The Difference Between Cash Back and Transferable Points—and Why You Might Want Both

Advertiser Disclosure: The Rewards Mom has partnered with CardRatings for our coverage of credit card products. The Rewards Mom and CardRatings may receive a commission from card issuers.

Many people think you have to choose: either earn cash back and keep things simple, or go all-in on transferable points and max every redemption. But once you really got into this points world—planning trips like our family vacation to Cancun that would’ve cost over $14,000 out of pocket—you realize it’s not ALWAYS about getting the absolute most value out of your points. You just have to know when each option makes the most sense.

If you’re just getting started, my Beginner’s Guide is a great place to start. But this post is about going one step further—understanding how cash back and points can actually work together to help your family travel for (almost) free.

The Basics: Cash Back vs. Flexible Points

Here’s the quick version:

• Cash back cards earn a fixed percentage on every purchase—usually 1–5%. You can apply those rewards as a statement credit, use them to cover purchases, or in some cases, redeem them toward travel.

• Flexible points cards earn rewards you can transfer to travel partners like hotel chains or airlines. These are the points that unlock outsized value—like turning 60,000 points into $1,200+ in flights or hotel stays.

That second group gets most of the attention (with good reason). If you want to fly your whole family to Hawaii, flexible points are usually the way to go. I explain why here.

Cash back isn’t always the “lesser” option—even if the dollar value looks smaller on paper. Because sometimes, value isn’t just about the math—it’s about how easy it is to use, and whether it helps you say yes to the trip your family actually wants to take.

When Cash Back Just Makes More Sense

There are plenty of real-life moments where redeeming at 1 cent per point or using cash back cards is the better move:

• When you want to cover Disney tickets or a Universal hotel stay without jumping through redemption hoops.

  👉 (See how we save on Universal tickets here)

• When you’re booking a vacation rental or a cruise and can’t use points directly.

  👉 Find how we save on Disney Cruises here

• When you just want something simple, like paying off part of your trip and moving on.

This is where Capital One cards really shine. With their “purchase eraser” feature, you can use your points to cover almost any travel charge—even if you didn’t book through a portal. That flexibility is exactly why I consider cards like the Capital One Venture X a game-changer for families.

My Favorite "Cash Back First, Travel Later" Cards

You know what’s even better than having to choose between cash back or points? Not having to.

Some cards earn cash back rewards that can later be turned into travel points—if you also hold a premium card from the same issuer. This setup lets you keep things simple while you’re getting started, but still gives you room to grow into more advanced travel redemptions later.

I’ve found this especially helpful with business cards that earn cash back. These three are my favorite:

👉 Top cards that start as cash back but can become transferable points

Yes, these are all business cards—but that doesn’t mean you need a storefront or full-time LLC to qualify. If you’ve got a side hustle (like reselling, photography, online tutoring, or even just selling on Facebook Marketplace), you likely qualify. I break it all down in this post about qualifying for a business credit card.

So… Which One Should You Use?

Here’s the honest answer: both.

• Use flexible points when you want to stretch your rewards—like transferring to airline partners for international flights or booking Hyatt stays for families.

• Use cash back (or cash-like travel redemptions) when you’re booking things that fall outside the traditional points world—like Disney hotels, rental cars, or even your Global Entry fee.

Sometimes, a 1-cent-per-point redemption is exactly what you need. And when you’re earning smartly—by leveraging welcome offers, tracking with Travel Freely, and using different cards for different goals—you’re still getting thousands of dollars in value you wouldn’t have had before.

One Last Thing

It’s easy to get caught up in chasing the “perfect” redemption. But the real goal? Booking the trips your family actually wants to take.

A $14K luxury resort in Mexico is amazing, but if your kids are begging to meet Captain America or ride Dumbo for the third time, then using your points for a Disney trip might be the better memory.

Want to build your own strategy?
👉 Check out my favorite flexible travel rewards cards
👉 Or browse my favorite beginner cards if you’re just getting started.

And if you want ongoing tips, card updates, and redemptions that work for real families, join my email list or follow along on Instagram.

Editorial Disclosure: Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities.</i></small>
<small><i>Advertiser Disclosure: The Rewards Mom has partnered with CardRatings for our coverage of credit card products. The Rewards Mom and CardRatings may receive a commission from card issuers.