I’ll start with the spoiler of all spoilers. It depends wholly on who you are, what you value, and how you operate. If you’re all about the cold hard cash, then likely straight cash is the best option. If you get an extra kick out of free things, and are willing to trade some flexibility for extra value, then miles or points can give a little extra kick. Below I’ll quickly outline my thoughts and reflections here, as well as a few specific cards that might scratch the itch across the various categories.
Let’s talk Cash
Cold hard cash is sweet. Easy to redeem. Easy to value. 2% back means spend $100, earn $2. No nonsense. Many points programs also have the ability to easily redeem points for cash, providing a clear floor of value (ex. Bank of America “points” are worth $0.01 for statement credit).
There are flat earn rate cards. A few no-fee examples: (not comprehensive)
- Wells Fargo Active Cash @ 2% everywhere
- Citi Double Cash @ 2% everywhere (1% on earn, 1% on payment)
- US Bank Smartly @ 2% everywhere
There are high category earn rate cards. A few no-fee examples:
- Discover It @ 5% rotating (currently Grocery Stores, Wholesale Clubs, Streaming)
- Bread AAA Travel Advantage @ 5% Gas Stations
- American Express Blue Cash @ 3% Online Purchases
But is cash king? Let’s quickly talk Points & Miles
Where cash provides predictable value and consistency, points and miles products offer a wider range of high-value redemption, either through explicit design, or through flexibility of related programs. Perhaps even more rewarding (but harder to value), is the ability to redeem for experiences you might not otherwise spend your own money. The inherent value of the “free trip to Europe” is somehow even more memorable and valuable than the straight cash cost for that flight.
- Many bank-based programs provide the flexibility to transfer points — this array of travel partners means that it’s possible to get meaningfully more value of any points by taking advantage of high-value redemptions or promotions
- Partner redemptions are often complex, but there’s meaningful value behind the scenes — while Delta points are worth at minimum $0.01 (as they have a fixed for-cash offset), they’re often worth meaningfully more when taking advantage of available offers. That is not to say there is always a good deal, but there are OFTEN good deals when looking at redemptions across loyalty programs. Sometimes there are even special offers (ex. Hilton points redeemed for Time Share Ownership dues are worth $0.005/point, which is ~50% more than the typical redemption value is).
- The ideal schedules and preferred dates are often more expensive for points redemption, so being flexible will allow you to find the best deals. If you play the game smartly, you’ll be able to eek substantially more value out of your points by being more flexible yourself.
- There is a long game to play. It’s possible to bank points and wait on the perfect redemption (the dream vacation in Bora Bora, the business class tickets to Europe, etc.) My experience highlights that it is worth holding a decent bank of points across currencies/programs to allow you the flexibility.
If you don’t travel, I’d argue that this flexibility is worthless, and that you should instead focus on cash or cash-like currencies (ex. currencies that can be redeemed for high value for statement credits).
I won’t list points/miles cards here as there is such an array, the right one entirely depends on your situation, and often even your location/local airport.
What’s my approach?
The truth is that I love all rewards. Shower me with the cash. Show me the sweet, sweet miles. I’m willing to sacrifice ideal itineraries for improved value. I’d estimate that flexibility allows me to get twice the value out of the “free” that I would otherwise manage. I’m also willing to accept complexity of multiple cards and multiple signups to maximize rewards and provide that flexibility. I will absolutely take cash, but “free” travel is a bit extra special when it is in fact free/redemption based.
To help manage this, I’m highly deliberate in valuing the different currencies and optimize my spend and activity based on that. For example, I value a range of points with non-fixed values for redemption as shown below:
- AMEX Membership Rewards @ $0.01/point (last redemption was $0.0223/point) – transferrable points
- Chase Ultimate Rewards @ $0.0125 (last redemption was $0.0125/point) – transferrable points
- Capital One Miles @ $0.01 (last redemption was $0.0144/point) – transferrable points
- Hilton Honors Points @ $0.0035 (last redemption was $0.0037/point)
- Delta Miles @ $0.0176 (last redemption was $0.0223/mile)
- American Miles @ $0.0125 (last redemption was $0.0139/mile)
In summary, the right choice for you really only requires you plan and strategize what you’re looking to get out of “free”, as that can mean so many different things.
Post-ending gif
