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Cash back cards and cards with miles give you the means to earn rewards based on your spending. You know the dollar value of your cash back, and redeeming it is fairly straightforward. However, the worth of your reward miles varies depending on multiple factors, and you might face limitations when it comes to redeeming them.
The credit card miles vs. cash back comparison has no clear winner because while the former might work well for you if you’re a frequent flyer, the latter may be more beneficial if you wish to keep the way you earn rewards simple.
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Cash back credit cards offer a fixed percentage of the amount you spend as cash rewards.
Co-branded cards with miles restrict the use of miles to a particular airline loyalty program.
Non-co-branded travel cards offer greater freedom than co-branded cards when redeeming miles for rewards.
Should You Get a Cash Back or Miles Credit Card?
Whether you should get a credit card with miles or cash back depends on how often you travel. That is because cards with miles offer the best value when you redeem your miles for travel-specific rewards. If you don’t fly frequently, you might benefit from getting a cash back card because it rewards your spending by giving a small percentage of it back to you as money. Check the pros and cons of cards with cash back or miles before determining which one to get.
Cash Back Credit Cards
- No or low annual fees
- Rewards in the form of cash
- The worth of your cash back is fixed
- Cash back earned is easy to redeem
- Cash back might come with maximum limits
- Limited in their offering of perks
- Typically lower welcome bonuses than cards with miles
Miles Credit Cards
- Typically offer travel- and airline-related perks
- Several cards come with sizeable welcome bonuses
- Non-co-branded cards allow you to transfer miles to different frequent flyer programs
- Co-branded cards do not let you transfer miles to other airline loyalty programs
- Most cards with miles charge annual fees, which can be steep in some cases
- The value of miles may vary based on different factors
What’s the Difference Between Miles and Cash Back?
The cash back you stand to earn through a cash back card is a fixed percentage of the amount you spend. For example, if you spend $500 using a card with 1.5% cash back, you get $7.50 as cash back. Cards with miles work in the same basic manner when it comes to earning miles, but the value of your miles is subject to change.
When it comes to redeeming cash back, most card issuers let you transfer your cash back into a bank account or use it as a statement credit. Some even offer to mail out physical checks. Redeeming reward miles is not as straightforward and may depend on whether you have a co-branded card or not.
Co-Branded and Non-Co-Branded Miles Credit Cards
A co-branded credit card with miles is one that is linked to a particular airline and might come with limitations on how you may use your miles. For example, if you have the Delta SkyMiles Platinum American Express Card , the miles you earnaccumulate in your Delta SkyMiles membership account. You'll need to redeem your miles through the Delta SkyMiles program, which allows you to book flights on Delta and its partner airlines.
A non-co-branded card, on the other hand, gives you more freedom in how you may use your miles. For instance, the Capital One Venture Rewards Credit Card lets you transfer your miles to different airline and hotel loyalty programs, book travel through Capital One Travel, "erase" eligible travel purchases and pay for online purchases at participating websites.
Value of Miles
What your miles are worth depends not just on the card you use but also on how you plan to redeem them. You typically stand to get better value for your miles when you use them to make travel bookings — either through your card provider’s travel portal or through a partner airline’s loyalty program — when compared to redeeming them as account credit (if that’s an option at all) or getting gift cards.
The value of your miles also depends on the dates you wish to fly and the route. This is because flights from popular airports and flights during the weekend or holidays typically require more miles. For example, while you may need 60,000 miles to fly between any two cities on a Tuesday, it might increase to 80,000 miles for a Saturday.
The miles vs. cash back comparison reveals some similarities. For starters, since both types of cards reward cardholders based on their spending, they typically come with higher interest rates than cards with no rewards. As a result, using them makes sense only if you plan to pay off your balances in full every month.
Both types of cards may offer higher rewards through category-based spending. In some cases, there might be maximum limits on how much cash back and how many miles you may earn. Your cash back and miles might also be subject to expiration if you don’t use them within a given time. For instance, if you don’t use the cash back earned through a U.S. Bank credit card within 36 months, it will expire. Avios points that you earn through the British Airways Visa Signature Card from Chase stand to expire if there’s no activity in your Executive Club program account for 36 successive months. Spending on your credit card earns additional rewards and generally extends the life of your airline miles.
Consider getting a credit card with miles if you’re a frequent flyer. If not, a cash back card might work better for you. We’ve put over 1,600 consumer credit cards through our ranking methodology to simplify how you look for the right alternative.
When to Use Airline Miles?
Using a card with airline miles makes sense if you’re a frequent flyer because they typically offer the best value through travel-based rewards and perks. If you favor one airline over others, you might benefit by getting a co-branded card. For instance, if you use United Airlines frequently, you might benefit from getting the no-annual-fee United Gateway Credit Card from Chase.
Flexibility in Rewards
If you’re looking for freedom when it comes to the airlines you are able to use your reward miles with, getting a non-co-branded card might be in your best interest.
With the Venture Rewards Card from Capital One, you may use your miles to book flights onboard different airlines through Capital One Travel. You also have the option of transferring your miles to several frequent flyer programs.
While the Chase Sapphire Reserve Card offers reward points, not miles, it is geared for travelers. You get more value for your points when you use them to book travel through Chase Ultimate Rewards. You also have the option of transferring your points as miles to different airline loyalty programs.
Some airline cards allow you to redeem your miles to pay for car rentals, vacations, gift cards and magazine subscriptions. These redemptions tend to offer the lowest value for your miles. The best value for airline miles is when they are redeemed for airline rewards, be it in the form of tickets or seat upgrades. In addition, while some regular travel cards let you redeem your points for cash, airline cards generally do not.
Airline credit cards aren't just for frequent fliers. Occasional fliers can also justify an airline credit card's annual fee with valuable benefits like free checked bags, priority boarding and in-flight discounts on food and beverages. -- Lee Huffman, credit card expert at BaldThoughts.com
Other Questions You May Have About Cash Back Cards
Learning the answers to other commonly asked questions about the credit card cash back vs. miles comparison will help you make a suitable decision about which type of card to get.
Now that you know whether you might benefit more by getting a credit card with miles or cash back, there are many rewards cards to choose from. If earning miles is your top priority, you may want to go through our carefully selected list of the top airline credit cards to simplify your search. Alternatively, you may check what the best cash back cards have to offer.
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About Rajiv Baniwal
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