As the old saying goes, cash is king. This couldn't be more true when it comes to credit card rewards. Yes, airline mile rewards provide some advantages. But if you want to get the most value out of your credit card, then having a cash back card is a must. Why? For starters, cash back rewards have a fixed value that is determined in dollars and cents. Airline miles won't put gas in your tank. And rewards can't be used at the grocery store. Cash, as you likely know, is accepted everywhere.
Okay, so I clearly like cash back. But my argument goes a little further than cash is king. A great way to illustrate this is to compare cash back to rewards points. With cash back, you earn from one to five cents for every dollar spent depending on the terms of the particular card. With rewards points, you also earn a set amount of points for every purchase. However, the value of a reward point usually isn't one cent. In many cases, it can be as little as half a cent. Plus, credit card companies can devalue points at any time, for any reason. So, if a credit card company decides it wants its points to be worth $.0025, then you'll need four times as many points to have the equivalent of one cent. (See Points are NOT the Best Credit Card Rewards for more on this issue.)
Hopefully, I've convinced you that cash back is superior to points. Arguing against airline credit cards, however, is a little more difficult, especially for frequent flyer mileage junkies. If you fall into this category, you know how to rack up airline miles and know how to leverage them into perks that exceed dollars and cents. Most people, however, will find that airline miles are much less useful than cash back.
The first type of airline card, the ones linked to a specific airline, are great for heavy travelers that stick to one airline. These cards often are promoted with thousands of free miles and no annual fee during the first year. Unfortunately, after the first year, annual fees kick in. Plus, interest rates are often two to five percentage points higher than on cash back cards. Lastly, if you're earning miles with one airline, you're putting yourself at the mercy of that airline. Not only will you have to settle for the price they are asking, but you may have a hard time getting the flight you want.
The second type of airline credit card offer, one that allows you to earn points on any airline, is a better option if you must have airline rewards. These cards generally have no annual fees, lower interest rates, and bonus mile promotions that are similar to their airline linked cousins. However, you do need to rack up a lot of miles to get a free flight and, if you had a cash back card, you could redeem your cash and use it to buy the lowest cost ticket available.
So, unless you're like George Clooney in Up in the Air, getting an airline or rewards points card will likely prove to be less useful-and less profitable-than a cash back credit card. As I said before, cash is king and cash back is the king of rewards.
To estimate how much you could earn with a cash back credit card, try CardWisdom's rewards calculator. To compare offers and apply online, please see the cash back credit card section of CardWisdom.
