Is It Better to Get Cash Back or Miles for travel?

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 travel rewards 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 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 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 (Omio)
• 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 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: INTRO 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

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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