Miles/Points vs. Cash Back
 

Other than the bonuses that you get for the airline cards, the best longterm plan seems to be:

Fidelity 2% Cash Back Amex and the Capital One Venture 2 points per Dollar card.

Why would it be better to earn 1 mile per dollar on individual airline cards?

It depends on how you value the individual airlines' miles. Personally, I'd prefer 2 cents to 1 mile on any given airline, so I use my schwab visa for everyday purchases when I'm not hitting a spend requirement on a bonus offer.

I agree with the previous post. If you do a lot of first class or business class international flights, then the miles have tremendous value to you, since these are very expensive tickets when purchased outright.

However, right now I'm finding there's a ton of miles to gain through sign-up bonuses, so I'm not particularly looking to add to those balances through regular spend. I'm satisfied that I've got a decent supply of miles for the next couple of trips, I'm looking for currency that I can use immediately instead.

"Cash is King". You can use cash right away to purchase any item that you want whether it's travel related or not. Miles have a much more restrictive use, and you run the chance of miles being devalued or being unable to use the miles due to a lack of award availability. My personal preference is to only sign-up and use mileage related cards when there's a good size bonus.

Plus no annual fee for the Fidelity 2% Amex, so there's no risk in keeping it idle while you meet the minimum spend on another new credit card.

Well, the sign-up bonuses
are where all the action is,
not the spend or cash rebate.

SPG spoints worth more than 2 cents per dollar spent
 

20,000 points convert to 25,000 miles in most programs that I use. As far as international flight awards are concerned, these can be worth close to 4 to 5 cents per SPG point. In my mind, you can't have too many points lying around for international premium travel. I have a 2% cash back on everything card (formerly by Schwab). I only use it at places that don't accept Amex. Otherwise, everything goes on SPG.

Fidelity cards' World Points are also redeemable for Aeroplan miles
 

Fidelity AmEx and Visa WorldPoints have other redemption options besides 1 point = US$.01, such as 1 point = 1 Aeroplan mile (Star Alliance, allows two stop-overs for intercontinental flights). There is also an option for redeeming for flights directly from World Points, which can occasionally be a better deal.

This shows where everyone is different and there is no right answer to questions like this. My instinct is to avoid having a bunch of miles or points "lying around" and subject to depreciation.

I also use the Fidelity 2% cash-back card regularly unless I'm chasing a bonus.

On average I value an airline mile at $0.0225, but the valuation depends on how the miles are redeemed and some options (that I would consider) are as low as $0.0175. Nonetheless, I prefer miles over cash or near-cash (e.g. Capital One Venture) because:

1. Comparing a cash back credit card to a mileage card isn't merely a matter of calculating the value of "a" mile, you need to look at the full package. Cash back cards seldom offer promotions, but mileage cards often have bonus offers for spending in targeted categories, for achieving annual thresholds, or for transfers to specific partners.

2. The premium class ticket that you buy with cash is very likely to require an advance purchase, be non-refundable, stipulate a large fee for changes, and cover only point-to-point travel. By comparison, mileage tickets often (not always) offer much more liberal terms and only trivial penalties for cancellation.

do both
 

When you use an SPG amex instead of a 2% cash back, you are buying miles for 1.6 c each after the 25% bonus on transfers.

At times you should not use a cash back card.
If you get a 2% cash back for business spend, that is taxable income = 1% left
In that case a rewards card in miles is not taxable and better = buying for 1 cpm

At times you should not use a miles card.
e.g., I get 5% cash back with Amex blue cash (old type card) for gas and groceries
I would never get miles instead of 5% cash = 5 cpm.

Reading the Value of Miles section of my website below should help.

True today, but at some point American Express and Chase will back away from the market share battle to evaluate what they have accomplished, and focus on encouraging customers to use and keep the cards. I think it's prudent to give some thought to which cards you want to be using for the medium term.

I have done a lot of analysis on my website regarding Fidelity 2% vs. a miles card. Even with the annual fee on a miles card, you don't need to value a mile as high as 2 cents to beat Fidelity.

For example, with SPG if your annual spending is $30K, you need to value a mile better than 1.78 cent to beat Fidelity. With Amex PR Gold, if your annual spending is $30K with 3K on airfare and 5.5K on gas/groceries, you only need to value a mile at 1.5 cent to net $75 in your pocket compared to Fidelity.

Of course, you can always say you have multiple cards for different categories. But most of us already have too many cards in our wallet, one for general spending, one for top bonus categories, one for places that don't take amex, one for lounge access, one for foreign transactions, and so on. So my argument is that cards such as PR Gold (covering airfare, gas, groceries), Sapphire Preferred (covering airfare, hotels, dining, etc.), Travelocity Amex (covering airfare, gas/groceries/dining) are very valuable. Then if you value 1 mile at 2 cents, then it is almost no-brainer to go with a miles card with an annual fee.

I am not saying Fidelity Amex is a bad card - actually I rate it highly. I am just suggesting other cards may be better if you value a mile high enough. I also understand that Fidelity Amex's WorldPoints can be transferred into AC miles - that is great value even considering the recent devaluation of AC; however, programs like SPG, MR and UR (by Chase) provide great value and flexibility at the same time.

If you value miles on an economic basis - as a discount against trips you would take anyway - a 2% cashback card is frequently the best option.*

If you value miles aspirationally - to be able to purchase travel you could not normally afford/justify - branded miles/points cards are frequently better.

In either situation, most travel related spend (airlines, hotels, car rentals...) will be more profitable on the associated branded credit card.

As someone who values miles on an economic basis, roughly 90% of my (non-travel) spend goes on 2-5% cash back cards.

Anyone who claims to be able to answer this question for you, without customizing the answer to your specific style and goals, is probably giving you bad advice.

* The Virgin America card can pay about 2.15% on everyday spending. I'd argue that the risk of accumulating points on a relatively new, unprofitable airline would negate that extra payback.

Likewise ThankYou Rewards now returns at least 2.66% if the card has the Flight Points feature and if the points are redeemed for air travel. Problem is that Citi has tinkered with this program so frequently that I find it difficult to convince myself to accumulate a substantial TYP balance.

In my mind it is always nice to have miles and points for when I travel.

There are occasions where I need a last minute flight and all they have is first class (due to a delay or mechanical issues).

Using hotel points during peak travel seasons is another reason.

It also depends on how much spending you do.

But the main reason is for emergencies, some examples which I said above.

However if you are able to plan everything far in advance then 2% cash is great since you should also have plenty of time to find deals.