1% cash back vs miles
 

Hello,

I have a question regarding debit card awards. I have a debit card that gives me 1% cash back and another one gives me 1 mile/$2 for United. which one is better in terms of value?

I go with dollars back. That said, YMMY.

Dollar-denoted rewards are harder to devalue than miles or points. That is the main reason I prefer cash back. As a rule-of-thumb one values miles at a penny/mile. So your choice is 1% in cash or 1/2 % in miles.

Now, can you leverage reward miles to be worth more than a penny? Yes and no. On the yes side, can you accumulate enough miles to get status? And can you get rewards such as class upgrades that are worth more than a penny a mile?

On the no side, United is pretty stingy about reward availability. Plus your "free" seats these days come with some pretty large fees. Christopher Elliot's column is very negative about airline loyalty programs. And he singles out United for criticizem.

Applied to my own travel and spend levels 1% cash yould be a far better deal than 1/2% in miles.

The right answer is that this might be different for everybody even when the credit card only gives 1/2 a mile per dollar some people might find it a better deal than the cash back. I suspect the majority would go with the $ rather than the miles.

However, the questions that you have to ask yourself are:

1) what level of credit card expenses do you have per year?

2) How many united miles do you have already? How many more for a free flight?

3) Do you have any plans to fly anywhere when you do get enough miles for a flight?

I look at this once in a while and always come down on getting miles.

I have a 2% cash back card, but, pretty much only use it overseas due to ripoff forex chages on Amex and other, miles earning, Visa and MC.

To me, an F ticket to, say Hong Kong, is worth more than three thousand bucks which is what I might get back if I used the 2% card instead of getting miles. Plus, I leverage my spend by getting large credit card bonuses (thanks fellow FTers :D) which I can't get on cash back cards.

Do you spend enough on the united card to justify the $65 annual fee preferred debit card that earns 1 mile per dollar, instead of 1 per $2?

If you do, I would value the miles more than the $$. But does the cash back card have an annual fee? How much do you spend on the cards per year and what are the annual fees on both?

I used to be in the cash back camp, until I came across a flyertalker's post that said something like miles/points allows them to experience and travel at levels they would generally never pay for out of pocket. An example is first class international tickets, or 5 star luxury resorts etc. And it's so true.