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Whether to choose between cash back vs. travel rewards is a common question for credit card holders. Each comes with its own unique set of advantages and disadvantages and is tailor-made for a specific type of user.

Before you choose one, you need to understand what both of these types of credit cards have to offer. If you’re credit card hunting, here’s what you need to know.

What Is Cash Back?

Cash back is a type of reward that many credit cards offer their users, where a percentage of the purchase is directed back to the cardholder. For example, if the card offers 2% cash back on eligible purchases and the cardholder made a $100 purchase that qualified, they would earn $2 in a cash back reward.

There are a few different kinds of cash back rewards programs. Some cards offer a statement credit, which can be used to reduce your statement balance. Others offer pay-with-rewards, which allows users to use their cash back to make a purchase. Some offer gift cards, while others either deposit the money into a checking or savings account or mail a check. Simply put, cash back comes in many forms.

While cash back rewards can be returned to cardholders in a few different ways depending on the card, the amount you earn on each purchase also varies with each card. Groceries and gas may be on one tier, while traveling and restaurants may be in another. Some cards offer the same flat rate on every purchase regardless of the spending category, while others offer bonus categories throughout the year, earning a higher percentage.

Benefits of Cash Back

People who regularly take advantage of cash back rewards often also prefer its simplicity over other options on the market, such as points or miles. The value of $100 in cash back is pretty straightforward and often doesn’t require any conversions.

Although cash back may be used to strategically lower the cost of travel on some cards, the benefits extend beyond travel, which is one of the greatest things about cash back. Cardholders often have a lot of flexibility in how they can receive and use their earnings.

As discussed above, cash back can be received in a few different ways (statement credit, pay-with-rewards, direct deposit, gift card, etc.), and many credit card companies offer cardholders a few different choices to take advantage of their membership rewards.

Another perk that often comes with cash back cards is that they may come with a free credit score check and credit score monitoring. That makes it easy to stay on top of your credit profile and monitor for identity theft.

Recommended: Preapproval vs. prequalify

What Are Travel Reward Points?

Travel reward points programs allow cardholders to earn reward points with eligible purchases. Those points can then be redeemed when making travel purchases, such as booking a hotel, a flight, or a rental car.

There may be restrictions, however; in addition to using the specific credit card, you may have to book through the carrier’s own travel portal. Alternatively, there are also hotel- and airline- branded credit cards attached to a loyalty program that accrues points as you spend. You can then redeem those points for discounts or upgrades when you book through that travel brand.

As with cash back, the amount of points earned with each purchase can depend on the category of purchase. Some cards offer differing tiers, while others offer a flat rate.

Benefits of Travel Reward Points

Cards with travel reward points programs are excellent tools for people who travel regularly because they can significantly offset expenses. Whether it reduces the cost of your hotel or pays the entire price of an airline ticket, travel rewards can drastically reduce the cost of going from point A to point B. But it doesn’t stop there.

As we all know, there can be a lot of pain points when going on a trip and some travel cards aim to alleviate some of them with benefits above and beyond accruing points. For example, some cardholders may get access to perks like trip protection, rental insurance, VIP airport lounge access, and free checked bags.

If you travel frequently, then you may want to apply for a credit card with travel rewards. When you do that math on all of the benefits, you may discover it makes financial sense.

How to Choose Cash Back vs. Travel Reward Points

Choosing between cash back and travel reward points really boils down to how you spend your money. If you don’t plan on traveling much during the year, then a cash back card may be more beneficial

Aside from how points are earned, it’s also important to make sure you understand how each type of card works. Before you apply for any rewards credit card, find out how points can be redeemed. Then examine your spending habits to determine which card is better suited for you.

For instance, you may want a card with specific spending categories and earning tiers. But if you don’t spend a lot in those areas, then a flat rate may make the most sense for you. Credit card approval odds often persuade applicants to go with a particular card over another, but if you have a good credit score, apply for the card that makes the most sense based on your financial behavior.

Recommended: Soft vs. hard credit inquiry

SoFi Plus Example Use Cases

SoFi Plus combines rewards with saving, investing, and borrowing benefits within the SoFi ecosystem. It can be part cash back rewards, part travel rewards card. If you have the SoFi Unlimited 2% Credit Card, the cash back rewards are worth 2% of each eligible purchase

SoFi Plus members who have the SoFi Unlimited 2% Credit Card can also get 5% cash back rewards points on bookings through SoFi Travel (except for airfare) and 2x rewards points on qualifying account activity.

Visit the SoFi Plus page for details on specific membership and promotional offerings.

SoFi Plus Premium Membership Benefits

The boost that SoFi Unlimited 2% Credit Card cardholders get when they pay for SoFi Plus is a huge benefit, especially when you consider the fact that there aren’t any earning caps or rotating categories.

