Whenever people find out about my involvement in this “hobby”, one of the first questions that comes up is, “what credit card should I get?”, or some variant of that.
And really, my advice to almost everyone is that they should just focus on cashback credit cards. 2% cashback is probably a better value for 95%+ of people I talk to than trying to accumulate miles. (Of course, the best strategy is to apply for lots of credit cards and get the sign-up bonuses and then close the cards after a year so you don’t have to pay the annual fee, but many people are unwilling to apply for lots of credit cards.)
Reasons why cashback dominates miles for most people:
- Cash can be used to purchase any flight that’s available. Miles are subject to the whims of award availability. While this might not be a problem for those of us with extremely flexible travel schedules (and/or those of us willing to fly circuitous routings), many people are beholden to strict vacation schedules. It honestly is not that feasible to rely on miles to travel to popular destinations during popular travel periods (e.g., summer, New Years), particularly if you have specific destinations in mind or specific dates you must fly on.
- Similar to #1, but it’s significantly harder to fly on miles if you’re looking for more than one ticket.
- Redeeming miles can be extremely complicated, particularly if you want to get lots of value out of your miles. Unless you are willing to invest a lot of time in terms of understanding how different programs work, what routes are likely to have availability, the best times to book, etc., (or you are willing to pay someone else to do this for you) you will likely be frustrated when trying to redeem your miles.
- Miles can be devalued at any point in time. Cash does devalue, but not nearly in the same way. You can start saving miles two years in advance for your honeymoon, but then a program announces a devaluation, and then you realize you need twice as many miles as you thought you did.
- Airfares are increasingly affordable, even in business class. It is increasingly common to see things like sub-$600 airfare to Asia and sub-$500 airfare to Europe. At these cash prices, it is very hard to justify using miles for economy class.
This calculation changes if you’re looking to fly business class or first class, as using miles makes these much more attainable than paying cash, but with the devaluations that we’ve seen in the main US frequent flyer programs, this is becoming harder to take advantage of unless you are a business traveler who earns tons of miles or are willing to manufacture lots of miles.
Of course, I will continue to accumulate and redeem miles, but I have an extremely flexible schedule, usually don’t have specific places I need/want to go, am usually only booking for one person, and have already invested a lot of time in terms of gaining the knowledge needed to redeem miles. But there are very, very few people I encounter in real life who I think would get more value out of accumulating miles instead of 2% cashback, particularly when you take into consideration all of the time and effort needed to learn enough to earn and redeem miles effectively.