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There have been lots of award chart devaluations in the last few weeks, and I suspect this trend is not yet finished.  It’s not abnormal this time of year, though it does seem to be hitting pretty hot and heavy this time around.  I’ve read comments from some people that they want to switch away from their miles and points loyalty credit cards to cash-back or fixed value credit cards because of the devaluations.  I’m not personally switching from my rewards cards completely any time soon, but I think it is extremely important to look at your travel goals and see which type of card makes sense for your everyday spending.  For some people it absolutely makes sense to put their everyday spending on a cash back of fixed value point credit card as opposed to a miles and points earning cards.

I don’t want to put together an overwhelmingly long list of options, but instead I’ll go through a few of my current favorites, as well as a few hybrid options in case you aren’t ready to commit totally one way or another.

Fixed Value Point Cards:

These cards are good if you want to use the points/money generated from your credit card spending toward travel, want total date flexibility, and typically make your redemptions on less expensive economy flights and relatively economical hotel options.  These are not the right cards to focus on if your travel goals include international premium cabin travel, expensive top tier hotels (like say the Park Hyatt Paris-Vendome or Park Hyatt Maldives), or even expensive economy airline tickets.

With these cards you will earn points that are worth a fixed value – often 1 cent per point.

Barclaycard Arrival(TM) World MasterCard® – Earn 2x on All Purchases:

This card awards 40,000 points worth $400 toward travel after spending $1,000 on the card in the first three months.  It also awards 2x on all purchases, so it can be a good card for those who don’t want to have to remember which card to use for which bonus category.  This means that if you put $4,000 on the card in a month then you earn 8,000 points.  Those 8,000 points are worth $80 toward travel.  When you redeem those 8,000 points, say toward a $100 charge on your card for a hotel room (leaving you responsible for $20) then you will end up getting 10% of the points (800 points) back to use on another redemption in the future.  That means that this card is essentially giving you 2.2% of what you spend to use toward travel expenses charged on the card.  This card has a $0 annual fee the first year, then $89 in subsequent years. 

Capital One Venture Rewards Card: (Offer can be accessed via the Card Match Tool)

The Venture Rewards card is pretty well known and it had a fantastic sign-up bonus of 100,000 miles a few years ago (no, don’t hold your breath for that to return), but the sign-up bonus now is 10,000 miles once you spend $1,000 on purchases within the first 3 months.  Just like with the Arrival card, the miles/points are worth 1 cent each toward travel.  Also just like the Arrival card, you earn 2x on all purchases and have no foreign transaction fees.  The main difference (other than the sign-up bonus) is that this card does not give a rebate on redeemed points, so the card simply gives 2% of what you spend back in the form of miles you can use on travel charges on your card. This card has a $0 introductory fee for the first year, $59 thereafter.

US Bank FlexPerks Travel Rewards Visa Signature:

The FlexPerks card has some value that is even higher than the previous two cards mentioned, but to maximize the value you have to be willing to use a bit more strategy.  The card offers a sign-up bonus of 20,000 Bonus FlexPoints after the first $3,500 in purchases in the first 150 days.  This sounds like a smaller sign-up bonus than the Arrival card, but in reality it is pretty similar because the points on the FlexPerks card are worth up to 2 cents each toward flights.  So, the sign-up bonus can be used for a flight that costs up to $400.  The flight redemptions are the most valuable on the card, but they are only maximized when the flight costs close to $400, $600, $800, etc.

The card earns one FlexPoint for every $1 of eligible purchases charged to your card, two FlexPoints for every $1 spent on gas, grocery or airline purchases – whichever you spend most on each monthly billing cycle – and on most cell phone expenses, and triple points on charitable donations.

Since the points are worth up to 2 cents each toward flights, this means that using it for grocery expenses nets up to a 4% return on each dollar you spend.  Charity donations (including Kiva loans) ring in at up to a 6% return.  However, while this card is more lucrative in earning fixed value points toward airfare on certain types of purchases, that is only valuable if you are willing to put some thought into earning and redeeming.  I love this card, but I also love a little strategy.  This card has a $0 annual fee the first year, after that $49.

