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Comparing Cash Back vs. Points or Miles

Last Updated: December 17, 2021
6 min read

A rewards credit card can be a simple way to earn benefits on your everyday purchases. There are so many rewards credit cards to choose from, though. How do you know which one is right for you? For starters, it’s important to understand the differences between cash back, points and miles. It’s not always straightforward, because a “point” or “mile” might mean something completely different depending on the card issuer’s rewards program.

What’s the difference between credit cards that give cash back, points and miles rewards?

Broadly speaking, there are three broad types of credit card rewards: cash back, points and miles. However, it might be easier to make sense of how they’re different if you focus on the type of credit card rather than the actual names of the rewards.

  • Cash back rewards. As their name suggests, you earn cash back on your purchases with cash back cards. Often, you can then redeem your cash back rewards for statement credits that you can use to pay your credit card charges, shopping credits you can use at certain merchants, or as a cash deposit into your bank account.
  • Card-issuer rewards points. Some rewards credit cards give you points in the card issuer’s rewards program. Generally, you’ll have different redemption options, such as cash back, gift cards, merchandise or booking travel, and the value of your points could depend on your choice.
  • Travel card rewards miles. Several card issuers have travel credit cards that will give you miles for your purchases. Depending on the card, you may be able to redeem your miles as a statement credit toward travel purchases. But you can sometimes use the miles for non-travel redemptions as well.
  • Loyalty program points and miles. An airline, hotel or retail credit card will give you points or miles in the associated company’s loyalty program. You can then redeem the points or miles through the loyalty program rather than with your credit card issuer.

The specifics can get a little murky, though. For example, some cards that are labeled “cash back cards” will actually give you points in the card issuer’s program. You can redeem your points for cash back, but you may have other redemption options as well.

Are credit cards with cash back, miles or points rewards better for travel?

Having a specific goal in mind can make choosing a rewards card easier. If you’re focused on using your rewards for travel, there are a few pros and cons to consider with each option.

Card-issuer rewards points vs. cash back

Card-issuer rewards points may offer flexibility, as you can often redeem the points for cash back or use them to book travel. You may also be able to transfer your points to partner loyalty programs and then book a rewards flight or hotel stay. The variety of options can make points programs appealing, and the transfers can lead to high-value redemptions, particularly when you’re booking luxury travel. But you want to be sure to look at the specifics.

For instance, you might only receive a good redemption value per point if you use the points in a specific way, such as booking travel through the card issuer’s travel portal. However, the travel portal’s options may be limited. Also, your points might be worth less if you want to use non-travel redemption options.

Cash back rewards can be simple to use. Generally, you know exactly how much your rewards will be worth. You can also redeem your cash back rewards in different ways regardless of where you made purchases.

Loyalty program points or miles vs. cash back

An airline or hotel credit card may be a good pick if you have a favorite airline or hotel chain, or one that you use often. For instance, if you live near an airline’s major hub, getting the corresponding airline credit card and earning miles could make sense. Especially if you can also benefit from the card’s other perks, such as free checked bags.

The downside is that you may be limited to redeeming your miles for flights through the airline—or hotel nights at the chain. Your rewards’ value may also depend on current travel costs, and there’s also no guarantee that the program won’t change its rules and require more miles or points to redeem your rewards in the future.

Cash back isn’t specific to a single airline or hotel chain. The value of your cash back rewards may also be easy to calculate, although card issuers can impose rules on their cash back rewards programs. You also won’t find many company-specific travel perks with cash back cards.

Travel card rewards miles vs. cash back

Travel card rewards miles are often similar to cash back cards. For example, with the Discover it® Miles travel card, your miles are worth 1 cent each, and you can redeem them for cash or use them as a statement credit to cover travel expenses.1 The best options may come down to the cards’ earning rates and other benefits, rather than the name of the rewards’ tracking mechanism.

When is cash back better than other types of rewards?

Cash back may be better than other types of rewards if you want simplicity, don’t want to be locked into using points or miles for a specific type of travel booking and generally don’t book high-end travel. Plus, you’ll always know how much your rewards will be worth, and the value won’t increase or decrease based on current travel costs or a loyalty program’s rules.

But you still want to compare cash back cards to determine which card will be best. Some cash back cards require you accumulate $20 or more in cash back before redeeming your rewards. Also, check to see if the rewards expire. (Discover rewards redemptions start at one penny, and rewards never expire.1)

Do you have to choose between cash back, points and miles rewards?

You don’t necessarily have to stick to a single type of rewards credit card for all your purchases. In fact, some people like to match a rotating rewards card with a flat-rate rewards card to maximize how much they earn.

For example, the Discover it® Cash Back Credit Card offers 5% cash back at different places each quarter on up to $1,500 in purchases when cardmembers sign up and 1% cash back on all other purchases. You could use the Discover it Cash Back Credit Card on purchases that earn 5%, and the Discover it® Miles, which gives you 1.5 Miles per dollar spent, on other purchases.

But keep in mind, applying for multiple cards could lead to new hard inquiries in your credit report, which may hurt your credit scores.

Some credit issuers also offer you with the ability to see if you are pre-approved for credit card offers, which may not impact your credit score to check.

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