months, we've seen special deals serving up anywhere between 40,000 and 100,000 frequent flier miles for new cardholders. That's usually enough for a couple domestic round trips, but you'll still pay a redemption fee of up to $75 per ticket when you try to convert your miles into flights and government fees and taxes. United MileagePlus® Explorer Card and Southwest Airlines Rapid Rewards® Premier Credit Card provide some great benefits for travelers willing to limit their bookings to a single airline.

    Cash: On the other hand, cash back credit cards reward everyday purchases at gas stations and grocery stores as a subtle way to encourage merchant acceptance for smaller transactions. Some Chase cards offer up to 5 percent cash back on seasonal spending categories subject to quarterly enrollment and up to $1,500 in combined purchases.

    Points: And then there are cards that pay rewards in "points." Chase and Citi both offer points rewards programs that let you earn more back in merchandise credit than you'd get as cash. Just review each lender's reward redemption sites to see whether they offer special deals for the things you buy often.

    Undecided? If you're split between miles, cash, and points, consider a "miles" per dollar reward earnings card, which can be redeemed for flights on your choice of airline. When you spend more money on the road than at the grocery store, your rewards can add up quickly.

    Regardless of which rewards credit card you choose, remember that you're only maximizing your savings by paying down your balance at the end of every statement cycle. Banks subsidize the cost of your rewards by charging higher finance charges and annual fees than no-frills cards. Use cards like these to cover reimbursed company expenses or routine household bills that you'd pay with cash, and you'll avoid spending more on service charges than you receive in rebates.


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