3 Times When Cash Back Is More Valuable Than Travel Rewards (Even When Booking Travel) (2023)

Travel rewards come with all sorts of restrictions with award inventory being a common issue. More often than we’d like, there simply aren’t available redemptions when using miles and points. This especially arises if you have non-negotiable requirements like nonstop flights, getting five seats together for your family or flying over a holiday. When the option is paying with cash or not going at all, the dollar value of your credit card rewards is irrelevant.

Cash-back rewards make it possible to book otherwise unobtainable trips. Sure, your rewards may “only” be worth a penny a piece but travel rewards that go unused are worth zero. Remember, hypothetical values are exactly that—something based on possibilities rather than realities.

Sure, travelers with flexibility in their plans can cherry pick incredible deals using miles by traveling on off-peak dates or to less-popular destinations. But someone determined (or limited) to go to a specific destination on a specific day will either need to get lucky or pay up.

While you might not get outsized value from using cash back at a penny per point in value, there’s indirect value in being able to lock in exactly what you want.

With cash, your rewards are consistently worth exactly 1 cent each. With travel rewards, the value of each mile or point varies based on the price of the redemption in miles as well as the price it would cost if you paid cash. Sometimes you win and sometimes you lose. And while there are always exceptions, more often than not you’re often on the losing side of the equation when using miles to book economy flights or basic hotels.

Reservations with high sticker prices (like international first class tickets and luxury hotels) may result in great yields per individual point. On the other hand, when tickets are cheap, it’s not uncommon for points to be worth less than a penny each, making cash rewards a better deal.

For example, someone flying from New York to London could use cash to pick any flight they wish. For a week this September, paid rates are reasonable—hovering around $600 for a round-trip ticket on multiple airlines. Therefore, you’d need about 60,000 credit card points (at a penny each) to cover the cost of the ticket when redeeming as cash or a statement credit.

Compare that to converting your rewards to miles or points. The first flight shown, on Delta, also costs 60,000 miles but also requires a $159 cash copay to cover airline taxes and fees. In other words, paying with miles is more expensive than using cash back.

The discrepancy is even more extreme if you book the British Airways flight. At a penny each, you’d need 62,400 cash-back points. With miles, you could instead redeem 54,000 American AAdvantage miles but you’d be forced to pay a whopping $423 in taxes and fees, hugely limiting the value of your miles.

Hotel redemptions can be similar when choosing value-oriented brands and properties. A run-of-the-mill property can yield far less than 1 cent per point—sometimes only half that.

Several credit cards entice you with what seems like the best of both worlds: Transfer miles to partner programs when you want or use rewards at a flat-rate toward cash-based travel bookings. No one will flinch if you choose the easy button. That’s exactly what those card programs are designed to do. But you might be overpaying by booking through your credit card since specials, coupons or promotions are rarely available in credit card travel portals.

Take this sample booking at a hotel bookable with Chase Ultimate Rewards®: The same room on the same dates costs $135 per night when booked through Chase compared to $122 per night on Hotels.com and other travel agencies that offer regularly hold sales.

On credit cards where your points are worth 1 cent per point toward travel, you’ll be better off booking the discounted room and redeeming your cash back as a statement credit instead of using points directly to pay for a reservation. You’ll still offset the cost and snatch a discount while you’re at it. In our example above you would even earn OneKey rewards you can use towards your next trip.

Buying discounted gift cards, using promo codes for online reservations or taking advantage of loyalty program elite perks are other methods to be money ahead by booking outside of your card’s travel portal…assuming you’re willing to search for a deal.

A few credit cards throw in a bonus when booking travel using “cash” rewards, turning those pennies into higher-yield redemptions. At times, that can make redeeming points for travel a fair value even if the sticker price of a reservation is more expensive. But bargain hunters—which many mile and point collectors are—will want to compare the out-of-pocket cost of stacking a few deals on top of each other compared to a card’s 25 to 50% bonus.