7 Situations Where Cash Back Credit Cards Are Better Than Air Miles Credit Cards

When you start collecting points and miles for free travel, you might find yourself plagued by the question – which card should I use for this purchase?  The biggest decision you’ll need to make is if you’ll use a cash back credit card or an air miles credit card.

7 Situations Where Cash Back Cards Beat Air Miles Credit Cards

1.  You tend to be a late vacation planner.

In my experience, you get the best value out of your miles when you book 6-9 months in advance.  When you start getting within six months, you may find that you need to change your dates from your original preference, or you may need to be prepared to use more miles than the lowest threshold.

Obviously, award ticket spots do open up within the last month, but depending on the airline (and your elite status), you’ll likely end up paying extra booking fees for tickets you purchase a month before travel.

Because of this, people who plan late vacations may be better off using a cash back credit card and paying cash for their vacation.

2.  You don’t travel much and have lots of miles already.

Every time you book travel you’ll pay taxes and fees in addition to paying miles.  If you already have more miles than you can use (accumulated through sign up bonuses), you might prefer to earn cash back so that you can achieve the illusive free vacation.

When you use points to book your tickets and use the cash back from a credit card to pay for the taxes and fees, you’ll get to fly somewhere without paying a penny out of pocket.

If you only travel once or twice a year and have lots of miles, you may be better off using a cash back credit card.

3. You typically prefer to travel domestically in the US.

You’ll get the least return on every point when you use air miles for domestic air travel within the US.

Typically, it’s hard to get more than a 2% per point value when you book domestically.

If you spend $20,000, you get 25,000 air miles (assuming you use the Starwood credit card where you’ll end up with 25,000 miles when you transfer 20,000 points).

If you then use those 25,000 points to book a $250 flight, each dollar you spend on the Starwood credit card gave you an equivalent 1.25% cash back.

If, however, you spend $20,000 and got 2% cash back (or travel credit like the Capital One Venture Rewards card), you’d end up with $400 worth of tickets.

4.  You usually prefer to fly economy class instead of business.

The class you plan/like to fly really starts showing a disparity in price.  Let’s say you were to buy an economy class ticket to Europe for $2,000.  It’s not unusual for a business class ticket to cost $6,000.  That means you get 3x times the value out of business class tickets when booking with miles.  Yes, business class tickets require more miles, but not three times the miles.

In my opinion, it is a no-brainer: if you want to fly business class, you should use a miles based credit card.  If not, after crunching the numbers you may find out that a cash back credit card may be best.

5.  You enjoy the vacation planning process and like researching for the best price.

For some of us, the planning (and hunting for good deals) is the best part of vacation.  When you have money from a cash back credit card, then every way you find to save a dollar would result in a cheaper vacation.  However, when using miles, the mileage requirement is fixed, so no amount of research will help you save more on vacation.

Someone who can find a flight to the Bahamas for $209 round trip will be better off using a cash back credit card than a points based credit card.

6.  You have a card that can give you 2% (or more).

Obviously, a big part of this discussion is how much cash back your card gives.  If you know you want to use your cash back for travel, then the Capital One Venture Rewards card might be right for you.  You get 2% back on every purchase.  That 2% can be used to ‘refund’ travel that you book using the card.

The Chase Freedom credit card is also a good card to consider.  It gives 1% cash back and then 5% back on select categories each quarter.  The card also has a decent sign up bonus.  Another advantage of the Chase Freedom card is that those points can be transferred to Ultimate Rewards points that can be transferred to several airlines.

In my next post I’ll introduce you to more good cash back credit card options.

7.  You are busy and know your time is more valuable than your money.

There’s no doubt that when you book reward seats you’ll need to spend some time doing it.  If you’d rather just do a quick search online, pay the highest price, and go on vacation, then you’re probably the type of person who ought to just get cash back if the vacation cost is not an issue for you.


Earn both if possible. (I’ll show you how in my next post.)


  1. says

    Excellent recap on cash back credit cards vs. travel rewards! I usually do both – cash back and travel cards. I keep monies earned from cash back credit cards in a separate account for travel. Typically I need to use some cash to airline tickets since it’s hard to find 4 award seats. Again, great post!

    • Craig says

      Doing both is exactly what I’m going to talk about in my next post. You’re right that the larger your family the harder it will be to use miles.

  2. says

    You have to be so careful with you credit card when you travel to Southeast Asia, especially Taiwan, has anyone had any trouble with this? Two of my friends had their credit cards stolen this year.

  3. Gary says

    Hey Craig,
    I fit most of these 7 categories (for now). My first steps are to get the enormous signup bonuses on the airline/hotel type cards. But for everyday spending, I’d like to have one great cash back card for all these reasons you describe. I think having some “money in the bank” would be a great combination with the other travel cards, at least in my case. I’m not much into keeping up with the rotating quarterly “select category” stuff. I’d much prefer something that has a set %, all the time.

    So, one card I’ve researched in the past, but can’t seem to find much written about it on your site or other sites, is the American Express Blue Cash Preferred Card (annual fee, but there is also the Blue Cash Everyday). Preferred has a 6-3-1% in great categories; Everyday has 3-2-1% in same categories.

    What is your opinion on this Amex card? Is it competitive/comparable with Chase Freedom?


    • Craig says

      The reason I prefer the Chase Freedom is because it leaves the option to transfer miles to airlines (if/when a person has the Chase Sapphire Preferred). The Blue Chase doesn’t have that option. However, I have frequently heard that the Blue Preferred is a favorite with those who have no interets in the mileage option.

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