Miles Vs. Cash-Back Credit Cards: Which Is Best For You?

When it comes to rewards credit cards, the number of choices out there is staggering. So much so, it can feel like information overload—especially if you haven’t decided yet whether you prefer earning credit card rewards in the form of miles or cash back.

Simply put, cash-back cards allow cardholders to earn a percentage of their spending back in the form of cash rewards. On the other hand, mileage-based credit cards earn rewards that can be redeemed toward free flights or hotel stays. While neither type of card is inherently better, they are two very different approaches to earning rewards.

So, how do you decide whether a card that earns miles or one that earns cash back is the right fit for you? It all depends on your spending habits, what benefits you’ll use, if you’re willing to pay an annual fee and how you prefer to redeem your rewards. Let’s take a look at some of the differences.

Cash-Back Credit Cards

What Is Cash Back?

One popular type of credit card rewards is cash back, because it’s easy to understand and incredibly flexible. Depending on your specific credit card, the cash back you earn may be provided as a deposit to a linked bank account, as a statement credit toward your card balance or as a check mailed to your account.

If you redeem your cash back for a statement credit, it will lower the balance on your card. And if you redeem it as a direct deposit or a check, you’ll be able to use those earnings for anything you wish, whether it’s practical or an indulgence. Like any other cash you’ve earned, you can spend it on bills, shopping, travel, gifts and anything else in your budget.

Furthermore, some cash-back credit cards allow redemptions of any value (others may have a modest threshold you need to reach before cashing out). There’s no need to save up for years.

Types of Cash-Back Credit Cards

Cash-back credit cards typically come in two main variations. For customers who prefer simplicity, flat-rate cash-back cards keep things easy to understand. Flat-rate cards earn the same percentage on every purchase—typically 1% to 2% cash back on all spending.

Tiered cards provide different cash-back rates for different types of purchases. For example, such a card could earn 6% back on groceries, 3% on gas and 1% on all other purchases. These cards can be good options for cardmembers who frequently use their card for a specific type of purchase and would like to earn an elevated cash-back rate in that spending category.

There’s also a third type of cash-back card you may encounter, which offers higher earning rates on rotating categories. These cards might offer 5% cash back on popular purchase categories for a few months before cycling onto a different set of categories that earn 5%. Meanwhile, other purchases would earn a flat rate, such as 1% cash back. Such cards are popular since they sometimes feature purchases that typically wouldn’t earn enhanced rates on many tiered-rate cash-back cards, such as shopping at Walmart.

Note that some cash-back cards may technically earn rewards in the form of points, with each point being worth 1 cent. For example, the Citi Custom Cash® Card is marketed as earning 5% cash back on purchases in a top eligible spend category up to the first $500 spent each billing cycle, 4% cash back on hotels, car rentals, and attractions booked on Citi Travel℠ portal through 6/30/2025 and 1% cash back on all other purchases. Rewards are earned as Citi ThankYou Points, redeemable for cash back at 1 cent per point.

When To Choose Cash-Back Credit Cards

Cash-back cards are the logical choice for anyone looking to keep their rewards simple. Cash back is instantly understood—you know the exact value of what you’re earning in advance.

Cash back is also typically very easy to redeem, and you’ll likely have options for statement credits, direct deposits or a check in the mail. On some cards, the cash back is automatically applied as a statement credit for the ultimate “set it and forget it” redemption.

Whether or not they’re auto-applied, your rewards are unlikely to expire as long as your account is open and in good standing. But make sure to read the terms of your account carefully, because some cards do allow rewards to expire after a certain period of time has passed.

One major advantage of choosing cash-back credit cards is that you can use your rewards for anything you like. You aren’t restricted to using your rewards at a single merchant or brand and you won’t face the limits or blackout dates that come with travel rewards. Go ahead and use that cash for your choice of responsible or frivolous purchases. Cash is as versatile as rewards get.

Miles Credit Cards

What Are Miles?

When referring to credit cards, the term “miles” is often used interchangeably with “points” for any type of branded travel reward. This may include frequent flyer miles, hotel points or transferable bank rewards, such as American Express Membership Rewards, Capital One Rewards, Chase Ultimate Rewards or Citi ThankYou Points.

Unlike cash back, most miles don’t have a fixed value. Instead, you’ll redeem them toward trips and the exact yield per mile will depend on the specific redemption you book. Some redemptions can be extremely valuable, in which case your miles are worth more than if you had collected cash back. Other redemptions may require an outsized number of miles for an inexpensive trip, resulting in a subpar value overall.

