Whether you should choose a cash back or miles credit card (or both) depends on the type of consumer you are. If you’re a frequent traveler who can take advantage of airline perks, like free checked bags, airport lounge access, priority boarding and more, you’ll enjoy the benefits of miles cards. But if you rarely travel or you don’t want to do too much legwork to use your rewards, you may prefer the more straightforward rewards that come with cash back 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. Your miles can then be used to help offset the cost of flights, upgrades or hotel stays.
These credit cards are great for frequent travelers who can benefit from free flights and hotel nights. Many also offer valuable travel perks, like priority boarding, early check-in and annual credits. That said — miles credit cards often charge annual fees that tend to increase with the amount of additional perks and benefits offered by the card.
What are credit card miles?For example, the Chase Sapphire Reserve® lets you earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Travel℠ immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases. All for a $550 annual fee.
The main types of miles credit cards are airline credit cards, hotel credit cards and general travel rewards cards. Here’s what you need to know about each:
While airline credit cards are often co-branded with a specific airline, there are general travel cards that offer valuable airline rewards and perks. Some airline-specific benefits may include:
Many airlines are also part of airline alliances. You can transfer miles earned on one airline to any of the other airlines in their alliance — making their airline cards even more valuable.
Hotel credit cards are cards that are co-branded with a specific hotel chain, or general travel cards that offer hotel-specific perks and elevated rewards on hotel purchases. Hotel benefits can include:
But it’s important to note that the value of hotel credit card points is typically inflated. So they tend to be worth less than airline rewards cards.
It can be argued that general travel rewards cards are the most valuable category of miles card. That’s because they don’t lock you into a single airline or hotel chain and can typically be flexibly transferred to various travel rewards programs to maximize their value.
For example, the Chase Sapphire Reserve® is our top overall travel card pick because it comes with a variety of valuable travel benefits, like airport lounge access, trip cancellation insurance and an annual travel credit. Plus it offers generous rewards that can be transferred to loyalty partners at a rate of 1:1.
That said — general travel rewards cards do require a bit of legwork to redeem your rewards and discern their value. This may not be ideal if you’re an infrequent traveler or prefer less fussy rewards.
Generally, you can redeem credit card miles for the following:
Just know, the value of miles tends to be pretty inconsistent and varies based on the rewards program and redemption method. That said, you can sometimes get the most value from your rewards by transferring them to a travel transfer partner.
The rewards earned with cash back cards are straightforward, high value and easy to redeem. The rewards are essentially the same as cash, so you know exactly how much you’re earning and exactly what they’re worth. Most cash back cards offer at least 1% cash back on every purchase — with some offering up to 6% cash back on specific spending categories, like groceries.
What are cash back rewards?The primary types of cash back credit cards provide flat-rate, tiered or rotating cash back rewards:
These cards offer the same cash back rate (1%, 1.5% or 2%) on every purchase you make using the card. For example, the Wells Fargo Active Cash® Card lets you earn unlimited 2% cash rewards on purchases.
Many cash back cards offer an accelerated rewards rate in specific spending categories — like dining or gas — and 1% cash back on all other purchases. For example, the Blue Cash Preferred® Card from American Express lets you earn 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%), 6% Cash Back on select U.S. streaming subscriptions, 3% Cash Back at U.S. gas stations and on transit (including taxis/rideshare, parking, tolls, trains, buses and more), 1% Cash Back on other purchases. Terms apply. Cash back is received in the form of Reward Dollars that can be redeemed as a statement credit or at Amazon.com checkout.
These cards offer elevated cash back rates in popular spending categories that rotate on a monthly or quarterly basis. For example, the Discover it® Cash Back lets you earn 5% cash back at different places each quarter up to the quarterly maximum when you activate. 1% unlimited cash back on all other purchases - automatically.
You can usually redeem cash back rewards the following ways:
However, it’s worth noting that some cards require you to earn a minimum amount of cash back before you can redeem your rewards. Usually these amounts are low, but they may start around $20.
Both miles and cash back cards have their benefits and drawbacks. But ultimately, consumers who prefer straightforward cash rewards will prefer cash back cards, and frequent travelers will prefer earning and maximizing rewards with miles credit cards.
| Miles credit cards | Cash back credit cards | |
|---|---|---|
Pros | Ability to maximize rewards value May offer travel benefits, like annual credits and travel protections Usually include high sign-up bonus offers Often offer elevated rewards on travel-related purchases | Cash rewards are straightforward Rewards are easy to redeem Cards provide greater long-term value than miles cards |
| Cons | Co-branded cards can be limiting Cards with more robust benefits tend to charge high annual fees Value of miles varies depending on how you redeem them and the specific program | Rewards can be capped or limited Cards typically don't offer many additional perks Tend to offer lower sign-up offers than travel rewards cards |
Deciding between a cash back and miles credit card will depend on your preferences and travel habits:
The information related to the Wells Fargo Active Cash® Card, Blue Cash Preferred® Card from American Express, Discover it® Cash Back and American Express® Gold Card has been collected by LendingTree and has not been reviewed or provided by the issuer of this card prior to publication. Terms apply.
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