SoFi Plus members can also get a 4.70% Annual Percentage Yield (APY) on up to $20,000 in a SoFi Bank savings account

Additionally, SoFi Plus members get unlimited one-on-one sessions with SoFi Wealth Financial Planners as well as access to SoFi Plus Experiences.

SoFi Plus Tips

The key is to find out whether your membership pays for itself. SoFi Plus is a premium banking service that costs $10 a month, or $120 a year, so do the math on the benefits you expect to use.

One SoFi Plus member advantage comes through booking trips through SoFi Travel for 5% cash back rewards points (except for airfare).

When you combine those rewards with the higher APYs on a SoFi Bank savings account, the membership could quickly pay for itself (and then some).

Determine how much you would earn with a SoFi Plus membership by making use of the SoFi Plus calculator.

The Takeaway

Choosing between cash back vs. travel rewards comes down to which reward makes the most financial sense to you. If life is busy and your work-life balance is keeping you close to home, you may consider opting for a cash back rewards card. If you’re always on the go, then a travel rewards card may offer better benefits.

SoFi Plus is America’s most rewarding financial membership—all in one app.* Unlock extra savings, rewards, discounts, and more.

The smart way to get more from your money.

FAQ

Is it better to get cash back or travel points?

Choosing between cash back or travel points depends on your spending needs. If you don’t travel very often, a cash back option may be a better option for you. If you do travel often and don’t mind learning the ins and outs of travel points, then a travel card can certainly make financial sense. It truly depends on your needs and spending habits.

What are the disadvantages of travel points?

Travel points can be more complicated than cash back rewards, especially if you’re looking for the highest redemption value for your points. It depends on the card, but it’s not uncommon for cards to have limitations on the points can be used, and may even have expirations on the points.

Another disadvantage is that some travel cards charge annual fees to their cardholders, which effectively lowers the value of your travel points.

Is cashback basically free money?

It may be thought of as free money, but it depends on whether or not the card has a balance after the payment due date. If so, then accumulated interest may very well cost more than any amount earned through spending.

Do cash back rewards expire?

It depends on the card and its policy, but most of the time cash back rewards do not expire. As long as your account is in good standing, you should have access to your cash back rewards regardless of when they were earned.

How much is 1,000 reward points in cash back?

It depends on the specific card’s redemption value. If a point equals one cent, for example, then 1,000 points would be the equivalent of $10. Some cards, however, offer up to 2 cents per point when those points are redeemed through select portals.

What are the pros and cons of cashback?

Cash back is straightforward and generally easy to use, but you may not be able to redeem it for as much as you would through a travel rewards program.

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Photo credit: iStock/Djordje Krstic

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.
SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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Credit card rewards programs can help turn everyday spending into valuable perks, whether that’s cash back rewards, travel miles, or flexible points. Many programs are available, so learn more to choose the right card to maximize your budget and get more out of every purchase.

What Are Credit Card Rewards?

Credit card rewards are benefits that you can earn when you make purchases with a rewards credit card. Credit card rewards are similar to membership rewards, which offer various benefits to customers who engage with certain products and services.

For every dollar you spend with your credit card, you will earn rewards, which are typically cash back, points, or travel miles. Some cards let you redeem your rewards for checks, statement credit, travel perks, gift cards, and/or merchandise purchased through the card company.

Types of Credit Card Reward Programs

There are three main types of credit card rewards programs: cash back rewards, points, and travel miles.

With cash back rewards, you earn a percentage of cash back on each eligible purchase you make with the card. Some cash back rewards cards earn a flat rate on all purchases, while others offer higher rates for bonus categories of spend or for rotating categories.

SoFi has two credit cards that offer cash back rewards. The SoFi Unlimited 2% Credit Card gives you unlimited 2% cash back rewards on all eligible purchases with no annual fee. The SoFi Everyday Cash Rewards card gives you 3% cash back rewards on dining, 2% on groceries, and 1% on all other eligible purchases, with no annual fee. To explore the annual fee of the SoFi Unlimited 2% Credit Card, see pricing, terms, and conditions.

Through points-based credit card reward programs, cardholders are able to earn reward points on their purchases. The value of the points will vary depending on the program and how you redeem the points. Some programs will let you redeem points for travel, gift cards, cash back, merchandise, concerts, sporting events, or statement credits.

Credit card reward programs that earn miles are typically co-branded airline credit cards. These cards earn miles for every dollar you spend with the credit card. You can then redeem miles for flights, seat upgrades, or other travel-related expenses.

Benefits of Credit Card Reward Programs

Credit card rewards programs can give you a way to take advantage of money that you are already spending by earning cash back, travel experiences, or merchandise on your everyday purchases. If you use your card responsibly and choose the right credit card program for you, you can earn more value than you spend on the card’s annual fee.

