Cash Back vs. Miles: Which Type of Credit Card Is Best For You?
Terms apply to American Express benefits and offers. Visit americanexpress.com to learn more.
Citi is an advertising partner.
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.
On this page
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.
Cash rewards are straightforward
Rewards are easy to redeem
Offers greater long-term value than miles cards
Rewards aren't flexible
Rewards can be capped or limited
Typically don't offer many additional perks
Tend to offer lower sign-up offers than travel rewards cards
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.
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.
Travel rewards cards offer flexible rewards
Offers the ability to maximize value
Typically offer additional perks and benefits
Usually include high sign-up offers
Co-branded airline cards can be limiting
Cards with stronger benefits tend to charge high annual fees
Value of miles varies depending on how you redeem them and the specific program
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.
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 – 18 month BT offer.
Sample rewards earned in the first year
|Chase Sapphire Preferred® Card||Citi® Double Cash Card – 18 month BT offer|
|Earning rate||The Chase Sapphire Preferred® Card earns 5x on travel purchased through Chase Ultimate Rewards®, 3x on dining and 2x on all other travel purchases||Earn 2% on every purchase with unlimited 1% cash back when you buy, plus an additional 1% as you pay for those purchases.|
|Sign-up bonus||Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $750 when you redeem through Chase Ultimate Rewards®.||None|
|First year value||$1,554||$400|
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.
The information related to Chase Sapphire Preferred® Card, has been independently collected by LendingTree and has not been reviewed or provided by the issuer of this card prior to publication.