Are You Better Off Earning Cash Back Instead of Miles for Your Credit Card Spend?

On Thursday I mentioned the Priceline Rewards™ Visa® Card from Barclays, buried in a discussion of the AviancaTaca LifeMiles program.

The mention there was that it’s probably better to earn cash back from credit card spend and then use the cash to buy LifeMiles when they’re offering a 100% bonus (because that costs 1.5 cents per mile) than it is to earn 1 mile per dollar with the LifeMiles Visa.

And I realized three things.

  • That the Priceline Visa is a little-known gem that hasn’t gotten much coverage
  • That it can be a better strategy to earn cash back and use the cash to buy miles, than to put spending on a mileage-earning credit card
  • That many people are better off with cash back anyway, and it’s worth a discussion of who that applies to and under what circumstances.

When is a Cash Back Card Better than a Mileage-Earning One

There are plenty of cash back cards in the world, most of them are good for 1% on most purchases and then there are occasional bonuses or category bonuses that make you feel like you’re doing better than that.

There are fans of the Capital One Venture card which earns 2 points per dollar spent, and each point can be worth up to a penny, meaning that if you spend your points in exactly the best way you can earn up to 2% cash back.

There are better options than that, though, like the Fidelity Investment Rewards American Express card which earns 2% back on all purchases in the form of actual cash that gets deposited into a brokerage account.

That card is effectively the opportunity cost of earning miles with your credit card spending.

That means every dollar you put on a mileage earning credit card that does not earn any bonuses — every dollar that just earns one point — is costing you two cents. In other words you are buying miles at two cents apiece each and every time you put a charge that earns one mile per dollar on your credit card. Which is more than most people think they’re happy buying miles at!

Of course the best use of your spending is meeting minimum spend requirements on credit card that earn bonuses.

And beyond that I actually like earning 1 point per dollar with my Starwood American Express card, my Chase Sapphire Preferred and Chase Ink Plus and Ink Bold cards (which earn Ultimate Rewards points), those have huge flexibility to transfer to a number of different airline mileage programs which is very useful to me.

But there are people who shouldn’t be earning airline miles with their everyday credit card spend. Anyone who wants to redeem for domestic coach awards, and sometimes international coach awards, would often be better with a cash back card. You then use the cash to straight up buy the airline tickets, don’t have to worry about flight availability, and those flights even earn miles and count towards status.

The best use of miles in my view is for premium cabin international awards, and cash back cards are not good for that — you’ll wind up having to put half a million dollars on a cash back card, perhaps, before you can buy such a ticket. But people not interested in premium cabin awards should consider something else.

If you want coach travel, it’s hard to imagine doing better for your everyday spending (not spending that counts towards bonuses) than the Citi Thank You Premier card since there’s an offer of 2 points per dollar on all of your spending for 2 years and those points can be worth more than a penny apiece when redeemed for airline tickets.

The Priceline Visa as Hidden Gem We Should All Know About

If you want cash back, though — real cash, not credit towards airline tickets — the gold standard has been the Fidelity Investment Rewards American Express card.

But the The Priceline Rewards™ Visa® Card is actually probably an even better card.

It’s a Visa so has broader acceptance than an American Express. Like the Fidelity card it has no annual fee. It also earns 5% cash back on Priceline Name Your Own Price bookings, and a $50 credit after first purchase.

You can redeem starting at 2500 points for a $25 statement credit that applies to a specific purchase you choose on your card statement, within 30 days of posting (there are some excluded purchases like gift cards). You have 90 days to apply points to Priceline name your own price purchases.

It’s the no fee 2% cash back card that people just don’t know about.

Using Cash Back to Buy Airline Miles

If you earn 2 cents back per dollar, and use the 2 cents to buy airline miles for less than that, you come out ahead compared to earning 1 airline mile per dollar spent on the credit card.

US Airways is the classic example, they sell miles much of the year with a 100% bonus and those miles then cost a bit over 1.8 cents apiece.

You could put a charge on the US Airways Mastercard and earn 1 mile.

Or you could put a charge on a 2% cash back credit card, earn 2 cents, buy a US Airways mile… and have a small portion of that cash back leftover.

Similarly, AviancaTaca’s LifeMiles program offers mileage purchase bonuses several times a year, and when they do you can buy miles at 1.5 cents apiece.