How to Choose a Credit Card Rewards Program

When choosing a credit card rewards program, you should figure out what your goals are. Do you want to earn cash back for your purchases? Do you have a trip in mind that involves a long flight? This will help you decide which type of rewards program would be best for your goals (like cash back, points, or miles).

You should also research other things about the credit card, like any annual fees, sign-up bonuses, travel protections, extended warranties, transfer partners, or other benefits. Weigh the pros and cons of the card for your specific wants and needs.

Before you apply for a credit card, you should understand your credit card approval odds. You don’t want to apply for a credit card that you definitely wouldn’t get approved for, due to your credit score or other factors.

You can do a free credit score check before applying. You can also sign up for credit score monitoring to get an understanding of what your credit score is.

You should also understand the difference between preapproval vs prequalify offers and how a soft vs. hard credit inquiry affects your credit score.

Credit Card Rewards Tips

Every credit card rewards program works a bit differently. The amount your rewards are worth can vary by program. Cash-back cards give you a percentage of your spending back, but cards that earn points or miles are not always a 1:1 conversion. The value can also vary depending on how you redeem the points or miles.

To ensure you are getting a good value for your points, you should try to get at least a 1:1 value, meaning one point or mile is worth one penny. To calculate this, take the cost of the redemption item (like a travel reservation) and divide it by how many points or miles are needed.

Different rewards programs also have different rules about redeeming rewards. Some programs require you to reach a minimum amount of rewards to be eligible to redeem them, like $25 or 2,500 points. Other card issuers let you redeem points at any amount. Most issuers also require you to keep your account open and in good standing to be eligible to redeem rewards. If you close your account or become delinquent, you will risk losing your rewards.

SoFi Plus Premium Membership Benefits

In addition to credit card rewards, some financial institutions offer premium banking services that provide extra perks and account benefits. For example, with SoFi Plus, you can get more than 20 perks and more than $1,000 in annual value with qualifying activities.

SoFi Plus members can earn 4.70% Annual Percentage Yield (APY) on up to $20,000 in a SoFi Bank savings account.

SoFi Plus members also get matching funds, including 1% of eligible deposits into non-retirement SoFi Invest accounts and 1% on crypto purchases.

SoFi Plus can give you additional rewards as well, including a 10% boost on cash back rewards when you earn reward points through select SoFi credit cards. You’ll also get 5% cash back rewards points on bookings through SoFi Travel (except for airfare) and 2x rewards points on qualifying account activity.

Additional discounts include a 50% discount on Hello Privacy, $200 off trusts with Trust & Will, 20% off TurboTax, a $50 Rakuten welcome bonus, and a discounted Care.com subscription.

You can save on fun experiences by being a SoFi Plus member through SoFi Plus experiences, exclusive chances to enjoy live entertainment. SoFi Plus membership includes a $20 reward on dining with Seated and 10% off tickets with Vivid Seats.

The SoFi Plus calculator can help you estimate the annual value you can earn with SoFi Plus.

Visit the SoFi Plus page for details on specific membership and promotional offerings.

The Takeaway

If you pay your credit card balance monthly, you can gain several advantages from credit card rewards programs. However, it is important to use your card responsibly: always pay your balance on time and in full, and don’t spend more than you would normally just to earn more rewards.

SoFi Plus is America’s most rewarding financial membership—all in one app.* Unlock extra savings, rewards, discounts, and more.

The smart way to get more from your money.

FAQ

What are the different types of credit card rewards?

The three main types of credit card rewards are cash back, points, and travel miles.

What is the 2/3/4 rule for credit cards?

The 2/3/4 rule is a Bank of America-originated policy for credit cards. It restricts how many new personal credit cards you can be approved for within certain time frames: two cards in 30 days, three cards in 12 months, and four cards in 24 months.

What is the #1 rule of credit card rewards?

The number one rule of credit card rewards is to always pay your credit card balance in full and on time.

What is the biggest mistake to avoid with credit card points?

The biggest mistake would be carrying a balance on your credit card. Interest rates on credit cards can be around 20% APR. If you carry a balance, you will erase any value that your credit card points provide.

Which credit card is best for cashback rewards for SoFi?

SoFi has two credit cards that offer cash back rewards. The SoFi Unlimited 2% Credit Card gives you unlimited 2% cash back rewards on all eligible purchases with no annual fee. The SoFi Everyday Cash Rewards Card can give you 3% cash back rewards on dining, 2% on groceries, and 1% on all other eligible purchases, with no annual fee.

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Photo credit: iStock/Jacob Wackerhausen

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.
SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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Choosing a credit card for rewards points can feel overwhelming if you don’t know much about credit cards or rewards programs. However, there is no one “best” credit card for rewards points. Everyone has different priorities and limitations for choosing a rewards credit card.

