Points or cashback, what's the difference?

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3 posts
charged
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Points or cashback, what's the difference?

Postby charged » Tue May 03, 2016 11:43 am

Hi, I use a rewards card right now, and am considering getting one more card from a different company.

For example I see that Amex offers the blue cash everyday with cashback and the everyday which offers points. In a situation where cards offer points how do I know which is the better deal? With cash back they explain to me clearly how much I'm getting, 1.5%, 3%, ect. I'm not understanding what the reward is with points.


takeshi
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Re: Points or cashback, what's the difference?

Postby takeshi » Tue May 03, 2016 12:08 pm

Better is always highly subjective and it's no different with points/miles rewards programs.

You need to look at your spend and the redemption options (which can significantly impact reward value) you can use with a miles/points program to determine the value you can get per point/mile. You need to do the math all the way from spending and the earn rates to redeeming to determine the vlaue you can achieve per point/mile. Once you have that you are equipped to compare it to cash back %. We can't tell you which is better for you without a lot more information. You can also look into the rewards program, existing threads, blogs, etc to research a given program. Program like Membership Rewards, Ultimate Rewards, etc are very common topics on this and other sites.

Generally speaking, most such programs offer best value when redeeming for premium international travel by transferring to the program's travel partners. You'd need to look at redemptions with the travel partners to sort that out. However, there may be other redemption options that provide what you consider to be sufficient value.

In my particular case, all my travel is on United so Ultimate Rewards is an obvious fit since United is a UR travel partner. I can't make use of the travel partners with Membership Rewards and the best value I can generally attain is 0.6 cents to 0.8 cents per MR point which is poor value so I don't bother with MR and focus on UR.

Most programs like this require a larger amount of spend. If you don't have sufficient spend to leverage a given program then you may be better served with a cash back card. If you don't want to hassle with figuring out point/mile value then you may be better served with a cash back card.

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CarefulBuilder14
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Re: Points or cashback, what's the difference?

Postby CarefulBuilder14 » Tue May 03, 2016 12:15 pm

charged wrote:Hi, I use a rewards card right now, and am considering getting one more card from a different company.

For example I see that Amex offers the blue cash everyday with cashback and the everyday which offers points. In a situation where cards offer points how do I know which is the better deal? With cash back they explain to me clearly how much I'm getting, 1.5%, 3%, ect. I'm not understanding what the reward is with points.

Points on the EveryDay (aka MR points) can potentially become points in certain frequent flyer and hotel loyalty programs. Loyalty points can potentially be worth more than 1 cent per point when you redeem for airfare (or, in some very limited cases, hotel rooms).

There are all kinds of risks, restrictions, and complications in doing this.
Warranties and sketchy merchants: Schwab Platinum
Price rewind: Costco
Travel insurance: Prestige, CSP
Perks: IHG, Hyatt
Rewards/Offers: Discover, Freedom, ED, BCE
Taxes/Misc: SPG

Limited value, might close: Arrival

Might add: First Tech, proper business card, Delta Gold, Aviator Red, BofA Travel



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