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Cash Back vs Miles: Which Type of Credit Card Is Best For Consumers?

For most consumers cash back credit cards will provide more value than a standard airline miles credit card. However, the issue is very nuanced, and the same won't apply to every person reading this. To have a good understanding of the relative value of cash back and airline credit cards you need to consider two elements — raw value and usability/flexibility. Airline credit cards, on average, provide much better short-term value, while cash back cards are better long-term. Airline cards are also less flexible, though they can be optimized while cash back rewards, for the most part, can't be.

Cash Back vs Airline Credit Cards: Which One Is More Valuable?

For the average consumer, we calculate that airline credit cards can return a net value of $678 over the first two years of cardmembership. Cash back credit cards provide just a $559 return in a similar time frame. We based these findings on the average consumer expenditure data released by the Bureau of Labor Statistics, so values will change depending on a consumer's spending habits. That includes spending $330 per month on groceries, $200 on gas, $230 on dining, and $670 on all other random categories. We applied these figures to a sampling of 30 cash back, and 30 airline credit cards from our internal database.

When you look at the long-term value potential of credit cards, however, you'll discover that cash back credit cards tend to provide better net rewards.

The discrepancy between long-term and short-term value of the two card types has to do with their bonuses. Airline credit cards often appear to be much more valuable because they come loaded with tremendous welcome offers. It's not uncommon for an airline card to provide 40,000 miles or more, that have a value of over $400. At the same time, cash back cards rarely come with bonus offers greater than $100 - $150. While it may seem airline cards are more valuable, once the first year is up the annual fees on the cards tend to play a big role in their net value. This eats away into the returns you get with airline cards, and allows cash back offers to provide greater net value long-term.

As we stressed above, the relative value of a card is highly dependent on the individual using it. That's why we built a tool that allows readers to get an estimate of just how valuable a particular card is, based on how they use it. Here is a sampling of cash back and airline credit cards. Press the gear icon and input your estimated monthly expenditures to get our approximate 2-year value of each card. Keep an eye on the bonus column to see how dependent the value of each card is on that initial boost, if you care about long-term reward potential. You can compare all of our cash back credit cards here, and see this page for a comparison of airline cards.

Assumptions Based On Monthly Spend of: $1,430 Edit
General:
U.S. Gas Stations:
U.S. Supermarkets:
Airlines:
Hotel:
U.S. Restaurants:
Office:
Utilities:
Computing:
Card Annual Fee 2-yr Net Rewards Rate

The Net Rewards Rate is equal to the Rewards Value over two years divided by the total spending. The total spending is equal to the values entered into the tool and multiplied by 24 months. See the rewards Value note to see details on how it is calculated.

The estimates here are ValuePenguin's alone. They are not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. All estimates are based on the spend assumptions entered above (which you can edit).

Bonus Value

The bonus field shows our estimate for the value of the card’s welcome bonus. If the bonus is point or mile based, we multiply the total bonus points/miles by our estimate for their value to arrive at a dollar equivalent. We display $0 if there is no bonus or if the user doesn’t qualify for the bonus based on the current spending entered into the tool. All estimates are based on the spend assumptions entered above (which you can edit).

The estimates here are ValuePenguin's alone. They are not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer.

2-yr Rewards Value

The Rewards value is calculated by adding together the rewards earned from charging purchases to the card over two years and any welcome bonuses (if applicable). They are then multiplied by our estimated point/mile value, with any annual fees (if applicable) subtracted. All values are based on our own estimates for the dollar value of any points, miles or bonuses earned using a card and on the spend assumptions entered above (which you can edit).

The estimates here are ValuePenguin's alone. They are not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer.

Southwest Rapid Rewards® Premier Credit Card
$99 3.70%
$884
6,000 bonus points after your Cardmember anniversary; Earn 40,000 points after you spend $1,000 on purchases in the first 3 months your account is open.
$1,269
Graph Card Read Review More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 34,320 x $0.017 = $583
Bonuses
6,000 x $0.017 = $102
40,000 x $0.017 = $680
6,000 x $0.017 = $102
Less Annual Fees -$198
Total Net Estimated Rewards Through 24 Months 1,269

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $99
APR 17.99% - 24.99% Variable