What Is a Rewards Credit Card?

A rewards credit card is one that allows you to earn rewards when you make purchases on the card. Credit card rewards are similar to membership rewards, which offer various benefits to customers who engage with certain products and services. For every dollar you spend with your credit card, you will earn rewards. There are three main types of rewards credit cards: rewards points, cash back, and travel miles.

Through points-based rewards credit cards, cardholders are able to earn reward points on their purchases. The value of the points will vary depending on the credit card and how you redeem the points. Some credit cards will let you redeem points for travel, gift cards, cash back, merchandise, concerts, sporting events, or statement credits.

With cash back rewards, you earn a percentage of cash back on each eligible purchase you make with the card. Some cash back cards earn a flat rate on all purchases, while others offer higher rates for bonus categories of spend or for rotating categories. SoFi offers two credit cards with cash back rewards.

The SoFi Unlimited 2% Credit Card gives you unlimited 2% cash back rewards on all eligible purchases with no annual fee. The SoFi Everyday Cash Rewards card gives you 3% cash back rewards on dining, 2% on groceries, and 1% on all other eligible purchases, with no annual fee.

To explore the annual fee, see pricing, terms, and conditions.

Credit cards that earn miles are typically co-branded airline credit cards. These cards earn miles on every dollar you spend. You can then redeem miles for flights, seat upgrades, or other travel-related expenses.

How to Choose a Credit Card for Rewards Points

When choosing a credit card for rewards points, you should research the fees and features of the credit card, like any annual fees, sign-up bonuses, travel protections, extended warranties, transfer partners, or other benefits. Weigh the pros and cons of the card for your specific wants and needs.

Before you apply for a credit card, you should understand your credit card approval odds. You don’t want to apply for a credit card that you definitely wouldn’t get approved for, due to your credit score or other factors. You can do a free credit score check before applying. You can also sign up for credit score monitoring to get an understanding of what your credit score is.

You should also understand the difference between preapproval vs prequalify offers and how a soft vs. hard credit inquiry affects your credit score.

Benefits of a Rewards Credit Card

Credit card rewards programs can let you take advantage of money that you would already be spending, and also earn cash back, travel experiences, or merchandise on that spending. If you use your card responsibly and choose the right credit card program for you, you can even earn more value than you spend on the card’s annual fee.

How to Maximize Credit Card Reward Points with SoFi Plus

To earn and maximize credit card reward points, existing SoFi members must first enroll in SoFi Member Rewards. You can earn rewards points when you pay a bill or when your credit score increases by five or more points. With SoFi Plus, you can also get a 10% boost on SoFi credit cards, 5% cash back rewards points on all SoFi travel bookings (except airfare) and 2x rewards points on qualifying account activity.

SoFi Plus Calculator

SoFi has long offered premium banking services. SoFi Plus is SoFi’s premium membership that helps members earn, save, and invest. Members can earn reward points on eligible SoFi Credit Card purchases, as well as gain access to additional benefits and rewards.

The SoFi Plus calculator can help you estimate your annual membership rewards based on credit card purchases and deposits into savings and investment accounts when you have SoFi Plus. SoFi Plus members can earn 4.70% Annual Percentage Yield (APY) on a SoFi Bank savings account up to $20,000 and 3.30% APY on all other savings balances.

SoFi Plus members may get matching funds, including 1% of eligible deposits into non-retirement SoFi Invest accounts and 1% on crypto purchases.

Additional SoFi Plus perks include services with SoFi Wealth Financial Planners and special discounts on travel and SoFi Plus experiences. The $10 monthly membership fee may be offset by rewards points.

You can visit the SoFi Plus page for details on specific membership and promotional offerings.

SoFi Plus Example Use Case

If you keep $20,000 in a SoFi Bank Savings account and earn 4.70% APY, you could earn about $900 in interest over one year.

Another example use case of SoFi Plus Benefits is through the unlimited 1% match on eligible non-retirement SoFi Invest deposits. For example, if you deposit $1,000 monthly, you could earn an extra $120 over the course of the year.

How to Sign Up for a SoFi Plus Subscription

You can enroll in SoFi Plus by paying a subscription fee of $10 a month. You can enroll online at SoFi.com/sofi-plus.

SoFi Plus Tips

If maximized, SoFi Plus benefits may total over $1,000 in annual value with qualifying activities. For only $10 a month, this could equate to a savings of about $880 per year. To maximize the SoFi Plus benefits, it is best to have a SoFi Bank Savings account with $20,000 in it.

