Is it better to earn cash back or miles and points for travel?
Or…should you just keep it simple and use a cash back credit card?
You’re definitely not alone if you’ve ever felt overwhelmed by points, airline programs, or confusing award travel pricing and rules.
This is actually one of the most common questions I get, especially from people just getting started with travel rewards.
Here’s the TLDR answer: Cash back absolutely has a place in a smart travel strategy. But depending on how you travel or what you want out of your trip, it’s not always going to return the best value.
Think of it like this. Cash back is simple, flexible, and reliable. But for a bit more effort and sweat equity, miles and points are where you’ll find that outsized, “how is this flight so cheap?” value.
The best goal is knowing when to use each one instead of thinking of it as a one or the other situation.
Let’s break it down so you can decide what actually works best for your travel style.
In this guide, we’ll cover:
- The difference between cash back and travel rewards points (and why it’s important to understand the difference)
- The smartest ways to use cash back for travel
- How to decide if cash back fits your travel goals
- The best cash back credit cards to consider
Cash Back vs Miles vs Points
There are 3 different types of travel rewards points. Each one has its own value and its own place as you put together a smart travel strategy.
Cash Back Points
Cash back points have a fixed redemption value of 1 cent each. Because of this, you always know the value you’re getting.
If you have 10k cash back points, then you can redeem them for $100 in rewards. No award charts or airline rules to learn or fuss with.
Transferable Points
Transferable points are earned through travel rewards bank credit cards like the Chase Sapphire Reserve or the American Express Gold Card.
The points you earn with travel rewards bank cards are high-value points because they can be flexibly transferred to a variety of airline and hotel partners. This gives you the ability to transfer your points to the airline or the hotel with the best award prices.
For this reason, the cent-per-point value of these points varies depending on how you use them. The more you learn about the best ways to redeem these transferable points by leveraging partner redemptions or taking advantage of transfer bonuses, the higher the cent-per-point value can be.
Another advantage with transferable points is if an airline or hotel makes negative changes to their award program (which happens with regularity), your transferable points are more protected from devaluation than branded miles and points.
You can choose NOT to transfer your points to an airline or hotel that has raised its award prices.
Branded Miles and Points
Branded miles and points are specific to a particular airline or hotel, like IHG hotel points or United miles.
These miles and points are earned from co-branded airline and hotel credit cards like the United Explorer card, from paid travel, or by taking advantage of loyalty program perks and promotions.
Airlines and hotels can devalue their award pricing or raise prices at any time, though, making these points more vulnerable than transferable points.
For example, if Hilton is charging 30k points per night for a specific hotel award night today, but tomorrow decides to charge 60k points for the same hotel night, your points are worth 50% less overnight.
For this reason, you always want to use your branded points sooner rather than later.
How to Use Cash Back Rewards for Travel
Which is better, cash back or miles?
Consider this example.
Let’s say you want to fly from a Texas city like Dallas, Austin, or Houston to Rome in business class.
You check cash prices and see a range between $3,000-$4,000 on average for a round-trip flight. You’d need between 300k-400k points if you used cash back rewards to pay for this flight.
In comparison, you check for a round trip flight on United because you have Chase Ultimate Rewards Points and know you can transfer them at a 1:1 ratio directly to United.
You see the same flight would cost you between 120k-150k United miles or Chase Ultimate Rewards points and the choice is obvious.
This difference between cash back points and transferable or branded miles and points can be even bigger as premium class seats on a flight can go for much more than $4,000.
Yet, cash back points can still be valuable for saving money on your travel plans.
Generally speaking, cash back points are best used for expenses that can’t be covered by loyalty program miles and points. These expenses include:
- car rentals (Kayak)
- train tickets (Omio)
- non-loyalty program hotels (B&Bs, boutique hotels)
- vacation rentals (VRBO, Plum Guide)
- tours
- cruises
- timeshare fees
- activities and excursions (museums, theme parks)
- airline and hotel fees (bag fee, room service)
- transportation (airport transfers)
- online hotel booking sites (Expedia)
Cash back points are also good for paying for amazing deals, like super-discounted flights or hotel nights.