Card Details

  • Earn 40,000 points after you spend $1,000 on purchases in the first 3 months your account is open. Plus earn 20,000 points after you spend $12,000 within your first year.
  • 6,000 bonus points after your Cardmember anniversary
  • 2 points per $1 spent on Southwest® purchases and Rapid Rewards® Hotel and Car Rental Partner purchases
  • 1 point per $1 spent on all other purchases
  • Earn unlimited points that don't expire as long as your card account is open
  • No foreign transaction fees
  • No blackout dates or seat restrictions, Bags fly free® and no change fees
  • Redeem your points for flights, hotel stays, gift cards, access to events and more
Southwest Rapid Rewards® Plus Credit Card
$69 3.58%
$782
3,000 bonus points after your Cardmember anniversary; Earn 40,000 points after you spend $1,000 on purchases in the first 3 months your account is open.
$1,227
Graph Card Read Review More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 34,320 x $0.017 = $583
Bonuses
3,000 x $0.017 = $51
40,000 x $0.017 = $680
3,000 x $0.017 = $51
Less Annual Fees -$138
Total Net Estimated Rewards Through 24 Months 1,227

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $69
APR 17.99% - 24.99% Variable

Card Details

  • Earn 40,000 points after you spend $1,000 on purchases in the first 3 months your account is open. Plus earn 20,000 points after you spend $12,000 within your first year.
  • 3,000 bonus points after your Cardmember anniversary
  • 2 points per $1 spent on Southwest® purchases and Rapid Rewards® Hotel and Car Rental Partner purchases
  • 1 point per $1 spent on all other purchases
  • Earn unlimited points that don't expire as long as your card account is open
  • No blackout dates or seat restrictions
  • Bags fly free® and no change fees
  • Redeem your points for flights, hotel stays, gift cards, access to events and more
Chase Sapphire Preferred® Card
$0 Intro for the First Year, then $95 3.00%
$625
50,000 Ultimate Rewards when you spend $4,000 on purchases in the first 3 months.
$1,028
Graph Card Read Review More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 39,840 x $0.013 = $498
Bonuses
50,000 x $0.013 = $625
Less Annual Fees -$95
Total Net Estimated Rewards Through 24 Months 1,028

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $0 Intro for the First Year, then $95
APR 17.99% - 24.99% Variable

Card Details

  • Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
  • Chase Sapphire Preferred named "Best Credit Card for Flexible Travel Redemption" - Kiplinger's Personal Finance, June 2018
  • 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
  • No foreign transaction fees
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
  • No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards
Capital One® Venture® Rewards Credit Card
$0 intro for first year; $95 after that 3.18%
$500
Receive 50,000 miles once you spend $3,000 within the first 3 months
$1,091
Graph Card Read Review More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 68,640 x $0.01 = $686
Bonuses
50,000 x $0.01 = $500
Less Annual Fees -$95
Total Net Estimated Rewards Through 24 Months 1,091

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $0 intro for first year; $95 after that
APR 14.74% - 24.74% (Variable)

Card Details

  • Enjoy a one-time bonus of 50,000 miles once you spend $3,000 on purchases within 3 months from account opening, equal to $500 in travel
  • Earn 2X miles on every purchase, every day. Plus earn 10X miles on thousands of hotels; learn more at hotels.com/venture
  • Named ‘The Best Travel Card' by CNBC, 2018
  • Receive up to $100 application fee credit for Global Entry or TSA Pre✓®
  • Fly any airline, stay at any hotel, anytime; no blackout dates
  • Miles won't expire for the life of the account and there's no limit to how many you can earn
  • No foreign transaction fees
  • $0 intro annual fee for the first year; $95 after that

Note: The information in this box was provided by Capital One® and is not part of our independent analysis.

Discover it® Miles
$0 2.25%
$257
Discover will match ALL the Miles you’ve earned at the end of your first year, automatically.
$772
Graph Card Read Review More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 51,480 x $0.01 = $515
Bonuses
257 x $0.01 = $257
Total Net Estimated Rewards Through 24 Months 772

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $0
APR 13.99% - 24.99% Variable

Card Details

    • INTRO OFFER: Discover will match ALL the Miles you've earned at the end of your first year, automatically. For example, if you earn 30,000 Miles, you get 60,000 Miles. That's $600 towards travel!
    • Earn unlimited 1.5x Miles for every dollar spent on all purchases all with no annual fee.
    • No Blackout Dates - fly any airline, stay at any hotel.
    • Redeem your Miles as a statement credit towards travel purchases.
    • Freeze your account in seconds with an on/off switch either on the mobile app or website to prevent new purchases, cash advances, and balance transfers.
    • Get your free Credit Scorecard with your FICO® Credit Score, number of recent inquiries and more.
    • Receive FREE Social Security number alerts-Discover will monitor thousands of risky websites when you sign up.
    • No Annual Fee.
    • Click "APPLY NOW" to see rates, rewards, FICO® Credit Score terms, Discover Match™ details & other information.
Chase Freedom Unlimited®
$0 1.94%
$150
Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
$665
Graph Card Read Review More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 51,480 x $0.01 = $515
Bonuses
0 x $0.01 = $150
Total Net Estimated Rewards Through 24 Months 665

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $0
APR 16.99% - 25.74% Variable