The Takeaway

Choosing a credit card for rewards points is a personal decision. When deciding which credit card is best for you, you should consider your credit score, spending habits, and financial goals, as well as the card’s rewards, interest rate, annual fee, and benefits. Some rewards credit cards charge a high annual fee but offer a lot of benefits or a high sign-up bonus that may offset the annual fee. Other people may want a card with a 0% introductory APR if they are trying to pay down credit card debt. It is important to try to never carry a balance on your credit card if you can avoid it.

SoFi Plus is America’s most rewarding financial membership—all in one app.* Unlock extra savings, rewards, discounts, and more.

The smart way to get more from your money.

FAQ

How much is 20,000 points worth on a credit card?

The value of 20,000 points on a credit card will depend on which rewards program the credit card is a part of and how you redeem those reward points. On average, 20,000 reward points are worth around $200, but your reward points could be worth a lot more or a lot less.

What’s the best credit card to use for rewards for SoFi?

There are two attractive options for SoFi credit cards that earn rewards. The SoFi Unlimited 2% Credit Card gives you unlimited 2% cash back rewards on all eligible purchases with no annual fee. The SoFi Everyday Cash Rewards card gives you 3% cash back rewards on dining, 2% on groceries, and 1% on all other eligible purchases, with no annual fee.

Which credit card is best for points?

There is no one best credit card for points. Everyone will have different priorities and limitations for choosing a rewards credit card. However, you should look for a rewards credit card that earns more than one point per dollar spent on everyday purchases. There are some cards that offer higher rates on certain bonus categories of spending.

How do I decide which credit card is best for me?

To decide which credit card is best for you, you should consider your credit score, spending habits, and financial goals, as well as the card’s rewards, interest rate, annual fee, and benefits. Some rewards credit cards charge a high annual fee but offer a lot of benefits or a high sign-up bonus that may offset the annual fee. Other people may want a card with a 0% introductory APR if they are trying to pay down credit card debt. It is important to try to never carry a balance on your credit card if you can avoid it.

How many credit cards should I have?

Having at least one credit card can help you build credit and improve your credit score. If you are a beginner, having one or two credit cards is likely the most responsible and easiest choice. If you have good or excellent credit and can use a credit card responsibly, you could consider additional credit cards. Some people have several credit cards open at once.

What to avoid on a credit card?

If you have a credit card, the biggest thing to avoid is carrying a balance. Always pay your credit card balance in full and on time.

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Photo credit: iStock/Ake Ngiamsanguan

This content is for educational and informational purposes only. The products, services, or features discussed may not currently be available via the SoFi platform. Any references to third-party products, services, or companies do not constitute an endorsement, recommendation, or solicitation by SoFi. Readers should independently evaluate their options and consider their individual financial needs and circumstances before making any decisions. ©2026 SoFi Technologies, Inc. All rights reserved.
SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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If you’re looking to put money aside for future needs and watch it grow, a savings account can be a great option. However, not all savings accounts are created equal. There are actually several different types to choose from, and the best choice for you will depend on your goals, how you want to access your money, and how soon you’ll need it.

If you’re looking for easy, in-person access to your savings, for example, you might like a traditional savings account. If getting a high return is your priority, a high-yield savings account, certificate of deposit (CD), or online bank account may be a better option. There are also speciality accounts for longer-term savings goals like retirement.

Here’s a closer look at different types of savings accounts and how to choose the best one (or ones) for your needs.

7 Common Types of Savings Accounts

To help you reach your specific financial goals, here’s an overview of some of the most common savings account types and how their features compare.

1. Traditional Savings Accounts

Many people start their savings journey by opening a traditional savings account at the same bank where they have a checking account. If your bank is insured by the Federal Deposit Insurance Corporation (FDIC), then your deposits are insured for up to $250,000 per depositor, per ownership category, per insured institution. The National Credit Union Administration (NCUA) provides similar insurance for credit unions.

You can typically open a basic savings account with a small minimum deposit. And, while the interest rates on these accounts tend to be low compared to other savings options, they offer fairly easy access to your funds. Just keep in mind that some institutions limit withdrawals on savings accounts to six per month, and will charge a fee if you exceed the limit. Some banks may charge other fees for basic savings accounts, such as monthly maintenance and inactivity fees.

2. Online Savings Accounts

Brick–and–mortar financial institutions aren’t the only place where you can shop for a savings account. If you’re comfortable doing your banking online or from your mobile device, you might consider an online bank for your savings account.

Because online-only financial institutions tend to have lower overhead costs than traditional banks, they often pass that savings on to customers in the form of higher interest rates and lower, or no, fees.

While you can’t meet with a bank representative face-to-face, these accounts often come with well-designed and user-friendly websites and mobile apps, seamless automated savings tools, along with customer service representatives available via online chat and by phone.

Like basic savings accounts, online savings accounts may have restrictions on the number of transactions you can make per month without incurring a penalty fee.

