Miles Vs Cash Back Calculator
Comparison Factors:
- Miles cards: Better for travel redemptions
- Cash back: More flexible, guaranteed value
- Consider annual fees and redemption effort
- Typical mile values: 1.0¢ – 2.0¢
Choosing between a miles rewards credit card and a cash back credit card can be tricky. Miles cards often offer great value for travelers, especially when redeeming points for flights or hotels. On the other hand, cash back cards provide flexibility and guaranteed returns in the form of actual cash.
Our Miles Vs Cash Back Calculator helps you quickly analyze which card is the better deal based on your annual spending, miles earning rate, miles value, cash back rate, and annual fees. This calculator breaks down the potential earnings, compares them side-by-side, and even offers a 5-year projection to help you make an informed decision.
How to Use the Miles Vs Cash Back Calculator
- Annual Spending Amount: Enter your estimated yearly spending on the credit card.
- Miles Earning Rate: Input how many miles you earn per dollar spent on your miles card.
- Miles Value (cents per mile): Enter the estimated value of each mile in cents. Typical values range from 1.0¢ to 2.0¢.
- Cash Back Rate (%): Enter the percentage cash back you receive on your cash back card.
- Miles Card Annual Fee: Input the yearly fee you pay for the miles card.
- Cash Back Card Annual Fee: Input the annual fee for the cash back card (often $0 for many cards).
Click Calculate to see the results.
What You Get from the Results
- Annual Spending: Your inputted spending amount.
- Miles Card Net Value: Total value earned from miles minus the annual fee.
- Cash Back Card Net Value: Total cash back earned minus its annual fee.
- Better Option: Which card offers more value based on your inputs.
- Annual Difference: The monetary difference between the two card values.
- Breakdown Sections: Detailed miles earned, miles value, fees, and net returns for each card.
- 5-Year Projection: How much value you could accumulate over five years.
- Break-Even Analysis: The miles value and spending level required for miles cards to be worth it over cash back.
Example Usage
Imagine you spend $15,000 annually. Your miles card earns 2 miles per dollar, and you value each mile at 1.5 cents. Your cash back card offers 2% back, and your miles card charges a $95 annual fee, while your cash back card has no fee.
- Miles Earned: 15,000 × 2 = 30,000 miles
- Miles Value: 30,000 × $0.015 = $450
- Net Miles Value: $450 – $95 = $355
- Cash Back Earned: 15,000 × 2% = $300
- Net Cash Back: $300 – $0 = $300
Here, the miles card nets you $355, better than the $300 cash back, so it would be the recommended option.
Why Use This Calculator?
- Simplify Decision Making: Easily compare the true value of miles vs cash back based on your spending.
- Personalized: Adjust for your specific miles value and card fees.
- Long-Term Insights: See 5-year projections to understand cumulative benefits.
- Understand Break-Even Points: Know how much you need to spend or what miles value you require to justify higher annual fees.
FAQs
1. What is a good value per mile?
Generally, 1.5 cents or more per mile is considered a good redemption value, but it varies by program and redemption type.
2. Why do miles cards have annual fees?
Miles cards often have higher fees to offer premium travel perks and higher rewards rates.
3. Can miles value change?
Yes, miles value depends on how you redeem them—flights, upgrades, hotels, or gift cards can vary widely in value.
4. Is cash back always better?
Cash back offers guaranteed and flexible value but may earn lower rewards compared to strategic miles redemptions.
5. How do I know my miles earning rate?
Check your credit card rewards details, usually listed as “X miles per $1 spent.”
6. What if I have multiple cards?
You can calculate each card separately or combine inputs to estimate blended returns.
7. Can I use this for hotel rewards?
Yes, just adjust the miles value based on how much you value your hotel points.
8. What if my card offers category bonuses?
This calculator uses a flat rate; for more precision, estimate weighted averages of your spending categories.
9. How often should I update these inputs?
Update anytime your spending or card terms change to keep your comparisons accurate.
10. What if my miles value is below 1 cent?
That usually indicates a poor redemption; you might be better off with a cash back card.
11. Does the calculator consider taxes and fees?
No, this calculator focuses on reward values and fees, not taxes or incidental costs.
12. Can I use this calculator internationally?
Yes, but convert your spending and values to USD or adjust for currency differences.
13. How accurate is the 5-year projection?
It’s a simple linear projection, assuming no changes in spending, fees, or rates.
14. What if my miles card offers additional perks?
Factor those separately as they can add significant value beyond points.
15. Why does break-even spending sometimes show “N/A”?
If the math results in no practical spending point to break even, it means one card is clearly better regardless of spend.