Card Details

  • 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 16.99-25.74%. Balance transfer fee is 3% of the amount transferred, $5 minimum
  • Unlimited 1.5% cash back on every purchase - it's automatic
  • Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
  • No minimum to redeem for cash back
  • Cash Back rewards do not expire as long as your account is open
  • Free credit score, updated weekly with Credit Journey℠
  • No annual fee
Barclaycard Arrival Plus® World Elite Mastercard®
$89 (waived first year) 1.84%
$0
Limited Time Offer: Enjoy 70,000 bonus miles after spending $5,000 on purchases in the first 90 days
$632
Graph Card Read Review More Details and Value Calculation

Estimated Rewards Through 24 Months

Card Rewards Estimated Rewards Value Dollars*
Spending Rewards 68,640 x $0.01 = $721
Less Annual Fees -$89
Total Net Estimated Rewards Through 24 Months 632

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $89 (waived first year)
APR 17.99%, 21.99% or 24.99% variable based on your creditworthiness

Card Details

  • Limited Time Offer: Enjoy 70,000 bonus miles after spending $5,000 on purchases in the first 90 days
  • Earn unlimited 2X miles on every purchase
  • Book travel your way—no airline, seat or hotel restrictions—and redeem your miles for travel statement credits
  • Get 5% miles back to use toward your next redemption, every time you redeem
  • No foreign transaction fees
  • International Chip and PIN for use at self-service chip terminals around the world
  • Miles don't expire as long as your account is open, active and in good standing
  • See Rates & Fees
Blue Cash Everyday® Card from American Express
$0 2.04%
$150
Get $150 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive $150 back in the form of a statement credit.
$700
Graph Card Read Review More Details and Value Calculation

Terms and Limitations Apply

Estimated Rewards Through 24 Months

Card Rewards Point Value Rewards Value
Spending Rewards 550 x $1 = $550
Bonuses
0 x $1 = $150
Total Net Estimated Rewards Through 24 Months 700

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $0
APR 14.99%-25.99% Variable
*Rates and Fees

Card Details

  • $150 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.
  • 3% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%).
  • 2% cash back at U.S. gas stations and at select U.S. department stores, 1% back on other purchases.
  • Low intro APR: 0% for 15 months on purchases and balance transfers, then a variable rate, currently 14.99% to 25.99%.
  • Over 1.5 million more places in the U.S. started accepting American Express® Cards in 2017.
  • Cash back is received in the form of Reward Dollars that can be easily redeemed for statement credits, gift cards, and merchandise.
  • No annual fee.
  • Terms Apply.
  • See Rates & Fees
Blue Cash Preferred® Card from American Express
$95 2.46%
$200
Get $200 back after you spend $1,000 in purchases on your new Card in your first 3 months. You will receive $200 back in the form of a statement credit.
$845
Graph Card Read Review More Details and Value Calculation

Terms and Limitations Apply

Estimated Rewards Through 24 Months

Card Spent Cash Back Rewards Value
Spending Rewards 835 x $1 = $835
Bonuses
0 x $1 = $200
Less Annual Fees -$190
Total Net Estimated Rewards Through 24 Months 845

*The value estimate is calculated using ValuePenguin.com rewards point value.

Annual Fee $95
APR 14.99%-25.99% Variable
*Rates and Fees

Card Details

  • $200 statement credit after you spend $1,000 in purchases on your new Card within the first 3 months.
  • 6% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%) - that means spending $60 a week at U.S. supermarkets could earn over $180 back per year.
  • 3% cash back at U.S. gas stations. 1% cash back on other purchases.
  • Over 1.5 million more places in the U.S. started accepting American Express® Cards in 2017.
  • Cash back is received in the form of Reward Dollars that can be easily redeemed for statement credits, gift cards, and merchandise.
  • $95 annual fee.
  • Terms Apply.
  • See Rates & Fees

Flexibility & Liquidity

Another point in favor of cash back over airline miles has to do with how flexible these type of rewards tend to be. When assessing the value of credit card rewards you should take liquidity into account. This term refers to how easily an asset, or something you own, can be converted to cash or something that is cash equivalent. Liquidity is important because it's how you, as a consumer, extract value out of whatever you own. With cash back credit cards this is almost a non-issue, since most cash back credit cards can essentially get you cash, making them very liquid. In some cases, you can even have a check mailed to you or money deposited into a checking or savings account.

Airline miles can often be difficult to actually use. First, you will only ever get real value out of them when you trade them in for an airline ticket. If, for whatever reason, you decide you don't want to travel, you will be sitting on a pile of useless points. This is also an issue when you have leftover points that aren't quite enough to pay for a flight. For example, say you have 70,000 miles and you decide to purchase a ticket that costs 50,000 miles. At the end, you will be left with 20,000 miles that have no value until you accumulate enough of them to buy another ticket. This can take years for some people. In most cases, partial redemptions are not possible. The airlines that do allow for it will typically reduce the value of your miles for a cash + miles redemption.