If you choose an online savings account from an institution with FDIC or NCUA insurance, then your funds will be protected (up to insured limits).

3. High-Yield Savings Accounts (HYSAs)

Primarily offered by online banks and credit unions, high-yield savings accounts tend to come with significantly higher interest rates than traditional savings accounts and often lower fees. In addition, some don’t charge fees or require minimum balances. These accounts are typically insured by the FDIC or NCUA.

While many online banks and credit unions allow unlimited withdrawals and transfers from savings accounts, some may limit withdrawals to a set number per month, and going over the limit may trigger a fee.

4. Money Market Accounts (MMAs)

A money market account (MMA) is a type of savings account that also offers some of the features of a checking account. Like a savings account, MMAs pay interest on your balance (often at a higher rate than a traditional savings account). Like a checking account, MMAs offer checking-writing privileges and/or debit cards, making it easy to access your funds.

On the downside, money market accounts generally require a much larger initial deposit than a basic savings account. And, you could be charged fees if the balance goes below a minimum amount.

Due to the potentially higher interest rates and check-writing/debit access, money market accounts can be a good choice for emergency funds if you’ve already saved enough to meet the initial deposit.

Keep in mind that there is a distinction between money market accounts vs. money market funds. The latter is a type of investment account and not insured by the FDIC or NCUA.

5. Certificates of Deposit (CDs)

Certificates of deposit, or CDs, can be a good savings tool if you don’t need quick access to your money. This type of savings account comes with a specific term — often between three months and five years — during which you need to keep your money in the account.

In return for leaving your money untouched for that time period, CDs generally offer higher returns than standard savings accounts. Traditionally, longer-term CDs pay higher interest rates, but market conditions can cause short-term CDs to offer equal or higher yields, so it’s worth shopping around and comparing rates and terms.

While savings and money market accounts pay variable interest rates (meaning your rate can change after you’ve opened the account), CDs typically pay fixed rates, so your rate is likely to be locked in once you’ve deposited the cash. However, if you pull your cash before the maturity date, you will usually pay a penalty. (There are some no-penalty CDs, but interest rates tend to be lower.)

6. Cash Management Accounts (CMAs)

A cash management account (CMA) is an interest-bearing account that is usually offered by a brokerage or investment firm. These accounts typically combine the features of a savings account and checking account and can be used to hold uninvested funds and make payments. Though they are not held by banks, they may be insured by the FDIC via a partner bank. Not all are, so be sure to check if you are thinking of opening one.

CMAs may offer higher interest rates than traditional savings accounts, along with check-writing privileges and a debit card. CMAs also typically provide easy transfers to brokerage accounts, where you can invest your funds. Keep in mind, however, that interest rates might not be as high as what you could earn in a high-yield savings account.

7. Speciality Savings Accounts

The types of savings accounts listed above can be great places to save money for short-term goals like saving for a large purchase. But if you’re looking to save for a more specific or longer-term goal, such as retirement or a child’s future education, you may want to open a more specialized account.

Specialty savings accounts are designed to serve a specific financial goal. They can earn interest to help you grow your money, just like other savings accounts. Some of these accounts, however, are investment vehicles, which means they can potentially yield higher returns over the long term, but also involve risk of loss.

Among the most common specialty accounts are 529 college savings plans, 401(k)s and individual retirement accounts (IRAs), health savings accounts (HSAs), and custodial accounts for a child (which are savings accounts set up and administered by an adult for a minor).

Opening a specialty savings account can make sense if you have a singular purpose for saving money. Keep in mind, however, that there may be restrictions on when and how you can withdraw those funds later. Some specialty accounts, such as IRAs, 529s, and HSAs, have strict tax rules for making withdrawals.

How to Choose the Right Savings Account

When choosing a savings account, you generally want to match your timeline and access needs to the highest available annual percentage yield (APY) while avoiding monthly fees. As you compare your options, here some key factors to keep in mind:

•   APY: Online and high-yield savings accounts typically offer significantly larger interest earnings than traditional savings accounts.

•   Fees: If possible, you’ll want to avoid accounts with monthly maintenance charges, low-balance fees, or other charges that can eat into your earnings.

•   Safety: Ensure your deposit is legally protected by the FDIC or NCUA.

•   Convenience: Evaluate mobile app features, ATM networks, and (if you want in-person service) access to local branches.

It’s also important to consider your goals. For example, a HYSA can be ideal for emergency funds and short-term goals where you need liquidity combined with strong growth. A CD, on the other hand, may work well when you have a fixed sum of money you won’t need for a set term and want to lock in a guaranteed rate. If you’re looking for above-average interest alongside checking-like features, such as limited check-writing or a debit card, you might open an MMA.

