Best Cash Back Credit Cards with Mileage Transfer Options

Last week I introduced 7 situations where cash back credit cards beat miles credit cards.  At the end of the article, I alluded to the fact that your best option is to find a card that allows you to do both – earn cash back or earn miles.  A card that allows that will certainly be one of the best cash back credit cards.

Best Cash Back Credit Cards

Once upon a time, 2% was the benchmark for cash back credit cards.  The cash back credit card I have (currently owned by FIA) was formerly the Charles Schwab credit card.  I got the card because it gave 2% cash back, and it had no foreign currency exchange fees.

The card has undergone several changes (i.e. no longer accepts new applications) and is rumored to soon being transferred over to Bank of America ownership.  I’ve heard that it might only offer 1% cash back at that point.

Chase Freedom & Chase Sapphire Preferred

The Chase Freedom piece of plastic gives 1% cash back on every purchase.  In addition, there are rotating categories that give 5% cash back (limited to $1,500 worth of spending).  While the cash back is decent, the card does have a few extra benefits that may be attractive to some.

If you are a Chase Sapphire Preferred card holder, you can transfer your Chase Freedom points to Ultimate Rewards points.  This means you can potentially earn 5 Ultimate Rewards points per dollar spent on a Chase Freedom card (if you have both cards and transfer the points).

One further option for Chase bank account holders is that each time you use your Chase Freedom you get 10 points.

The Chase Freedom card has no annual fee and the Chase Sapphire Preferred has a $95 annual fee (waived for the first year).  Thus, one option is to get the Chase Freedom card and accumulate rewards.  Only get the Chase Sapphire Preferred when you’re ready to transfer some rewards.

How could this flexibility be advantageous?

Steve and Sally have both the Chase Freedom card and the Chase Sapphire Preferred card.  When traveling overseas, they use the Sapphire card as it has no foreign currency exchange.  When they are paying for dining out or travel, they use the Chase Sapphire Preferred card, as it gives 2 points per dollar spent.  When they are shopping at a place that qualifies as a 5% category for the quarter, they use the Chase Freedom card.  When they shop anywhere else, they use the Chase Freedom card.

After spending $50,000, they end up with:

25,000 ($250 worth of cash back) and 25,000 Ultimate Rewards points.

Sally is planning a short trip from Denver to Los Angeles and she decides to use $150 worth of the cash back (15,000 points) since using 25,000 for miles would be more expensive.

Steve, on the other hand, is planning a one-way trip to Japan.  Tickets cost $400.  Instead, he transfers 10,000 points from the Chase Freedom card into the Ultimate Rewards program for a total of 35,000 Ultimate Rewards points.  He uses 30,000 miles to get from his home to Japan.

There are some situations where using cash (cash back) is a better deal and some where using points (miles tranferred from Ultimate Rewards) is a better deal.  By using a cash back card like the Chase Freedom together with the Chase Sapphire Preferred card, you’ll develop a winning strategy.  This is why I think this combination is right for one of the best cash back credit cards.

Fidelity American Express and Visa Cash Back Credit Card

The Fidelity American Express allows you to earn 2% cash back.  The Visa card will give you 1.5% (or 2% after you spend $15,000).  Once again, the Fidelity plastic options give you a mileage transfer option that helps it stand out as offering the best of both worlds for mileage users.

You can transfer your points into Air Canada Aeroplan miles.  Thus, you’ll have the option to decide if cash back or earning miles is better, depending on your upcoming travel plans.

This card has no annual fee.

Capital One Venture Rewards

The Capital One Venture Rewards card is another card that essentially allows you to earn 2% back on every purchase.  While it does not have an option to transfer miles into a mileage program, it does allow you to refund any travel expenses with your ‘miles’.  The nice benefit of this card is that it doesn’t charge a foreign currency fee.

You can even get actual cash back with this card. 

  1. Charge your travel on the card.
  2. Request a travel credit, and get those funds deposited back into your account.
  3. Don’t charge anything the next month.
  4. When you have a negative balance, Capital One will send a check for that amount (at least it did in my case).

The Cap1 comes in very handy when you’re trying to book discount travel.  As an example, if you purchase at Priceline.com through the Cap1 web site, you can get 4% back.

The Cap1 Venture Rewards comes with a $59 annual fee.

Do you have another favorite cash back system that you think might be the best cash back credit card?

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