Knowing when and how to redeem your miles takes some time to learn, but can lead to outsized value, especially when booking aspirational trips like international flights in premium cabins or luxury hotel stays.

Types of Miles Credit Cards

There are three main types of miles cards: branded airline cards, branded hotel credit cards and transferable miles cards.

Airline credit cards are the original type of miles cards and allow you to collect frequent flyer miles in your preferred program with every purchase. A common earning structure is to earn 1 mile per dollar spent on every purchase, with a higher rate of 2 miles per dollar on flights purchased directly from the airline. Some premium cards may offer bonus miles in additional categories as well.

Hotel credit cards are similarly structured, with a base earnings rate for most purchases and higher rates on qualifying hotel stays and any additional bonus categories.

Lastly, there are several flexible points cards where you actually earn rewards proprietary to the issuer even though they are sometimes referred to as “miles.” On these travel rewards cards, you usually have more flexibility—there are options to redeem your miles through an issuer portal, as cash back or by transferring them to specifically-branded airline or hotel miles. Typically, you’ll earn bonus miles in select categories and a base rate on all other purchases.

When To Choose Miles Credit Cards

Miles cards come with several advantages that cash-back credit cards don’t offer, which can make them a useful option for frequent travelers.

For starters, miles credit cards offer the dream of earning and redeeming toward aspirational redemptions. Most cardholders would never be able to earn enough cash back to afford a trip with first-class flights and honeymoon suites in Tahiti: that would take tens of thousands of dollars worth of cash rewards. However, with miles as your reward and a little practice at strategic redemption hunting, bucket list trips like this are actually within reach.

Additionally, miles-based credit cards almost always include built-in benefits related to the associated brand. For example, airline credit cards may include free checked bags and priority boarding when flying the associated airline. Hotel credit cards may include on-site benefits such as room upgrades or free breakfast. Generally speaking, the more premium the card, the better the benefits will be.

Lastly, miles credit cards may offer pathways to earn elite status based on your card spending. By reaching certain dollar thresholds on your card, you may earn additional elite-qualifying miles (or hotel nights) toward the next level of status. In turn, that can lead to even more benefits while traveling.

Cash-Back vs. Miles Credit Cards

As you can see, both cash-back and miles credit cards have their advantages.

If you’re not a traveler, a cash-back card is almost always the clear choice. Cash redemptions are easy and more likely to fit your lifestyle, especially if you don’t need the included travel benefits available through miles cards.

If you are a traveler, miles credit cards may make more sense, but only if you’re willing to put in the time to seek out strong redemptions. Mileage value varies substantially depending on how you use your miles and takes strategy to optimize. It also may require flexibility in your travel plans to find exceptional awards. If you’re not willing to budge on travel dates or nonstop routings, you might prefer to earn cash back and use your earnings to buy flights directly.

One other selling point of miles credit cards is their generous welcome offers. A single card offer could be worth $500 or more. Cash-back cards may also have welcome offers but at smaller amounts. Anniversary bonuses are common too with miles cards, which is when you get an incentive for keeping your card another year. Perks might include airline lounge passes or a free hotel night certificate. These are nearly unheard of with cash-back credit cards.

The downside to the travel benefits, high welcome offers and anniversary bonuses is that they come at a price. While there are numerous cash-back credit cards without an annual fee, the best miles cards may cost $95 to $695 per year. Someone using the included benefits may consider that a reasonable price—especially because some of the most premium travel cards offer credits to reimburse eligible expenses up to a certain amount—but it won’t be for everyone.

Comparing Cash-Back and Miles Credit Cards

To summarize, here are some pros and cons of cash-back and miles credit cards at a glance:

	Cash-Back Credit Cards	Miles Credit Cards
Guaranteed Redemption Rates	✓	Depends on program
Easy Redemptions	✓	Depends on program
Possibility of Outsized Value	x	✓
Rewards Typically Don’t Expire	✓	Depends on program
Welcome Bonuses	Zero to Mid-Value	Mid- to High-Value
Anniversary Bonuses	x	Some cards
Built-In Travel Benefits	x	✓
Annual Fees	Often $0	Potentially High Cost

See MoreSee Less

Bottom Line

The debate between miles versus cash-back credit cards comes down to a very personal decision, but it’s likely that one type of card resonated with you more as you considered both options. Trust your instincts. No one knows your credit card preferences and spending habits better than you do, so you can feel confident with your decision.