Cash back programs are becoming increasingly popular with credit card users, but how do they compare to mileage rewards programs? Here’s a list of the top 10 differences between cash back and miles rewards programs.
1. Earning rates
Cash back cards generally offer at least 1 percent cash back on all purchases, while mile-based cards often only reward you for spending in certain categories. For example, Aeroplan® offers 2 miles per $1 spent on Air Canada family flights and purchases made through Star Alliance™ carriers, so your earning rate may vary depending on what you buy. With most cash back cards offering unlimited earnings without caps or restrictions, it is easier to earn rewards with them than miles-based cards.
2. Redemption rates
You can redeem cash back rewards at any time, but miles are typically more flexible. With some mileage programs, you have to book your travel before you can redeem points for tickets. Other programs let you choose your seat at the time of booking, while some offer even more flexibility by allowing you to change or cancel flights without penalty fees.
3. Number of partners
Cashback cards typically have fewer partner program options than mile-based cards. For example, American Express has over 20 partners in its Membership Rewards program and only one partner in its cash back program (the Blue Business℠ Plus Credit Card). Aeroplan, on the other hand, has over 30 airline partners and four different hotel partners where members can earn and their rewards.
4. Blackout dates
Cash back cards typically have fewer blackout dates when using points for your travel. This is because points are worth a certain amount of cash back or miles, according to the rates assigned by the issuer. You can redeem these points at any time, regardless of whether there are seats available on an airline. Miles, however, can only be redeemed after you’ve booked your ticket in full – any additional taxes and fees must be paid with additional miles in some cases. For example, American Express requires that you use 20 percent more miles if you wish to fly with Air Canada during peak travel times (between December 15 and January 5) due to increased demand during the Christmas holidays.
5. Extending expiration dates
Some mileage programs let you extend the expiration dates of your miles, but this is usually time-consuming. For example, you can enroll in your Aeroplan account at any time to receive bonus miles every year on your membership anniversary. However, after receiving these bonus miles, you must book a flight within 90 days, or else the miles will expire – it’s, therefore, easier to let them expire if you aren’t traveling during that timeframe than to extend their validity. Most cash back cards do not have deadlines for using your cash back.
6. Bonuses
Many cash back cards offer sign-up bonuses to provide you with extra value. If you spend a certain amount during the first three months of opening a card, you’ll receive a bonus on a portion of your purchases, allowing you to boost your earnings for the first few months after opening an account with that issuer. Aeroplan offers two different welcome bonuses: one for new accounts and another for existing members who want to transfer their points from another program. In contrast, most mile-based rewards programs do not have sign-up bonuses or loyalty benefits that reward current cardholders – they only reward new customers for spending with them each year.
7. Account age
Cash back cards are best for frequent travellers with evolving needs, since most mileage programs change their redemption rules every few years. For example, British Airways originally offered special deals to members wanting to redeem Avios points for business or first-class tickets on American Airlines flights before reversing its decision in 2016 due to high demand for these seats. If you have a cash back card, the issuer won’t restrict your ability to use your rewards as you want – but redemption values will usually decrease over time as more people take advantage of certain deals. With mile-based cards, they typically don’t offer benefits based on how long you’ve had their program – they are simply tied to how much you spend each year instead.
Conclusion paragraph: If you don’t want to spend all your time collecting miles, this might be the reward program for you. Cash back is often a much easier way to earn rewards and still get something out of it! I hope these tips will help make spending money more enjoyable – or at least not as bad as before. Good luck on your shopping endeavors – may they always lead to cash back!