I receive compensation for many links on this blog. You don’t have to use these links, but I am grateful to you if you do. American Express, Citibank, Chase, Capital One and other banks are advertising partners of this site. Any opinions expressed in this post are my own, and have not been reviewed, approved, or endorsed by my advertising partners. I do not write about all credit cards that are available -- instead focusing on miles, points, and cash back (and currencies that can be converted into the same).
If you put a dollar of spending on a credit card, your opportunity cost is the two cents you’d earn with a 2% cash back card. If all you’re earning is one airline mile, you’re effectively buying that mile for two cents.
The simple way to see that is you can earn 1% when you make a purchase and 1% when you pay for the purchase with a no annual fee Citi Double Cash Card. You’re giving up cash when you put spend on a miles credit card. So you should be getting a higher rate of return in order to do that.
2 cents is more than most people are willing to spend for miles. For instance, I don’t recommend most people buy American Airlines miles when they’re on sale for 1.8 cents or 2 cents.
The good news though is that you can consistently get better than a 2% return on your spending even without limited-time offers or category bonuses that apply only to a portion of your spending.
There are three ways to do it.
Chase Freedom Unlimited
Chase Freedom Unlimited earns 1.5 points per dollar on all spending. (The information related to Chase Freedom Unlimited credit card has been collected by View from the Wing and has not been reviewed or provided by the issuer of this card.)
If you also have a Chase Sapphire Preferred Card you can move your Chase Freedom Unlimited points to your Sapphire Preferred account and from there to airline miles or hotel points.
Since I value Sapphire Preferred’s points at 1.9 cents apiece, earning at 1.5 points per dollar on Freedom Unlimited means this strategy nets you a 2.85% effective rebate on spend without any other bonus. That’s unparalleled for earning on an ongoing basis.
Starwood Preferred Guest American Express
The Starwood Preferred Guest® Credit Card from American Express only earns one point per dollar but it earns Starwood points and I value those at 2.3 cents apiece.
They have the most airline transfer partners where points transfer 1:1 and of course when you move Starwood points into 20,000 miles you get 5000 bonus miles. That gets you effectively a 1:1.25 transfer ratio with most airline partners.
With the addition of Korean and Aegean as transfer partners, on top of existing programs like American, Japan Airlines, Singapore, and Alaska) I’d probably raise my valuation of Starwood points but I’m waiting to see what happens with the Marriott integration.
Putting unbonused spend on these three cards can all consistently get you better than 2% on your otherwise-unbonused spend, meaning that they’re better than a 2% cash back card and better than earning 1 mile per dollar with an airline card.