To see how much your savings could grow over time based on different interest rates, you can use an APY calculator to help you compare your options.

The Takeaway

There are many different types of savings accounts, and the best option for you will likely depend on how and when you want to access your money.

You might like a traditional savings account if you want to bank in person. For better interest rates and lower fees, you might prefer an online high-yield savings account or, if you won’t need the money for a while, a CD.

For more specific savings goals, such as preparing for retirement, covering health expenses, or saving for your child’s education, you may want to open a specialty savings account in addition to a more liquid savings vehicle.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, named the #1 Bank in the U.S. for the fourth year in a row by Forbes (2026).* Enjoy up to 3.30% APY on SoFi Checking and Savings.

FAQ

What are the main types of savings accounts?

There are several common savings account types, each designed for different financial goals. They include:

•   Traditional savings accounts: Offer easy, in-person access at local branches.

•   Online savings accounts: Often feature lower fees and higher interest rates.

•   High-yield savings accounts (HYSAs): Focus on maximizing interest earnings.

•   Money market accounts (MMAs): Combine savings features with checking-like access.

•   Certificates of deposit (CDs): Allow you to lock in rates for fixed terms.

•   Cash management accounts (CMAs): Combine features of checking and savings accounts, often offered by brokerages.

•   Specialty accounts: Help save for specific long-term goals like retirement or education.

Which type of savings account has the highest interest rate?

High-yield savings accounts (HYSAs) typically offer significantly higher interest rates than traditional savings accounts. Online banks and credit unions primarily offer these accounts. Certificates of deposit (CDs) can also offer competitive returns, especially when market conditions are favorable, because they allow you to lock in a fixed rate for a set term. Money market accounts generally also provide better growth potential for your cash than basic savings accounts.

Is it better to keep money in a checking or savings account?

It depends on your goal. Checking accounts are designed for everyday spending and frequent transactions, providing easy access to your money via debit cards and checks. Savings accounts are intended for setting aside money for future needs. While they may have limits on the number of monthly transactions, they generally pay interest, helping your money grow over time. Ideally, you’ll want to maintain a checking account for daily expenses and use a savings account to store your emergency fund or money earmarked for short-term goals.

Are online and high-yield savings accounts safe?

Yes, online and high-yield savings accounts are generally safe, provided you choose an institution insured by the Federal Deposit Insurance Corporation (FDIC) for banks or the National Credit Union Administration (NCUA) for credit unions. If your financial institution is covered by these agencies, your deposits are protected up to $250,000 per depositor, per ownership category, per insured institution. Always verify the insurance status of any bank or credit union before opening an account to ensure your funds are protected.

Can you lose money in a savings account?

When you keep money in an FDIC- or NCUA-insured savings account, your funds are protected up to $250,000 per depositor, per institution, and per ownership category. You will not lose principal from bank failures within these limits, but you can still lose money in other ways.

Monthly maintenance or inactivity fees can directly reduce your balance. In addition, withdrawing funds from a certificate of deposit (CD) early triggers penalties that can eat into your principal, and inflation can erode your money’s purchasing power. Also keep in mind that investment-based savings vehicles carry the risk of market loss.

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SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2026 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
^Early access to direct deposit funds is based on the timing in which we receive notice of impending payment from the Federal Reserve, which is typically up to two days before the scheduled payment date, but may vary.
Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 10/20/26. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet. We do not charge any account, service, or maintenance fees for SoFi Checking and Savings. We do charge transaction fees for outgoing wire transfers, Instant Transfers, and global remittance transfers. Our fee policy is subject to change at any time. See the SoFi Bank Fee Sheet for details at sofi.com/legal/banking-fees/. *Awards or rankings from Forbes are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Many grocery stores offer their customers loyalty programs with rewards such as discounts, cash back, points, or free items for purchasing groceries they already need. Details vary from store to store, but these programs can offer big benefits to customers and stores alike.

Everyone is aware that food prices have gone up in recent years, with the Bureau of Labor Statistics reporting an increase of 2.9% from May 2024 to May 2025. Every bit of savings can help. Understanding how these grocery store reward programs work can help you make informed choices before you head for the check out.

What Are Grocery Store Rewards?

Grocery store rewards are useful for grocery shoppers on a budget. They are targeted benefits that shoppers receive for participating in a loyalty program. In return shoppers typically provide access to data on their purchasing habits, which can be invaluable information for stores.

How Does a Grocery Store Rewards Program Work?

Grocery store rewards programs usually require you to sign up for a card or app by providing personal information, such as your name, phone number, and email address.

To earn and redeem rewards, shoppers are asked to present their card or app when they check out to buy grocery items like eggs or household products, like sponges or dish soap.

