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Posted: 12:38 p.m. Tuesday, July 1, 2014

Dumping Your Frequent Flyer Miles For Cash Back Rewards? Read This First

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By Geoff Whitmore, Contributor

I love frequent flyer miles. Easy as that. That's because they allow me to travel more frequently, and often in more style, than I ever could without them.

I teach people new to rewards how they can maximize their miles and points for insane travel on my blog. So, I may be a little biased, but I happen to think that miles and points kick cash back rewards in the seat of the pants.

Let's take a look at the difference between miles, points, and cash back

Before we get started, it's important to know the differences between frequent flyer miles, fixed value points, transferable points (my favorite), and cash back rewards. Here we go.

Frequent flyer miles

Frequent flyer miles earned in an airline's loyalty program can be redeemed for flights, hotels, or merchandise. Even though miles can be redeemed for hotels or merchandise, it's usually at a lower redemption rate, so you'll get the best value redeeming your miles for flights. You may think that you have to pay for a flight to earn miles, but you can easily earn miles through a co-branded airline credit card. (Editor's note: See which airline credit cards Clark Howard uses.)

Transferable points

Transferable points are THE BOMB! Sorry, but I get a little excited when talking about them. With transferable points, you have the option of redeeming them for cash back, merchandise, OR transferring them out to travel partners. They give you great flexibility. For example, with Chase Ultimate Rewards points, you have 11 travel partners to choose from! The Ultimate Rewards program is the best program to earn transferable points in, and they have the top personal rewards credit card out there, in my opinion.

Fixed value points

Fixed value points are points that can be redeemed for travel at a fixed ratio (generally of 1:10). The Capital One Venture and Barclays Arrival Plus are good examples of cards that earn fixed value points. The upside of fixed value points is their flexibility (since you can redeem them for any travel expense) and the downside is that their value is fixed. You can get more value out of airline miles or transferable points, but fixed value points can certainly come in handy. With the cards mentioned above, you can still redeem your points for cash back and merchandise, but at a lesser rate. No thanks!

Cash back

Cash back rewards are pretty straightforward. You will earn cash back, usually at a 1:10 ratio, just like fixed value points. The beauty is that you can use your cash back for anything. Anything! Obviously, this is the most flexible option of them all. Right? But, if you plan on using that cash back for travel, think again. You can stretch your miles or transferable points a lot further than cash back. I'll explain.

The value in miles

Ok, so why have I dedicated myself to teaching others about travel through rewards programs? It's all about the insane value! Airfare is expensive, especially when you're traveling internationally.

For example, a round-trip ticket to Europe is easily $1,200. That's a lot of cash. If you wanted to use cash back rewards, or fixed value points, it would cost you 120,000 points at the 1:10 redemption ratio. No thanks. I could take that same amount of 120,000 transferable points or frequent flyer miles and get TWO round-trip tickets to Europe! And all I would be out of pocket for my two round-trip tickets to Paris is $185.60. Not too bad when the purchase price in this example would've been $2,392.60.



See, there's great value in miles! But I'm a dreamer, and I want to get the most value out of my miles as possible. That means I'm looking to redeem my miles for premium cabin flights. Flying in business class or first class isn't for everyone, but through miles and points, it's definitely possible.

Usually, business class tickets are 100,000 miles for a round-trip ticket, and first class is about 120,000 miles. I was able to book an award ticket in Singapore Suites, which is a class above First Class, and the purchase price of this ticket was over $10,000! I could never dream of affording that, or paying that, for that matter. But flying Singapore Suites is a reality because they are a transfer partner of Chase's Ultimate Rewards program. (That's me in Singapore Suites in the pic below, by the way.)




How to rack up the miles and points

OK, so it's easy to see how miles can help you travel, but how easy are they to get? Pretty easy. I primarily earn miles and points through rewards credit cards. The banks are willing to reward new users with lucrative sign-up bonuses after meeting minimum spending requirements. It's not rare to see bonuses of 50,000 points all the way up to 100,000.

Beyond personal rewards cards, there are business rewards credit cards, and getting a business card can be easier than you think. (Editor's note: See why Clark doesn't recommend business cards.) Basically, you can sign up for two rewards credit cards and have enough miles for a business class ticket to Europe, or an economy ticket with some miles left over.

It goes without saying that you should pay off your credit card bills in full at the end of every month to avoid interest and maximize your rewards.

What does the future of frequent flyer miles hold?

The state of frequent flyer miles is always changing, and even this year, we have seen American, Delta, and United make changes to their award charts. That's why I always recommend "earning and burning." Don't hoard your miles, because they aren't earning any interest in your account! Instead, always have a plan for earning your miles and then redeem them for an epic vacation. Do it!


Earning frequent flyer miles and transferable points is the way to go for travel rewards, because you can redeem them at a higher rate than cash back or fixed value points, enabling you to really stretch out their value.

If you have no desire to travel, then by all means, get all the cash back you can! Obviously, cash is the most flexible of them all. But if traveling and seeing the world is your goal, miles and points are hands down where it's at!

Questions? Shoot me a comment below! I don't bite.

Geoff Whitmore is lead traveler/writer at, a blog dedicated to educating its readers on reward travel, travel tips, and cost-saving travel techniques. The blog particularly focuses on new travelers (or as they like to call them, “Noobs”), and it teaches its readers how to save BIG. All the while, the site maintains a humorous writing style that is both fun and informative.

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