So you could put $3 in charges on the LifeMiles Visa, and earn 3 LifeMiles. Or you could put $3 in charges on a 2% cash back and earn 6 cents — which buys 4 LifeMiles.

This Strategy Isn’t For Me — Should it Be the Strategy for You?

I want to be clear, this is a strategy that works for some. It highlights what miles are worth, and what they aren’t worth.

Every time you earn 1 mile per dollar spent on an airline miles card, you’re buying that mile at 2 cents because you could otherwise be earning 2 cents on the Priceline Visa or Fidelity American Express.

I don’t have a cash back card. I earn miles. I use my spending to earn credit card bonuses. And I even earn 1 point per dollar — 1 Starwood point with my Starwood American Express or 1 Chase Ultimate Rewards point, and I am effectively buying that point at 2 cents. And getting outsized value for that 2 cents.

But I wouldn’t earn 1 mile per dollar on a US Airways Mastercard (even though I have that card). I’d rather earn 2% cash back, and then buy US Airways miles at a bit under 1.9 cents apiece when they have a 100% purchase bonus. Cash is more flexible, and in this case it’s also a better deal.

In fact I’m even reluctant to buy US Airways miles at 1.9 cents, because I already have plenty and I think there’s some risk to US Airways miles — a risk of award chart devaluation (it’s been about three years since they last did that) and a risk that the airline adopts a revenue-based model for its frequent flyer program (although a merger with American could forestall that).

And if I’m not a buyer at 1.9 cents, I certainly shouldn’t be a buyer at 2 cents.

I should also say that the Priceline Visa offers referral credit to me if you use my link to sign up and are approved. I don’t get any credit for the Fidelity American Express card. Cash back cards are a popular category and I want to highlight the very best ones, and also point out that my own strategy is wedded to miles and points and not to cash. But some will find these to be great opportunities.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary ┬╗

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  1. The Fidelity Amex can be converted to a Visa while preserving the 2 cents per $1 feature. I did it about six months ago. It’s an interesting trick because if you apply for the Fidelity Visa directly, you get 1.5 cents per $1.

    The advantage of the Fidelity card over the Priceline card is that Fidelity is issued by FIA (a sub of BofA), while Priceline is issued by Barclays. Barclays has notoriously bad customer service (google the forums) so if you ever run into a problem with a return or some other reward issue, you’re pretty much SOL with Barclays.

  2. Gary, you seem to forget that int’l coach tickets on miles may have very flexible routes (e.g. one ways or United with more than one destinations) and many others that are very expensive when bought using cash.

  3. Also, for CA and other state residents the JCB Marukai card gets over 3% on spend over $3k+. I think Gary has mentioned this card before. I’d also keep on the lookout for better-than-2% cards that appear from time to time. They generally escape the attention of the bloggers, who tend to be more miles focused. In the last year, the BofA Privileges card was initially introduced as a 2% Visa with a 10% annual bonus. A few years ago, Barclays offered a Travelocity card that was essentially 4% cash back on all spend. If you grab these when they’re offered you can build a nice collection of cash back cards that get grandfathered even when the card companies typically later reduce them to less-favorable reward structures.

  4. Why compromise? If you want cash back instead of miles I suspect you can probably switch to this card from another Barclay card. If so, why not get the best of both worlds? Sign up with non-affiliate US offer, buy a pack of gum, get the 40K US sign up bonus with annual fee waived, then switch to the Priceline card.

  5. @bluto
    I have the Fidelity AmEx and would love to know how to convert it to a visa. You can pm me on flyertalk if you like. Thanks!

  6. I got the Priceline card as part of my recent churn that included 4 Barclays cards, all merged to one TU pull, but a 5th went to pending and triggered a pull a week later. I had tried to get the Priceline card, along with an US Air, in the summer when I reviewed it as possibly the best cash back card. For Barclays first-time applicants it is rare to get approved for more than one. Second time around you can snap up a bunch, more detail here.

  7. Every time there’s a discussion of non-miles cards, I expect someone to mention Citi ThankYou Premier – and no one ever does. Granted, it used to be a much better card when you could convert 90K TYP into a $2700 ticket, but under the right circumstances it still can be a very good card for domestic travel. As long as 1) for every dollar you spend you fly a mile paid in cash, and 2) all TYPs are used for travel, this card will bring 2.66c/$1.

  8. @HikerT as I emphasize best use of spend is signup bonuses, I don’t think I ever told anyone NOT to get a signup bonus for the US Airways card?