Grocery store reward programs offer benefits in both directions. Stores like to use them because they encourage loyalty and repeat visits. They also use these programs to gather data on what their customers are buying, which helps shape marketing campaigns and inventory decisions.

Types of Grocery Store Rewards

Some reward programs offer entertainment benefits. Grocery store rewards programs try to offer shoppers the chance to earn a number of different benefits linked to food shopping, such as:

•   Points: Shoppers may receive points that they can redeem for money off in-store purchases. Some stores may offer points that can be redeemed for discounts on gas at partnering gas stations.

•   Discounts: Rewards program members may have access to coupons through a store’s app, for example.

•   Members pricing: Certain products may be priced lower for rewards members.

•   Cash rewards: Cashback rewards give you a certain percentage of your money back as a rebate when you make purchases.

Benefits of Grocery Store Rewards

The biggest—and perhaps most obvious—benefit of a grocery store rewards programs is savings. Rewards can help you lower your grocery bill or provide points for discounts with other retailers, such as gas stations or pharmacies. Savings are quick and easy, usually applied at the point of checkout.

Other less obvious benefits are connected to the data grocery stores collect on your purchases. This information may allow them to target special offers to you based on your purchasing patterns. This way you receive offers for items that you already buy rather than a collection of random promotions.

Rewards apps often offer purchase histories and savings summaries that allow you to track your spending as well as how much you typically spend on deals. This information can be helpful as you build your monthly budget.

Finally, because grocery store rewards help incentivize you to shop at the store, they can also incentivize eating at home versus eating out regularly. This can be a boon to budget-conscious shoppers, since the cost of eating at home hovers around $4 to $6 per person on average, while dining out can be $15 or more per person.

Recommended: What Are the Average Monthly Expenses for One Person?

Examples of Grocery Store Rewards Program

There are many different rewards programs from major retailers. Some are relatively elaborate. For instance, Kroger, a major grocery store chain, offers a free card with personalized deals, digital coupons, and points that can be redeemed for gas. The retailer offers a paid tier membership which doubles fuel points, offers free grocery delivery, and several free streaming services.

Other rewards programs may be simpler. Publix, for instance, offers digital coupons and notifications for buy-one-get-one sales.

Ways to Earn Grocery Store Rewards

Usually, all you have to do to earn grocery store rewards is sign up for the program and redeem benefits at checkout.

Some retailers offer a paid membership that can unlock further rewards, such as free delivery on purchase over a certain amount, free shipping for online purchases, no-rush returns, or access to a selection of free gifts or exclusive discounts.

Alternatives to Grocery Store Rewards Program

Not all grocery rewards programs operate as in-house benefits. For example, certain bank cards may offer cashback on grocery story purchase.

Other cards may offer different types of rewards for spending, such as points that can be redeemed for airline tickets or hotel rooms. Some cards may offer higher rewards for spending at grocery stores, while others may not differentiate them from other retailers.

Grocery Store Rewards Tips

To maximize rewards programs use tips that can help you save money on groceries. For instance, make use of coupons and shop sales for items that you already need. If you are using a rewards credit card, pay your bill in full each month. This way you will avoid carrying a balance, which triggers interest payments that could erase the cost savings you gained at the store.

Recommended: Average Grocery Budget for Family of 3

The Takeaway

Whether you’re looking to stretch your budget or pick up extra savings to use toward other financial goals, understanding rewards programs can help you make informed decisions and which programs to sign up for. Ultimately the goal is to maximize your benefits to ensure that you are getting real value from these programs.

FAQ

What are advantages of using a grocery store rewards program?

Grocery store rewards programs can help you save money, allowing you to stretch a grocery budget or secure savings for other financial goals. They can also provide more targeted offers for items that you already buy.

What is the 6-to-1 grocery rule?

The 6-to-1 grocery rule was designed by chef Will Coleman and suggests that when grocery shopping, shoppers buy six vegetables, five fruits, four proteins, three starches, two sauces, and one fun item. According to Coleman, this should provide shoppers with cost-effective, versatile ingredients that can be used for a week’s worth of meals.

Is $300 a month good for groceries?

Wondering how much you should spend on food? Your grocery budget will depend on your food preferences, where you shop, and the size of your household. That said, spending $300 a month on food is well below the approximately $504 monthly average Americans spend according to the Bureau of Labor Statistics (BLS). It may be a big enough grocery budget for a single person. However, the grocery budget for a family of five, for example, might need to be much larger.

What is a realistic monthly grocery budget?

The average cost of groceries is $504 a month, according to the BLS. This may serve as an appropriate benchmark. The United State Department of Agriculture provides food budget estimates of around $300 to $500 per month per adult. Costs also vary widely by age, household size, and location. A grocery budget table can help you determine the average cost for your situation.

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Photo credit: iStock/FreshSplash

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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