Hybrid Rewards/Fixed Value Cards:

If you want the option of using points as cash, but still want to retain the ability to use your points as airline miles or hotel points, then I recommend cards that earn points that can do both.  The caveat to this is that your fixed value or cash back earning potential will be lower than if you used a pure fixed value point or cash back card like the ones listed in this post, but if you mostly just use your points to transfer to hotels/airlines, but want the ability to use occasionally as cash from time to time, then these can be good options.

Chase Sapphire Preferred® Card

Every miles and points collector should get this card as it is pretty simple, but very useful.  It awards 40,000 bonus points after you spend $3,000 in the first 3 months from account opening.  You earn 2X points on travel and dining at restaurants and 1 point per dollar spent on all other purchases.  You also get a 7% dividend on all points earned once per year, so you are really earning 1.07 on most purchases and 2.14 on travel and dining.  These Ultimate Reward points can be transferred 1:1 to United, British Airways, Hyatt, Marriott, IHG Rewards, Korean Air, Southwest, and more.  You are somewhat protected against award chart devaluations because of the large number of options and transfer partners.

However, if you want to just use these points as cash toward travel then they are worth 1.25 cents each when you redeem through their Ultimate Rewards Travel site.  That means the 40k points sign-up bonus is worth $500 toward travel.  You can also use the points as straight cash back as a statement credit at a rate of one point = one cent.  With this card you can use the points as hotel/airline points, at 1.25 cents per point toward travel, or at a flat 1 cent each as a statement credit.  This card has an introductory $0 annual fee the first year, $95 in subsequent years.

American Express(R) Premier Rewards Gold Card

Amex has a somewhat similar product that awards 25K Membership Rewards points after you spend $2K during your first three months.  You will earn 3X points for flights booked with airlines, 2X points at US gas stations and US supermarkets, and 1X points on other purchases.  You can transfer these points to Membership Rewards hotel and airlines transfer partners including British Airways, Delta, Hilton, ANA, Aeroplan, Hawaiian Airlines, Choice Hotels, and more.  Best of all, they sometimes offer transfer bonuses which improve the transfer rates to these partners!

However, if you also want the option to use your points you can use them toward travel or against other statement charges at a rate of 1 point = 1 cent.  So, 10,000 points would equate $100 toward travel or as a statement credit.  this card has a $0 introductory annual fee for the first year, then $175 in subsequent years.

Pure Cash Back Cards:

If you just want cash back to use toward anything you want, there are a few good options out there to consider.

Capital One Quicksilver Cash Rewards Credit Card: (Offer was accessed via the Card Match Tool as of 11/15/13.  The offer may or may not be available for you)

This card gives a one-time $100 bonus after you spend $500 on purchases within the first 3 months and then allows you to earn unlimited 1.5% cash back on every purchase, every day.  It also has no annual fee, so is a pretty easy no-brainer card for someone that wants a simple and free cash back card. 

Spark Cash Business Credit Card:

This is a business card that gives 2% cash back on every purchase.  It also pays out a one-time $100 bonus once you spend $1,000 on purchases within the first 3 months and a one-time $50 bonus when you sign up for one or more employee cards within the first 60 days.  There is a $0 annual fee the first year and $59 in subsequent years.

If you want money deposited into a retirement/college/investment account, are okay with rotating or fixed bonus categories, live in certain states, have certain military affiliations, etc. there may be some even better cash back options out there, but I wanted to keep this list pretty simple.  Bottom line, is it isn’t hard to find a card that pays 1.5% – 2% cash back, so make sure you are getting that level of value from the miles and points you earn via your credit card spending or you are costing yourself in the long run.  Let me know if you have questions and I’ll do my best to get you some answers or suggestions!  Also, if I left off one of your favorite options feel free to let me know!

 

Disclosure: I do receive a commission if you are approved for a credit card using one of my affiliate links.  As always, thanks for your support. 

Posted by mommypoints | 13 Comments

13 Responses to “Cash Back Cards vs. Fixed Value Cards vs. Miles and Points Credit Cards”

  1. Mark R. says:

    Another main difference between the Barclay & Capital one cards:

    Barclay – if you have a $100 travel expense and 8,000 points you can offset $80 and owe $20.

    Capital One – if you have a $100 expense you must have 10,000 points to offset the whole expense (no partial offsets.