  9. For the past year and a half my strategy has been to earn miles and points via credit card bonuses; and once I have enough miles and points to meet my travel needs, virtually all of my spend goes on either my AMEX Blue Cash Preferred at 6% cash back or the Priceline Visa for 2% cash back. I have six miles and points cards which have value to me because of free hotel nights, free checked bags or other perks; so I use them occasionally to keep up some activity.

  10. I don’t use cash back for two reasons: 1) The points I want usually can’t be bought for less than two cents such as united/Hyatt so I’m happy to buy them for two cents each since I usually get much more than that out of them. 2) if I got money back as a statement credit, I would just spend it on other stuff. But, with miles I think of it as an automatic savings account that forces me to save for future trips.

  11. Gary, you didn’t say not to get a signup bonus for the US Airways card. Did I say you did? But you did present only one option for getting the Priceline card. It’s easy to forget about other options for obtaining cards you might want that don’t burn an inquiry. I obtained my AMEX Simply Cash card this way.

  12. @Gary ugh. I have no idea how I managed to read the whole post (that is, I thought I had read it) and miss that. Shame on me. Though you don’t talk about Flight TYP, which is what makes the card amazingly good with the intro offer, and still pretty decent without it.

    @SgFm 2.66 is 1 TYP for spend + 1 TYP for every mile you fly on tickets purchased with the card (being able to buy business travel on your card and then get reimbursed would be one great scenario for this), and 33% bonus when buying tickets through This ignores the intro offer Gary linked to. New signups with the 2 Purchase TYP intro could get 5.32c/$1 for the first two years: (2 Purchase TYP + 2 Flight TYP) x 1.33.

  13. A-ha, found the whole thing. Gary had a follow up post, where the 5.32% figure does come up. So, I haven’t really contributed anything.

    (Crawling back under my rock.)

  14. FYI I have the Fidelity Visa which earns me 2%. However the first 15K in charges it earns 1.5%. Charges after the first 15K come in at 2%. My business partner has the 2% AMEX card. Ill get that one also. Gary puts things straight in this post. For many people the cash back is a better deal. Even for me and I do premium travel internationally there may be a limit to how many tickets I need anyway. Devaluing is always something that can happen. Cash devalues at a slower rate. I like the comments about earning cash and using that to buy miles if needed. I have never bought miles myself though.

  15. I’m always surprised the Capital One Spark Cash card doesn’t come up when 2% cash cards are discussed – it’s also a Visa and has no cash back limit.

  16. @Jared that’s fair, it’s a good small business cash back card for sure. CapOne gets bad wraps for lots of reasons but that’s a good business card product.

  17. Bluto- You are right about Barclays. I rarely have any real issues (other than chase) but that is another story. Barclays is beyond terrible. Their customer service flat out stinks. They are clueless about most of their programs and the reps just dont know what is going on. FIA has truly excellent service.

  18. Rapid Travel Chai-I never had luck getting any second Barclays card but the next time I try I will have zero on my Travelocity card to see if that helps. Many yrs ago Barclays had a business credit card with a 18 month 0% rate with zero costs. I hit that card and so did my business partner. Those were the good old days. I will try your tips on my next AOR. Credit always has been AAA+ Btw

  19. Sometime I’d like to see a post and discussion on best cash-back or mileage earning cards/strategies for expats living overseas. We need no (or VERY low) foreign transaction fee cards. We can’t take advantage of spending categories and the like. Not much out there that comments on our specific needs, but over 5 million of us out there.

  20. If you are 5xing then you are still better off getting points than cashback even if redeeming for domestic coach.

  21. Leo, Gary – intl coach award tickets are also much lower cost for changes and cancellations, and for last-minute ticket purchases.

  22. Gary, the current landing page for the priceline card shows an additional 5000 bonus pts with $1000 spend in 3months. However, it only earns 1pt per $1 on every purchase vs 2pts. I’m wondering if theres a way to take advantage of the better signup offer of $100 cashback + 2% cashback on everything else.

  23. I even tried to use the correct link (“Use the correct link” link in referenced article) for the 2-points-per-dollar Priceline Visa and it only shows 1 point per dollar. So, is the 2-points-per-dollar form of the Priceline Visa card gone now?

  24. Sad… I too am more of a cash-back guy than a miles guy so this post was very promising. Please keep us posted on any better options than the Fidelity Amex…! I’m subscribing to this thread.

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