For most, cash-back cards are better than airline miles
If you use an airline credit card, such as the American Airlines Aadvantage MasterCard, might I suggest a cashback card instead? Airline cards award one mile or point per dollar you spend, and that’s great if you’re a big spender: after charging $25,000 you might earn enough miles for a free round-trip domestic flight. But most people don’t charge enough, or quickly enough, to earn a flight award, and those tickets come with unpleasant restrictions and fees that most people only learn about when it’s too late.
The best cash-back cards, in contrast, refund 2% on everything you buy with them, so even if you spend $12,000 you’ll get back $240, or enough for a free nonstop flight from L.A. to New York when there’s a fare sale. Even better, some of these cards offer cash sign-up bonuses, and, unlike airline-affiliated cards, all of which have hefty annual fees, most cash-back cards have none.
But the biggest reason to switch to cash-back might be all the rules you unwittingly agree to abide by, and fees you agree to pay, when you join a frequentflyer program.
Not all programs are alike, but consider some of their liabilities when compared to cash: miles may expire if there’s no activity in your account, while cash may be spent until it’s gone; miles may be subject to capacity controls, while cash can be splurged on any flight with an empty seat; and miles may be devalued whenever the airline increases, on a whim, the number needed to fly “free,” while cash is subject only to inflation, lately around 2 percent.