Here it goes folks, which one benefits you more? It is time to compare them!
Your cash-back and mile awards depend on your spending in both cases but there is a huge difference, and correct me if I’m wrong, you get your cash-back at the end of the year while you are earning the miles as you go, so you may have enough points for a free ticket before the end of the year. The cash-back percentage is between 1%-2% of your total annual purchase, while airline credit cards deposit between 1-3 miles per dollar spent depending on the type of credit card (regular, business, gold, platinum, etc).
When you are a frequent flyer of an airline holding their credit card, you are not only earning miles from the credit card company but also from the online stores you shop at via the airline’s web portal, restaurants, hotels, rental cars and many other merchants, who are participating in the program with the airline, this is what I call “Double-Dipping”. There many different ways of earning miles, which I have already explained in my previous blogs (How to Fly for Free 1-4).
Now, when you get cash-back after your annual purchases and let’s say you want to use that money for air tickets, you can simply buy that on your own from any website, BUT your money may not be enough! You have x amount of money (cash-back) in your hand but your air ticket could cost 2x (depending on where and when you travel).
When you have miles you don’t worry about the cost of the ticket; this is how it works: There is an award chart showing the mile requirements for each zone. Take my example: last year I went to Sardinia, Italy on miles; flew from Washington DC to Olbia. Washington DC is in the continental USA and Italy is in the “Europe Zone” so a free round trip ticket between these two destinations “costs” 50,000 miles. The continental USA means 48 states and the Europe Zone means a lot of countries in Europe from Portugal to Turkey, from Scandinavia to the Mediterranean. With other words, it does not matter where in the continental USA I fly from to which European country (even if it is a small, remote island) as long as the airline (or their European partner airline) flies there, it still “costs” 50,000 miles round trip.
Now let’s break it down to the dollar value; I guarantee you gonna love this! Take my example again: My ticket from Washington, D.C. to Sardinia, Italy “costs” 50,000 miles per person in the month of August, which is considered to be a peak season. At the time of redeeming my miles the cheapest airfare was advertised for $1,980 per person on Expedia, then imagine how much it would have been with my airline! Since I took my husband with me I would have paid $3,960 for the 2 of us, which is insane for air tickets alone. If I lived in Los Angeles (which is still in the continental USA), I would have paid approximately $2,300 per person to Sardinia, if I had purchased tickets from my own money but if I had used miles from Los Angles to Sardinia, Olbia, it still would have been 50,000! Capish?
Flying to Europe from the east coast does not always cost that much, it all depends on the season, country and the airline. In April we are going to fly again on miles, from Washington, D.C. to Madrid, Spain. April is pre-season and at the time of redeeming my miles the cheapest airfare was advertised for $960 per person for the same dates as mine and we are two people. Let’s translate this into miles: Washington, D.C .again is in the continental USA and Spain is in the “Europe Zone” so again, it “costs” 50,000 miles per person round trip.
Maybe you can see the difference now on REDEEMING MILES for air ticket versus BUYING an air ticket from your cash-back by your credit card company.