For frequent travelers, it's the Holy Grail: a free flight, a free upgrade, the ability to say, "Oh, this? I got it with my airline miles."
But when push comes to shove, are credit cards that give you airline miles
really worth it?
Let's go point by point.
Value For Your Money
Running the math requires making a few assumptions, but here's a rough sketch.
Let's say your travel card gives you a mile per dollar you spend. Let's also say that it takes 25,000 miles to get a free round-trip domestic U.S. flight, which is the going rate at airlines like American
. Obviously, the dollar value of a domestic flight will vary, but for argument's sake, let's call it roughly $500.
To earn the 25,000 miles you need, you'd have to spend $25,000. If that flight is normally worth $500, you're getting back 2 cents on every dollar you spend.
Let's say your cash-back card gives you 5% back on certain categories of spending, and 1% back on everything else, pretty standard
for its card type. For the sake of our math, let's say, on the whole, that averages out to roughly 3% back per month.
Instead of using miles, you want to earn $500 to buy your ticket the old-fashioned way. At an average of 3% back, you'd have to spend just under $16,700. That comes out to about 3 cents per dollar.
The outcome? If these numbers hold true, you're getting better value with a cash-back card.
Of course, not all cards are created equal. If you found a travel card offering 2 or more miles per dollar, then that card would beat most cash-back cards. Try it out with your own numbers with these basic equations:
% money back = cost of your flight / amount you need to spend to earn that flight
From there, you can compare your percent back with a travel card to your percent back with a cash-back card.