Which Credit Card Reward is the Most Valuable?

April 07, 2015 : Jason Steele- Guest Contributor

Editor’s Note: If you are credit card-savvy and tend to use them for additional benefits – like a loyalty program – you may start to analyze whether a cash back or points reward system is best for you. This expert has some key considerations on finding the best credit card rewards out there…

What is the more valuable credit card reward – points and miles or cash back? Unfortunately, there is no simple answer to this question. Depending on how much cash back your credit cards offers, or what type of points or miles you earn, it’s possible to receive tremendous value from either form of rewards.

The Argument for Credit Card Points and Miles

Credit cards that offer frequent flyer miles were some of the first to be offered by banks, as many cardholders can’t resist the offer of a “free flight.” In recent years, airlines have raised the number of miles needed for most award flights, and these miles have gotten harder to redeem at the lowest mileage levels. So, while your frequent flyer miles are no longer as valuable as they once were, there are still some excellent deals to be had when you redeem your miles for expensive last-minute flights or international flights in business and first class.

The landscape is better when it comes to hotel points. Many hotel programs allow points to be redeemed for any unsold room, allowing you to book award nights at popular vacation spots during peak periods, so long as rooms remain for sale. In the best case scenario, you can realize as much as two to three cents in value per dollar spent on all purchases, which is better than you can do with cash back.

A Case for Credit Cards with Cash Back

If you are disillusioned with airline and hotel loyalty programs, credit card cash back is the best alternative to credit card rewards in the form of points or miles. Cash back can be spent on any type of travel reservation, used to pay bills or just put into savings. For the most part, cash back credit cards are very simple, and you needn’t be credit card rewards guru in order to find the best way to earn and redeem their rewards.

In fact, many travelers are starting to realize that numerous airline frequent flyer programs are now imposing costly fuel surcharges on awards that were supposed to be free. So when a family saves up their miles and attempts to book an award flight, they could be facing hundreds, if not thousands of dollars in fuel surcharges.

Furthermore, there are some cash back cards that offer fantastic rates of return. For example, American Express’s Blue Cash Preferred offers 6% cash back on up to $6,000 spent each year on groceries, and the Citi Double Cash card offers 2% cash back on all purchases. It would be difficult to consistently receive two cents in value per mile redeemed, and nearly impossible to receive six cents per mile on a regular basis.

When reward credit card users weigh the advantages and disadvantages of earning points, miles and cash back, they can choose the type of rewards offering that best meets their needs.

Hopefully this post offered ideas on the best credit card rewards out there. Read more insights on your money and credit on Block Talk now! 

Related Topics


Jason Steele- Guest Contributor

Jason is a freelance personal finance writer who specializes in credit cards and travel. You can keep up with Jason at his home page JasonSteele.com

Related Resources

How to Check Your Credit Score for Free (Really)

A free credit score check is a great way to save money and monitor your financial health. Learn how to check your credit score for free with H&R Block.

How Do I Become An Enrolled Agent?

Learn more about what an enrolled agent is and how to become one. H&R Block explains exactly what you need to do if you’re interested in the career path.

Tips For Staying Out of Debt In The New Year

Need debt help for the new year? Read these tips from H&R Block to stay out of debt and have a prosperous year.

The First-Time Home Buyer’s Guide To Saving

Follow these tips from H&R Block if you're saving to buy a house. This guide will help you buy your first home and save money!