Miles or Cashback Programs
 

Does anyone know what's better to do, get miles from CC's or get cashback. I've looked at discover and they seem to offer pretty good cashback plans, just curious.

thanks

btw if you have recommendations can you please post them

Unless you can provide more detailed information about your specific needs / desires, the answer is just going to be "it depends".

For example, review this recent thread: I don't understand people dealing with miles.

Despite all the threads on the subject it all boils down to you. Once you have made a decision about the value of a mile you've a simple arithmetical calculation to find if csh back is worth more to you than are points or miles. Generally the credit card companies price their products so it will be financially even for them. Because they buy points wholesale generally cash back will be a better deal than will points. Generally. But specifics vary greatly. Thus a generalization does not reflect the choice you need to make. So, "your mileage may vary". I personally use some of both, depending on specific promotions to make the tradeoff for how I use them.

So, I know this answers no questions, just raises a couple of issues. Look at the threads and you decide.

Cashback programs... you never can get the awards you want.

We're looking at the same data, but we're not reaching the same conclusion. If a card issuer budgets, say, 1.5% of transactions for rewards they can award $0.015 per dollar -or- they can buy airline miles which I can redeem for about $0.0225 of air travel. The extra value represents the spread between the wholesale cost of the miles and the retail price of the otherwise unsold airline seat or hotel room.

Maybe you can't, but I can.

Though in a gross sense, I generally feel hotel points are more valuable than FF miles.

Why not get both? Whenever I make purchases, I click thru using cashreporter.com. United, Enterprise, W Hotels and others all offer cash back.

But - if you want miles/points, you can also go thru the aírlines/hotels shopping sites. Sometimes cash back is the better deal, sometime points/miles are.

I use www.evrewards.com
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It all boils down to what matters more to you, at this moment - cash now or miles/status that will give back rewards later. There are several threads already on this topic. I even wrote a blog post discussing the Value of Airline Miles.

To me miles for status on an airline, upgrades when I fly and free award tickets are worth than 2% (or so) cash back. You have to decide what is worth more to you.

I've always preferred points. If you have the flexibility to plan your travel reasonably far in advance the awards are relatively easy to come by. I'd probably never pay $5,000 for a business class ticket to Europe, but the ~60k points it took to redeem a business class award was more valuable to me than the $1,200 I could have earned had I gone the cash back route. Had I taken the cash, it would have cost more than that to fly coach. For me points are a no-brainer, but as has been said many times, it's different for everybody.

I had the same question a while ago and I stuck with points.

This is how I look at it:

I can afford to spend a few hundred thousand miles to purchase first-class tickets. I cannot afford to spend 10K+ to do that. If I spend $100,000, 1% cash back is only $1,000. In this case, I'm ahead.

It really depends on how much cash back you're getting and how you plan to travel...

can you elaborate, please? is it because you feel hotel availability via points is easier to snag than flights...are the hotel upgrades more important to you...what is the big value for you. thanks

That's part of it. Some hotel programs have no blackout dates, for rooms at reasonable point levels. Almost all airline programs tightly restrict "saver" awards on many routes, forcing you to use double the nominal points.

Take an example -- a few weeks ago I needed (well . . .) to be in Atlantic City over the weekend (memo to self: horrible place). For a horrible place, it fills up on weekends, bigtime. I could not find a "real" (that is, Marina or Boardwalk, non-motel) hotel for under $299. But using Starwoods points, I got a large King room at the very nice Sheraton convention center for 7,000 points. Not only is that a third of the price of the cheapest airline ticket, it's a $300 value for $7k worth of spend. The best cashback card would have yielded me at most around $150.

As with all good deals, you need to monitor how good they are -- Hyatt, for instance, sent me an innocuous little e-mail recently about some program "enhancements" that will net out to move a good number of "okay" quality hotels into the "expensive" redemption level, and some "expensive" ones into "luxury."

I think that sums it up well, though I don't know where you get 2% cash back on most purchases (excepting the recently closed Schwab deal and specialized rebates on gas, groceries, etc.).

The better assuption is that most people will get 1% cashback so 30k in spending would net $300. In my case I am currently spending $30k on my Chase BA card which will yield approx. 38k BA miles plus a BA companion ticket. I am pretty sure the miles and cert. will be worth more to me than $300 but you never know until you try to redeem.

The real deals of course are for upgraded travel. We just spent 50k UA miles for a transcon F roundtrip. The same ticket quoted today retails for almost $2000 (or more depending on flight times). So the ROI is 4 cents per mile. Now of course we would never spend $2000 for an F ticket, but the alternative was $400 for an economy ticket. So essentially we are buying F for an extra $100 which you could never do with a cashback card. (And this made Mrs. B really happy, which is priceless!

As noted point cards have other benefits. For example with SPG you can do cash plus points and I have used that to pay $60 + 4k points for a room that would otherwise cost $300/night. Since I really can't afford to spend that much the alternative would probably be to stay in a lesser quality hotel as the cashback card would only yield $40 vs. 4k points on SPG Amex. So the points are getting me a "first class" room for $40.

Finally note that the mileage and point cards have a steady stream of bonus point deals, so the return is usually better than 1 point per $1 spent.

Addendum: After writing this I realized I had left out the downside of mileage programs, which is that you may find it impossible to redeem for peak dates at a good ROI. Over the past 3 years, we have never been able to redeem miles for saver awards to Cancun at Xmas (tried 4 airlines) nor to Orlando during spring break. By contrast $100k in spending would have yielded a cash rebate of $1000 that would have bought 2 coach tickets. So cashback might be a better option depending on your needs.

:) Nobody would argue 1 mile beats 1 cent. But for average people who only spend 10K - 20K/year with >50% being gas/grocery/drugstore/dept store/office supplies, you can easily get 3% cashback from different card combinations (e.g., Amex blue cash, Fidelity Amex, Schwab Visa, Chase freedom, Penfed Visa, Amazon Visa). All of them have no annual fee.

Now unless you are a big spender, it would take years to get an award ticket through spending. Also, for the same amount of miles, average people like me would take 2 coach tickets easily over 1 business one. So 1 mile is only worth very restricted 1 - 1.5 cents. In general, I only apply for mileage cards to get bonus but always cancel them before annual fee kicks in.