Cash Back or Airline Credit Cards? What’s Best For Travel

by The Smarter Wallet on Deals and Offers

There are hundreds of reward credit cards to choose from as we enjoy a very competitive market. All reward cards can be divided into cash back cards or loyalty point cards. The most common loyalty point cards are the ubiquitous cards that offer frequent flier miles. For many travelers, the first decision they have to make when choosing a reward card is whether or not they should apply for a card that earns frequent flier miles, or simply opt for a cash back card.

Cash Back or Airline Credit Cards? What’s Best For Travel

Cash back credit cards have the advantage of being fairly simple. Many cards, such as the Capitol One No Hassles card offer a fixed percentage of cash back. Others provide different percentages for different types of purchases. If you are using your card for a lot of purchases of a certain type, this particular type of card can be advantageous. Here’s an interesting calculator.

Some samples of top cash back credit cards:


Airline credit cards have several advantages of their own. Many come with perks that are specific to an airline. You can get elite qualifying miles to help you move your status up to the next level. This is a key benefit for travelers who are trying to move up the upgrade and standby lists. Elite level frequent fliers also get their ticketing and change fees waived and enjoy greater access to award seat inventory. Some airline cards even offer waived checked bag fees.

Some samples of top airline credit cards:

Another advantage of frequent flier credit cards is that their points, in some instances, can be worth more than the cash you would have received from a simple cash back card. If you have some flexibility when you make your travel plans, you can find premium class international tickets that return value well above the 1-2% you would normally receive from a cash back card. Here’s a list.

For example, if your goal is to take a trip to Rio in business class some time in the winter, a frequent flier card could allow you to redeem miles for a ticket at a great rate of return. If your goal is to take a family across the country for Christmas or Spring break, you are likely to be frustrated by the lack of availability of award seats on your specific travel days, especially during holidays. Also, solo travelers and couples are more likely to be able to utilize frequent flier miles, while families requiring more award seats on the same plane will have a much more difficult time.

Another factor is the airline offering the miles. Ten years ago, miles were pretty much equally valued across different programs, while today, airlines have widely varying redemption levels and award availability. Among the major airlines, Southwest and American airlines offer the best award availability. Continental is just below, followed by US Airways and United. United is in a class of its own, as they employ a practice known as Starnet Blocking to restrict partner awards that are available to other members of their Star Alliance group. At the bottom of the rung is Delta, which typically charges the most miles for awards while having an online redemption tool that can charitably be described as broken. Do your research and take these factors into account before committing to an airline’s frequent flier card.

So Should I Get The Cash Back or Frequent Flier Card?

My answer is “both” and “neither”. Get both cards so that you can have the flexibility to earn either type of award as necessary. You may also wish to get a flexible reward card such as the American Express Starwood card or any Amex that earns Membership Rewards points.

In each instance, you are earning points that can be transferred to various airline programs, or redeemed for other rewards. Flexibility is the real key to earning the most valuable rewards possible from your credit card. Finally, no discussion about reward cards can be considered complete without mentioning the simple fact that reward cards are only for people who always pay their balance in full and on time. Anyone who carries a balance is much better off choosing a card that forgoes rewards altogether while offering the most competitive interest rate. Rewards are great, but at best, they are only a small percentage of even the most competitive interest rate.

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