Is it better to get cash back or miles? Why not just get a cash back credit card?
These are fair questions. And, ones that come up often, especially from award travel beginners or anyone feeling frustrated by complicated airline award charts.
For those of you looking for a quick answer, cash back travel rewards are part of a well-rounded miles and points strategy.
They can be used for solid value for certain travel expenses, but then not be the best value for others. Let’s go a bit deeper to fully understand the answer.
In this guide, we’ll discuss:
- the difference between cash back points and other travel rewards points,
- the best ways to use cash back rewards for travel,
- how to know if cash back rewards are right for your travel goals, and
- the top cash back cards.
Cash Back vs Miles vs Points
There are 3 different types of travel rewards points. Each has its respective value.
Cash back points have a fixed redemption value of 1 cent each. In this way, they’re super easy to understand. If you have 10k cash back points, then you can redeem $100 in rewards. No award charts or airline rules to learn or fuss with.
Transferable points are those earned through bank credit cards like the Chase Sapphire Reserve or the Citi ThankYou Premier.
These points are considered high-value points because they can be flexibly transferred to a variety of airline and hotel partners.
Even better, if an airline or hotel makes negative changes to their award program, your transferable points are (somewhat) protected from devaluation.
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 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 charts at any time, though, making these points more vulnerable than transferable points.
For the best possible value, 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.
According to Google Flights, prices 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, a round trip flight on United or one of its partners would cost between 120k-150k United miles or Chase Ultimate Rewards points.
This example doesn’t even include the free stopover in a second city which is within United’s award rules.
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
- non-loyalty program hotels (B&Bs, boutique hotels)
- vacation rentals (VRBO, Booking, Plum Guide, Sonder)
- 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 (Booking.com, 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, cash back points would serve you better.
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 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: $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: Earn an extra 1.5x for every dollar spent up to $20,000 in the first year
Favorite Card Features:
- 5% on travel booked through the Chase Travel Portal
- 3% on drug store purchases and dining (including takeout and delivery)
- 1.5% on all other purchases, with no spending cap or time limit
- 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
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 may be better suited to your needs.
For travelers looking to maximize the value of their spending and earning, though, cash back rewards are the perfect supplement to traditional credit card and loyalty program miles and points.
What are your questions about cash back rewards for travel?
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This was really informative, thank you. I have debated which card might be best for me and not really considered a cash back card.
I still recommend an all around transferable points earning card like the Chase Sapphire, Theresa. But, cash back rewards are helpful for some things.
What an interesting post! Now we have a better insight in when to use cash back or miles when booking flights and hotels! 🙂 Thank you so much for sharing this!
Glad the info was useful, Mei. Thanks for your comment.
Until now I have only used my cash back point for shopping or on a online booking site like Agoda. Perhaps it’s time to step higher and try to redeem my points for flight tickets and else. Thanks for sharing this useful article 🙂
You’ll definitely get more value from your money, Debbzie, especially for hotel bookings. 🙂
I prefer miles to cash back because I prefer flying in First Class and Business Class. Cash back rewards do serve their purpose, mostly for making money (large scale MS).
Thanks for your comment, Debra. I agree with you. I focus much more on miles, but cash back has come in handy for specific travel expenses.
Very informative post. I can imagine that it could be invaluable not only for the beginner but even for a more experienced traveler since travel rewards programs could be confusing and/or have small print attached ;). I want to add one more thing: there are differences in how any program applies domestically (i.e., inside the US) vs. internationally especially in lesser popular destinations. Hence, it’s always a good idea to check exclusions and restrictions every time going anywhere abroad.
Thanks for your comment and the tip, Elena. Very helpful.
This post is really informative! I wish that it was just an easy, quick way to know all of this. However, we’re all lucky that you’ve done all of this research for us! I have the Bank of America Travel credit card that gives me 1.5 points back which I can use on anything travel related – metro stations, rentals, hotels, flights, etc. I like it because it’s so much easier for me to understand.
Thanks for your comment, Paige. Simplicity is one of the draws of cash back rewards.
I love to use miles for First or Business Class seats. Thanks for the tips re: the best credit cards.
Miles are the best for premium airline travel, Nancy. Well-done!
Thanks for the great breakdown of the two options! We always prefer using miles, but you are right sometimes cash can help reduce travel costs especially for things you can’t usually use miles for. We have one card through our bank account that’s cash back and it’s been nice to have for the random little expenses here and there!
Agreed, Jenna! Miles are my go-to but the cash back is nice for saving on some travel expenses.
I’m always terrible at loyalty schemes – I’m always looking for the cheapest deal at the time so forget about long term savings! Its great to get some tips from a pro 🙂
I hope you can put some them to use in your favor, Claire! Thanks so much for reading. 🙂