    Plus, like you said, the Barclay card gives you 10% of the points back. I’ve stopped using the Cap One and switched to the Barclay.

  2. mommypoints says:

    Mark, agree the Barclay Arrival card is superior in my view.

  3. DWT says:

    Although it has a high annual fee of $400, another option is the Citi Prestige card. If you charge a lot of airfare and are able to match each $ of spending with a corresponding Flight Point, you are effectively getting 2.66% back to be used toward the purchase of airfare. This card reimburses $200 a year on airline incidental spending and also includes a worldwide companion ticket in coach, so for frequent fliers it’s not hard to reclaim the annual fee.

  4. Choochmac says:

    I received a targeted offer a few months ago for AE Bluesky. 30,000 points for $500 in spend with no annual fee. It only gives back 1 point on purchases, but credits $100 at $7,500 points on travel purchases so effectively 1.33 cash back on travel. It is not as good as 2 points like Arrival, but with no annual fee it is a good back up spend card I feel. I would use Arrival if using cash back as primary card, but the annual fee eats up a lot of return if you are only putting a few thousand on it (like I do). Plus it can stay in your wallet since no annual fee. I now put all of my Costco purchases on it.

  5. Lynn says:

    Another thing to consider is whether there are any checking or partner options that go along with the cards. For instance, I have the Venture card, and I also bank at Capital One. I have the Premier rewards checking acct which awards points for every check I write, and I have a Capital One Money Market acct that earns a pretty decent amount of points every month based on the daily balance in addition to interest (I don’t think they offer the MM acct any more). I consider these “passive points” earning because I don’t do anything to earn them but have my regular bank accts.

  6. askmrlee says:

    Why is there no mention of a simpler card like the American Express Rewards from Fidelity Investments, issued by FIA Card Services (a Bank of America company)? This is a simple 2% award which is paid directly to a Fidelity brokerage account, IRA or 529 account of your choice. No annual fee, 1% foreign transaction fee. Or is it not listed because there’s no affiliate commission?

    There’s no signup bonus (AFAIK), but what I like best is that point redemption can be set to automatic. Once you hit 5,000 points ($2,500 spending) or MORE on a statement, the entire rewards balance is cashed out, so unlike most programs you won’t wait until you hit another points tier to get your reward. For example, if you have 5,750 points, you’ll get $57.50 in your Fidelity account automatically.

  7. stvr says:

    I second askmrlee’s concerns. I also feel the BOA 2.2% card is worth mentioning. Redeemed for statement credits for travel expenses (just like Barclay) and NO ANNUAL FEE. I guess no referral credit for you either?

    No foreign exchange either! And they let you redeem for partial statement credits.

  8. […] Cash Back Cards vs. Fixed Value Cards vs. Miles and Points Credit Cards […]

  9. mommypoints says:

    Boa is good but requires boa account to get full 2.2% and I mention that some cards can be better if you are okay with investment account, rotating category, etc. good option for many but some just want straight cash. There are tons if options out there that will be better in some situations, but this list should be varied enough to give an idea of what is out there and whether your current strategy is the best for your goals. I don’t have affiliate relationships with all the cards in the post so that is not the criteria for making it in the post…just like always.

  10. Tom says:

    This is a miles blog and I agree with the recommendations here. But there are times where its not smart to use those cards.

    There are four card EVERYONE should have and carry because they all have no annual fee

    1) Chase Freedom – obvious reasons.
    2) Fidelity Amex – you do not need an investment account to get your cash back. I got about $2000 back so far in last 4 years and I do not have an investment account with fidelity. Yes, it works in costco too.

    3)Discover. cash back options are plenty

    4)Capital One Master : No Foreign transcation fee

  11. Tom says:

    A question about Barclays Arrival card. We are going in cruise from galveson early next year. If I attach this card to carnivals ‘sign and sail’ account (the account that autotically bills all your onboad expense to the credit card linked to it), will it be cosidered as an elgible travel purchase by barclays?

  12. mommypoints says:

    Tom, love the recs (though must admit I only have one of the four) and agree that when the card is fee free it certainly helps!

  13. mommypoints says:

    Tom, I don’t have personal experience with that but if the charge comes through from Carnival, I don’t see why it wouldn’t be.

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