credit & debt

Miles or Cash Back: Which Is the Better Credit-Card Reward?

MileCards.com can help you decide whether an air-miles reward card or a cash-back card will be a better deal for you.

Ever wonder whether an air-miles rewards card or a cash-back card offers the better deal? Now, card-comparison site MileCards.com has crunched some numbers that can help you decide. MileCards tallied redemption prices for more than 100,000 domestic award flights. Using consumer-spending data from the U.S. Bureau of Labor Statistics, the site also gauged how much a customer might spend on each of 38 credit cards offering points or miles that could be traded for domestic flights. Putting the two components together, MileCards estimated the value in flight awards that the travel cards would earn over three years, then compared those figures with the three-year return on a cash-back card that yields 2% with no annual fee.

Eleven miles cards beat the cash-back card, among them Barclaycard Arrival Plus, Chase Sapphire Preferred and Southwest Rapid Rewards Premier card (see The Best Rewards Card for You). Note that all the winning miles cards charge an annual fee. “For consumers who want to pay no annual fee, a 2% cash-back card like Citi Double Cash is usually a better bet” than a travel rewards card for domestic flight awards, according to MileCards. And both travel and cash-back redemptions have a higher value, on average, than merchandise, according to Wallet­Hub.com.

Ultimately, your own spending patterns and preferences dictate which card will work best for you. A no-fee card that lets you rack up miles or points may be the best way to save for a vacation, even if the card doesn’t offer the highest payback. If you prefer a simple strategy for collecting and redeeming rewards, a no-fee cash-back card is hard to beat.

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