If you’re going back and forth over whether to get a credit card that earns cash back or points, we’ve got you covered. Find out how much money you’ll really save per year with each type of card.

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It’s the first question you need to answer when shopping for a new credit card: Do you want to earn cash back or travel points?

Although it’s easy to get mesmerized by all the features credit cards offer, what’s ultimately important is picking the card that will save you the most money year in and year out.

To help answer that question, I’ve put together sample scenarios showing how much money you’d save per year with a cash-back card or one of two different types of travel cards. These scenarios run the gamut from people who hardly ever travel to those who like to book luxurious international vacations, allowing you to figure out which type of card best matches your lifestyle.

The methodology

I chose three cards for these comparisons, including one of the best cash-back cards on the market and two different types of top travel rewards cards.

Wells Fargo Cash Wise Visa® Card:

• Unlimited 1.5% cash back

• No annual fee

Bank of America® Premium Rewards® credit card:

• 2 points per $1 on travel and dining

• 1.5 points per $1 on all other spending

• $95 annual fee

• $100 annual credit towards incidental airline charges

• Redeem rewards at value of $0.01 per point for travel purchases or cash back

Chase Sapphire Reserve®:

• 3 points per $1 on travel and dining

• 1 point per $1 on all other spending

• $450 annual fee

• $300 annual travel credit towards any travel purchases

• Redeem rewards through Ultimate Rewards® travel portal at value of $0.015 per point, transfer to any of 16 airline and hotel transfer partners, or redeem for cash back at $0.01 per point

But just how much would you be earning back per year? To get a reasonable estimate on what the average consumer could earn, I used the data collected by the U.S. Bureau of Labor Statistics for Consumer Expenditures in 2017.

In 2017, average consumer expenditures were $60,060. However, that included $19,884 for housing, $1,873 in cash contributions, and $6,353 in pensions and Social Security. Those usually aren’t things you pay by credit card, so I’m subtracting them. That leaves $31,950 in spending that could realistically be paid by credit card, including $3,365 on eating out, where those travel cards earn bonus points.

Let’s round up to $32,000 in total spending and $3,500 on eating out. Here’s the rewards you’d earn on that with each card:

Source: Author’s calculations.

1. The homebodies -- infrequent travelers

We’ll start with the people who aren’t big on traveling and don’t incur many traveling expenses per year. This category also includes people who take trips that don’t involve airfare or hotels. For example, if you usually take road trips and stay with family at your destinations, then you wouldn’t have much you could pay using travel rewards.

Even infrequent travelers may have the occasional travel expense. Let’s go with $300 in annual travel costs here, which is a normal price for a domestic roundtrip ticket.

Source: Author’s calculations.

In this situation, the Wells Fargo Cash Wise Visa® Card is the definite winner, as the travel benefits of the other cards just don’t come into play. You lose out the most with the Chase Sapphire Reserve® because of that big annual fee and because you can’t maximize the value of your points through travel redemptions.

If you’re not much of a traveler, then you’ll get the most value from a cash-back card. Besides the Wells Fargo Cash Wise Visa® Card, you could also consider:

• Discover it® Cash Back

• Blue Cash Everyday® Card from American Express

• Capital One® Quicksilver® Cash Rewards Credit Card

2. Frequent economy travelers

Next up are the consumers who like to travel, but usually go for the most affordable bookings. They may stay at a couple different hotels each year, take a few domestic flights, and potentially incur some airline charges, such as bag fees or in-flight purchases.

If you’re traveling multiple times per year, then it’ll cost you in airfare and accommodations. For this type of traveler, we’ll estimate at least $1,000 in travel expenses every year, along with at least $100 in airline incidentals.

Source: Author’s calculations.

Here, the Bank of America® Premium Rewards® would save you the most money courtesy of its affordable annual fee and travel perks. The Chase Sapphire Reserve® is a better value than before, but the annual fee still makes a big difference and prevents it from catching the other cards. While you could also transfer your Chase Ultimate Rewards® points for award bookings, you’ll generally get a better value redeeming them at the fixed rate when buying less expensive travel.

The travel rewards cards with mid-tier annual fees are a good option if you stick to affordable domestic trips. Other travel cards in this vein are:

• Capital One® Venture® Rewards Credit Card

• Chase Sapphire Preferred®

• The Gold Card from American Express®

3. Jetsetters taking expensive international trips

If you want to travel in style without paying an arm and a leg, credit card points are a smart way to do it. Whether you want to fly in business class or first class, or you’re interested in visiting a beautiful resort, it can be much more cost effective to pay for it in points instead of cash.

This is one area where points you can transfer, such as Chase Ultimate Rewards® points, come in handy. A business-class international ticket often costs $1,000 or more, but depending on where you’re going, you could find a Chase transfer partner selling the same ticket for 30,000 miles.

For this category, we’ll figure at least $2,000 in travel costs, including one $1,000 business-class ticket and at least $100 in airline incidentals.

Source: Author’s calculations.

It can be tricky to find deals on expensive travel, but when you do, you can get an incredible value for your points. That’s when the Chase Sapphire Reserve® more than justifies its annual fee, offering almost twice as much value as the competition. It also includes other perks that can improve your travel experience, such as airport lounge access.

When you’re aiming for this type of travel, premium credit cards are useful to have. Many have transferable points that you can send to various travel partners, and they also feature the most travel benefits. In addition to the Chase Sapphire Reserve®, other quality premium credit cards are:

• The Platinum Card from American Express®

• Citi Prestige®

Getting the most value from your credit card

The scenarios above give you a good idea of which type of card best fits your travel habits. To sum it up:

• If you don’t travel much, get a cash-back card.

• If you usually stick to affordable domestic/economy travel, check out mid-tier travel cards.

• If you want to book expensive travel, a premium travel card is the way to go.

Once you know what type of card to get, you can start to narrow down your options by seeing how different cards’ rewards rates compare to your normal spending and by checking out what other perks each card offers.

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