I think you mean you would never get miles at 1 mile/$ instead of 5% cash. That I understand.

But up through this month, I was able to get 4+ UA miles per dollar spent, instead of 5% cash back, on the Chase Rewards Plus card. (Though it's going "poof" at the end of this month.) I value 4+ miles way higher (the way I use them, mostly for "unaffordable in cash" overseas front-cabin flights) than 5 cpm.

And there is at least one card out there (Hilton HHonors Surpass) that gets 6 HHonors points per dollar at gas/grocery/drug, and that might be competitve with 5% as well.

(But this Amex Blue Cash card with 5% cashback on gas/groceries is no longer available to those who don't already have it, right? The current no-fee Amex Blue Cash seems to only give 3% back on groceries and 2% back on gas, and so for me even the no-fee Hilton HHonors AMEX that gives 3 HHonors points on both groceries and gas seems reasonably competitive with that.)

The Pen Fed card with No annual fee and 5% cash back on Gasoline to me is a no brainer. Between the wife and I we spend $800+/mo on Gas that $40 credit right to my account is great!
I have other cards that I sign up for bonuses and churn for other expenses

"As far as international flight awards are concerned, these can be worth close to 4 to 5 cents per SPG point."

I agree, but normally only when redeemed for a premium airline award. I also use SPG points occasionally for Starwood stays, but only when room prices are very high compared to SPG points.

"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."

I agree again, but I use ex-Schwab for all expenses outside of the US due to SPG's surcharge. Lately there are other choices such as certain Chase cards (Priority Club, British Airways, etc) or AMEX Platinum. I normally avoid CapitalOne due to its poor customer service, the restrictive nature of its definition of 'travel expenses' for redemption purposes, and the fact that it often refuses charges outside of the US for reasons of suspected fraud (even if advised of foreign travel).

The new Blue Cash everyday is not very attractive due to its 3% return on groceries; however, Blue Cash Preferred with a $75 AF may make sense to some since its 6% on groceries (only 3% on gas/department stores). Of course, with the $75 AF factored in, you never get 6%.

Amex PR Gold's 2x gas and groceries does not look a lot at the first glance; however, if you value 1 point at 2 cents, then it is 4% = that is why PR Gold could be very valuable. Of course the AF is $175, but you also get 15K bonus after $30K spending - that more than negates the AF. My point is that it all depends on how you value miles and if you value them high enough, then you may want to use those miles cards in lieu of any cash back cards.

That's how I feel, too. That's why I've shifted all spending away from my Citi card and spent almost all the points. Too bad for the unmatched flight points that are going to wilt away.

But for the OP, I value miles more than 2% cash back because I do redeem them for front-cabin flying. I see miles as an opportunity to fly up front because I'm now spoiled that way. If I wanted to maximize the number of miles I fly per mile accumulated, I probably would sit in back, at which point, 2% may be a better deal.

I generally think that 2% cards are the way to go. Using airline or hotel cards only makes sense to me if you get EXTRA PERKS OUT OF THE CARD (a few listed below). Also, if I book a ticket from NYC - HKG with miles, I won't accumulate the 16K miles (and Elite bonus/status additions) I would if I paid cash (or even used Citi ThankYou points or some other points). Therefore, I personally use my miles to book trips for other people.

Some extra perks that may make miles card worth it:

Platinum Delta American Express (10k MQM elite miles if you spend 25k/year + $25 lounge access, free checked bag, + more)

United-Continental Visa Credit Card (2 lounge passes, priority boarding, free checked bag)

American Airlines Visa/Mastercard (discounted rewards promos on US redemptions)

While I like the SPG card for its flexibility, it only offers a quicker way to hotel status (which is not very important to me). Another thing about SPG is that people normally look at the going rate of rooms and extract a 2 cent - 4 cent value from there. However, you can normally book rooms MUCH MUCH CHEAPER using Priceline. This fact goes unnoticed by many. If you don't stay at one hotel chain or value getting hotel elite status (which is nowhere near as good as Airline elite status) the SPG card is simply not as valuable as some think. Now for international redemptions, you can probably extract a bit more value out of the card.

I thought cash back were considered rebates and therefore not taxable. :confused:

Agreed, but a cash rebate could be recorded as reducing the amount of deductible business expenses, effectively increasing the taxable profit of the business. However, in a closely held business there are ample opportunities to reduce taxable profit, and taxes needn't be a decisive factor in choosing a rewards program.

I understand what you are getting at, but as far as I know there is no current requirement to record the transaction net of the rebate - so no tax effect.

There is if you follow accepted accounting practices. You cannot balance if the company claims $100 expenses but disperses only $98. The rebate may not need to be attached to a specific purchase, but it will show up somewhere in the company's books.

The reasoning is different if you are thinking about expense reimbursements made by an employer to an employee using her own card, but if the company pays the credit card bill directly there is no acceptable way to ignore statement credits.

Can't find any quick reference to this but if you search the IRS rulings, you will find that the IRS logic is that the rebate is non-taxable unless it offsets something that is deductible against taxes.

So, for example, these scenarios would require special handling; if the rebate is...

• Against a deductible business expense, then the rebate is subtracted from the deduction claimed
• Against a business capital expense, then it is subtracted from the basis of the item
• Against anything else deductible, such as a charitable contribution, then it is subtracted form the deduction claimed

It would be hard for them to know if you are handling this correctly or not but it would certainly be fair game in an audit...

gotcha. I may have blurred the line a bit but I was responding to the point raised that rebates are taxable income to the individual.

Note that you get $100 cash back when you get the Blue Cash Preferred, so first year is negative $25 fee. If you have a family's worth of grocery spend, it is a no brainier for your groceries. At 3% for gas, I use it, but consider starwood points to be of similar worth.

Note also that many flyertalk members and readers of my blog have been successful at upping the PR Gold's bonus from 15k to 75k after spending only $1,000. Reply or PM me if you need more details.

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Dave

This describes my view to a T.

As to the computations of value for stockpiled miles, I would add that my discount factor for the unknown future gets bigger with each month we see more whopping sign-up bonuses. At some point, the airlines will impose rules that carve out rewards for people who are then currently spending money, and getting awards for others will be much harder or expensive or both.

Very well put, and exactly correct in my view. As I'm more aspirational than economic, my preference is for the SPG card, but due to the foreign exchange surcharge I use ex-Schwab for all expenses in currencies other than USD. In my case that comes to well over 50%.