Cash Back vs. Miles: Which Type of Credit Card Is Best For You?

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Miles credit cards can be extremely valuable for frequent travelers, while cash back cards can be more beneficial for those looking for high value, no-fuss rewards.

Cash Back vs. Miles

Whether you should choose a cash back or miles credit card (or both) will depend on the type of consumer you are. Frequent travelers who can take advantage of airline perks like free checked bags, airport lounge access, priority boarding and more, will enjoy the benefits of miles cards. Consumers who rarely travel or for those unwilling to do too much legwork to use their rewards may prefer the more straightforward and indisputably valuable rewards that come with cash back cards.

Tip

Regardless of whether you choose a miles or cash back card, we always recommend using some type of rewards card so your money is working for you and you’re always earning while you’re spending.

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Cash back vs. miles: Pros and cons of each

While both types of cards have their benefits and drawbacks, consumers who prefer straightforward cash rewards will prefer cash back cards, and frequent travelers will prefer earning and maximizing rewards with miles credit cards.

Cash back credit cards

Cash back credit cards work by returning a percentage of your card purchases to you in cash. For example, if your cash back card offers 1% cash back on all purchases, you’ll receive 1% (at least) back of the price of everything you buy. Over time, this can really add up and result in significant earnings, allowing you to earn while you spend.

The rewards earned with cash back cards are straightforward, high value, and easy to redeem. The rewards are the same as cash, so you know exactly how much you’re earning and exactly what it’s worth. The only downside here is that these rewards can’t be maximized like miles often can be.

The value of cash back rewards always remains constant, which may be more appealing for consumers who don’t want to do any work to reap the benefits of their rewards.

Redeeming your cash back is typically an easy process. You can usually redeem cash back as:

• A deposit into your bank account
• A statement credit to cover your past purchases
• A check by mail

However, it’s worth noting that some cards require you to have earned a minimum amount of cash back before you can redeem it. Usually these amounts are low, however, typically set around $25.

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Miles credit cards

​Miles credit cards, also referred to as travel rewards credit cards, allow you to earn a certain amount of miles on every purchase you make with your card, which can then be used toward earning free flights, upgrades or free hotel nights.

While the value of miles is inconsistent and varies based on the rewards program and the method in which you choose to redeem them, some miles programs offer ways to increase the value of your points. For example, the Chase Ultimate Rewards® program allows you to transfer your miles to different hotel and airline partners who offer more value per point.

Miles credit cards are great for frequent travelers who can benefit from free flights and hotel nights, as well as other travel perks that are typically included with these types of cards. One of the downsides of miles cards, however, is that they often charge annual fees, which tend to increase with the amount of additional perks and benefits offered by the card.

There are three different types of miles cards:

• Airline credit cards,
• Hotel credit cards
• General travel rewards cards

Deciding which type of miles card is best for you will depend on the type of traveler you are and how loyal you are or aren’t to particular travel chains.

Airline credit cards

Airline credit cards are cards that are co-branded with a specific airline, for example the Delta SkyMiles^® Gold American Express Card. Airline cards offer benefits specific to that airline, including:

• Priority boarding
• Airport lounge access
• Free checked bags
• Priority upgrades and more

These cards also tend to offer hefty welcome offers and high earning rates on purchases made with their airline, but usually include some type of annual fee.

Savvy traveler tip

Check to see if you live in a city that’s a hub for a particular airline. For example, if you live in Atlanta which is a Delta hub, getting a co-branded Delta card can come in handy, as you’ll earn miles each time you fly with them and can use your accumulated miles to take free flights.

Many airlines are also part of airline alliances which allow you to transfer your miles earned on one airline to any of the other airlines in their alliance, which make co-branded cards extra beneficial. The only downside to airline credit cards is that you need to commit to one specific airline that you always, or almost always fly with. For travelers who prefer to fly with whichever airline offers the best itinerary, these types of cards can be limiting.

Cash back vs. miles credit cards: Which one should you get?

Ultimately, deciding between a cash back and miles credit card will depend on your preferences and travel habits:

• For frequent travelers who tend to stick with the same airline or hotel chain, a co-branded miles card will be the most beneficial option.
• For regular travelers who still want to earn miles but don’t want to be tied down to a specific brand, a general travel rewards card can be a great choice.
• If you’re not a frequent traveler but still want to earn rewards on your spending, a cash back credit card can be a perfect fit for your needs.

It’s worth noting that depending on your credit, you don’t need to limit yourself to a single type of rewards card. It can be extremely beneficial to own both a cash back and miles card at the same time as long as you use them responsibly.

Best for simple rewards: Cash back

For consumers looking to simply earn a percentage back on all their spending, a cash back card is the way to go. You won’t have to worry about figuring out how to maximize the value of your rewards; you know you’re earning in cash, so the value of your earnings is straightforward.

Some cash back cards offer bonus spending categories, so if you want to get the most bang for your buck, make sure you use your card for all the spending you do in those higher earning categories.

Best for optimizers: Travel rewards

Unlike cash back rewards, airline miles have the advantage of being optimizable. If you have a travel rewards card and are willing to put in a bit of effort, you can stretch out the value of a single mile. Optimizers will plan itineraries that give them the best returns for the miles they have.

For example, if you spend time looking at flights on different days and times, you can book an award ticket with United so that you get $0.02 for each mile. The average value of a United mile, however, typically hovers around $0.012.

Flexible travel rewards cards are one of the best options for maximizing point value because you have the ability to transfer your points to a variety of loyalty programs. For example, the Chase Ultimate Rewards® program includes transfer partners like JetBlue, United, and Southwest, among others. We’ve found an average value of 2 cents per point transferred to an Ultimate Rewards travel partner, which is double what Ultimate Rewards points are worth when not transferred to a travel partner.

In the following example, you can see how transferring points with a miles card like the Chase Sapphire Preferred^® Card can yield greater value than a simpler cash back card, like the Citi Double Cash^® Card.

Sample rewards earned in the first year

Our valuations are based on an assumption of $20,000 annual spend, with $3,000 spent on travel through Chase Ultimate Rewards®, $2,000 spent on all other travel, $5,000 spent on dining, and $10,000 on everything else. We value Chase Ultimate Rewards® points at 2 cents each.

To see rates & fees for American Express cards mentioned on this page, visit the links provided below:

• Delta SkyMiles^® Gold American Express Card
• Hilton Honors American Express Card