Rewards categories for credit cards are a great way to turn your everyday spending into valuable cash back or travel allowences, but knowing which type of program to pick might leave you scratching your head. Fear not, as we will help you navigate the credit card landscape to know which rewards method makes the most sense for your spending habits and personal needs.

Which do you value more: cash or travel?

The first question to ask yourself before you decide on a rewards card is what type of reward you value most. If you think packing up a suitcase and getting on a plane to see the world sounds like a terrible time, you should probably stick with cash back credit card rewards. If you love travel and lust for your next exotic adventure, travel rewards are definitely the way to go.

For those who fall somewhere in the middle, you have a harder decision to make. In most cases, you can get a better value per dollar spent with travel rewards cards than you can with cash back. However, if you don’t travel very much, you might find a 2% cash back opportunity more valuable than a couple percent more in travel rewards.

If you want to get down to the math, however, of which will give you the best results, it is most likely a general points earning card that earns Chase Ultimate Rewards points or American Express Membership Rewards points. Both of those give you flexible redemption options that maximize the value of a reward point to be worth more than any cash back card can keep up with.

Comparing what you can earn: cash back versus travel rewards

If you are still on the fence after looking at your own travel habits, the next place to look to decide on your next rewards credit card is how much you can earn. There is a wide range of options out there to earn rewards and different cards offer unique bonuses that help you earn even more.

For example, with a cash back credit card you may find some flat-rate cards more appealing while others might be more excited by variable rate cards that pay a bonus. For example, the Citi® Double Cash card pays you 1% cash back when you shop and another 1% when you pay your bill for an effective 2% cash back rate.

Others, like money experrt Clark Howard himself, are more excited by the Costco Anywhere Visa® from Citi, which offers 4% cash back on gas up to $7,000 per year, 3% on restaurant and travel purchases, 2% at Costco, and 1% everywhere else. Depending on how you shop, one might be better than the other.

For miles and points cards, you can find similar options where some cards offer a more simple program and some offer big bonuses depending on where you spend. Cards like the Chase Sapphire Preferred® pay 2x points on travel and restaurant purchases and 1x everywhere else. The American Express EveryDay® Preferred card offers a 50% bonus for all points earned in a month, which includes 3x points at the grocery store, if you make at least 30 purchases on the card per statement cycle.

Redeeming for travel versus fixed value of cash

In terms of earning, you might want to compare one point to one cent, which is a common redemption value, but you can do far better than 1 cent per point with a travel rewards card. This is why you can’t compare the earn rate of cash back credit cards versus travel rewards cards on an apples-to-apples basis. Each has its own benefit, one is simply cash you can use however you want, while you can stretch your redemptions further when used for travel.

We all know what a penny is worth, so valuing your cash back is simple. Miles and points are a little more complicated. On the low end, you should be able to get at least one cent per point in value.

Depending on how you use them, Amex Membership Rewards points are worth about 2 cents each, Chase Ultimate Rewards are worth 2.2 cents, Citi ThankYou points are worth 1.6 cents, most airlines are worth 1-2 cents, and most hotels are worth a half cent to 1 cent each.

This means if you can earn a relatively similar earnings rate, travel rewards are still worth more than cash back. A cash back card that pays 2% pays you back just that 2%. A travel card that pays 2 points per dollar may give you an equivalent of 4% cash back. That is double the value for the same swipe of your card.

No rewards are worth it if you pay interest

When you are deciding on a credit card rewards program, remember that rewards are only worth it if you pay your card off in full each month. If you pay expensive credit card interest, it will cost you a lot more than you get back in rewards. That interest is a big part of how banks make money.

But if you can avoid the temptation to overspend and keep your balances paid off every month when the statement comes, you can dive into the world of credit card rewards with a cautious optimism. Start with a favorite card or two to get an idea of how it works, then decide if you want to become a full-fledged travel hacker or cashback earner. There is no right or wrong, just what makes the most sense for your unique personal finance needs.