Cash back credit cards have a similar problem, though it's far less severe. Some cards will have a minimum threshold for redemption — typically set at $25. That means if you have $20 worth of cash back accumulated, you can't withdraw it until you hit that $25 mark. The upside to cash back credit cards is that these thresholds tend to be low. With airline miles, they are much higher. You often need to spend thousands or tens of thousands of dollars before you get enough usable miles.

Finally, one should also consider the fact that award seats are not always available on all flights. Depending on the airline credit card you have, the points you're accumulating can end up not serving you on the exact itinerary you want to book.

Airline Miles Can Be Optimized, While Cash Back Rewards Can't

Unlike cash back rewards, airline miles have the advantage of being optimizable. If a person with airline miles chooses to do so, they can stretch out the value of a single mile, beyond the estimates we based our above analysis on. So-called optimizers will plan itineraries that give them the best returns for the miles they have. For example, if you spend time looking at flights on different days and times, you can book an award ticket with United so that you get $0.02 for each mile. The average value of a United mile, however, typically hovers around $0.012.

Program

Average Value
Alaska Mileage Plan$0.019
American AAdvantage$0.013 - $0.015
Avianca Lifemiles$0.014
British Airways Executive Club$0.015
Cathay Pacific Asia Miles$0.01
Delta SkyMiles$0.006 - $0.05
Etihad Guest$0.013
JetBlue TrueBlue$0.016
Korean Air SkyPass$0.01
Singapore Airlines KrisFlyer$0.015
Southwest Rapid Rewards$0.017
United MileagePlus$0.012 - $0.015
Virgin America Elevate$0.02
Virgin Atlantic Flying Club$0.01

Even the top cash back credit cards, on the other hand, will almost never give you more than the $0.01 per point. Quite the contrary, some of the cash back cards we examined in the past had alternate redemptions available that would severely undercut the value of your points.

While having a flexible value may at first seem like an advantage for airline miles, this can be a double-edged sword. Anyone who isn't paying attention to how they use their miles can just as easily end up using them in a sub-optimal way. If you want to know how this will apply to your particular situation, you should consider how patient you are when dealing with reward redemptions. If you are a meticulous planner, airline miles can buck the average value trends we described above, and provide you way more value than cash back cards. However, if you are a casual user who doesn't like to spend time planning their trips and redemptions, cash back cards will likely provide the better value in the end.

Comments and Questions

Opinions, analyses, reviews, or recommendations expressed here are the author's alone, and have not been reviewed or endorsed by the issuer. We may be compensated through the issuer's Affiliate Program. For a full list of our advertisers see our disclosure page

* See the online credit card application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However all credit card information is presented without warranty. When you click on the "Apply Now" button, you can review the credit card terms and conditions on the issuer's website.

Info about the following cards: Premier Rewards Gold Card from American Express, Delta Reserve® Credit Card from American Express, Platinum Delta SkyMiles® Credit Card from American Express, Hilton Honors Surpass® Credit Card, American Express® Blue Sky, American Express® Green Card, The Amex EveryDay® Credit Card from American Express, The Amex EveryDay® Preferred Credit Card from American Express, The Plenti® Credit Card from Amex, Blue from American Express®, Platinum Card® from American Express Exclusively for Mercedes-Benz, Bluebird, Centurion® Card from American Express, Hilton Honors American Express Aspire Card, Starwood Preferred Guest® American Express Luxury Card, and Amazon Business American Express Card has been collected independently by ValuePenguin. The issuer did not provide the details, nor is it responsible for their accuracy.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author's alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This site may be compensated through the credit card issuer Affiliate Program.

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

How We Calculate Rewards: ValuePenguin calculates the value of rewards by estimating the dollar value of any points, miles or bonuses earned using the card less any associated annual fees. These estimates here are ValuePenguin's alone, not those of the card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer.

Example of how we calculate the rewards rates: When redeemed for travel through Ultimate Rewards, Chase Sapphire Preferred® Card points are worth $0.0125 each. The card awards 2 points on travel and dining and 1 point on everything else. Therefore, we say the card has a 2.5% rewards rate on dining and travel (2 x $0.0125) and a 1.25% rewards rate on everything else (1 x $0.0125).

Advertiser Disclosure: Some of the offers that appear on this website are from companies which ValuePenguin receives compensation. This compensation may impact how and where offers appear on this site (including, for example, the order in which they appear). The site does not review or include all companies or all available products. For more information please see our Advertiser Disclosure.