Take the example flight to Rome discussed above. If you found a discounted round-trip economy fare for $400 and compared it with a round trip award flight on the same airline and route for 60k miles/points, cash back points are clearly the better choice.
Why use 60k credit card points or airline miles when you can get the flight for 40k cash back points?
Are Cash Back Rewards Right for my Travel Goals?
Cash back rewards are great as part of an overall travel strategy.
However, depending on your specific goals for your upcoming trips, you may need to rely more on your cash back points.
- Are you planning a National Parks road trip? Cash back rewards can help with your car rental and gas costs, as well as campsite fees or lodging expenses.
- Have you decided to plan a big family ski trip? Use your cash back rewards to help pay for a ski house and lift tickets.
- Will you be sightseeing in New York City? Your cash back rewards are perfect for tours and Broadway tickets.
- Do you hope to take a cruise? Perhaps your cash back points can help you afford a better room class on board.
Cash back travel rewards might also be useful if you’re someone who:
- has no interest in figuring out airline and hotel award charts,
- consistently flies in large family groups and needs many award seats,
- typically only flies domestically in economy class, and/or
- can’t or doesn’t want to be flexible with travel dates, airports, etc.
What are the Best Credit Cards for Cash Back Rewards?
The 2 cash back credit cards I recommend below are by no means the only ones available.
However, these cash back cards are hybrids. This means that they can earn cash back but when paired with a travel rewards credit card like the Chase Sapphire Preferred or Sapphire Reserve or a Chase Ink Business Preferred, they can also be used as transferable points.
In this way, they are ideal because if you’re just getting started or aren’t sold on the value of transferrable points and miles, these cards offer a toe-in-the-door to the wider points and miles world, while still offering cash back in the meanwhile.
Chase Freedom Flex
Current Welcome Bonus: (OFFER EXPIRED. Check with Chase for the most up-to-date offer.) $200 after spending $500 in the first 3 months after opening your account.
Favorite Card Features:
- 5% on rotating bonus categories up to $1,500 each quarter
- 5% on travel booked through the Chase Travel Portal
- 3% on drug store purchases and dining (including delivery and takeout)
- 1% on all other purchases
- Paired with a Sapphire Preferred, Sapphire Reserve, or Ink Preferred, cashback rewards points can be combined to become transferrable Ultimate Rewards points
Annual Fee: $0
Chase Freedom Unlimited
Current Welcome Bonus: (OFFER EXPIRED. Check with Chase for the most up-to-date offer.) Earn an extra 1.5% cash back on all your purchases (on up to $20k of spending in the first year) that's worth up to $300 cash
back!
Favorite Card Features:
- With this offer:
- Get 6.5% cash back on travel bought through Chase Ultimate Rewards(R), Chase's travel rewards program where you can redeem rewards for cash back, travel, gift cards & more.
- Earn 4.5% cash back at drugstores and for dining, including takeout and eligible delivery service.
- Get 3% on all other purchases (on up to $20,000 spent in the first year).
- After a year as a cardholder or when $20k is spent, get 5% cash back on Chase travel bought through Ultimate Rewards(R), 3% cash back on drugstore purchases and for dining, including takeout and eligible delivery service, and unlimited 1.5% cash back on all other purchases.
- Get a 0% Intro APR for 15 months from your account opening on purchases and balance transfers; Variable APR of 20.49% - 29.24% thereafter.
- No minimum amount to redeem for cash back. Choose to get a statement credit or direct deposit into most U.S. checking and savings accounts. Cash Back rewards don't expire as long as you remain a cardholder.
- Paired with a Sapphire Preferred, Sapphire Reserve, or Ink Preferred, cashback rewards points can be combined to become transferrable Ultimate Rewards points
- Member FDIC
Annual Fee: $0
Bottom Line: Cash Back or Miles and Points?
Cash back rewards should have a place in every award traveler’s portfolio of benefits. After all, the more diverse your travel rewards are, the more ways you can use them to travel for less.
Depending on your travel goals and style, cash back rewards might be better.
But for travelers looking to maximize the value of their spending and earning, cash back rewards are the supporting actor, with traditional credit card and loyalty program miles and points as the starring role.
What are your questions about cash back rewards for travel?
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