Airmiles or Cashback Credit Card: Which is Better?

Do really save money by using an Airmiles Credit Card or can you save more money using a Cashback Credit Card? I personally would vote for the later, but the American Exchange Blue Sky card is almost as good as cash.

Here's why.

The Blue Sky Card allows you to travel free of restrictions and blackout dates — fly on any airline, stay at any hotel, and sail on any cruise line. In my opinion, this is one of the best features that you have since most airmiles cards restrict you to a single airline.

The cardd has no annual fee which is so atypical of airline credit cards. You can find no annual fee cards for Delta and United, but they're hard to find. My United Mileage Plus Card has no annual fees and I'm very happy with it.

But I keep laughing at Chase which sends me pre-approved applications to upgrade to their United Platinum Business Card. In return for 30,000 miles, I get the honor of paying an annual fee of $75. Yeah right.
How much are your miles worth?

Miles that you earned through purchases or bonusus are worth one cent per mile. So for example, if you get an offer of 30,000 miles, it's worth $300 to you. The bank breaks even after 5 years (they wave the first year's annual fee) and starts making a nice profit of $75/year on each card holder thereafter.

Another way to look at it is that you get one mile for every dollar you spend. This is equavalent to 1% savings, the same savings you would have received using a cashback card.

The Blue Sky Card is a little better where you can receive discounts of up to $100 for every 7500 points you earn. This is the same as 1.33% cash back; however, you have to read the fine print, you can:

Use the points for any airline, any hotel, any cruise or any car rental - no blackout dates, advance purchase requirements, hotel room restrictions, or travel restrictions.

Although this is better than most airmiles cards, you are still restricted to the "travel industry." I still like my Discover card because your cash back is not restricted other than you can only take it in increments of $20. Plus if you sign up for the Jan - March 5% bonus, you can use your Discover Card as an Airmiles Card.

Use Your Discover as an Airmiles Card

This quarter (January - March), remember to sign up for your 5% bonus at the Discover website and your card will be better than an Airmiles Card for purchases in the travel industry.

Every three months, Discover promotes different types of industries where you can increase your cashback bonus from 1% to 5%. If you book any hotel rooms, flights, car rentals using your card, you get a huge discount.

Typical discounts using your airmiles credit card are about 1%, but during the first three months of the year, your Discover card will pay you back 5x the amount.

The only catch is that you have to sign up for the bonus once you login to your account or just call the 1-800 number on the back of your card and ask for the bonus for January - March.

We're Using Our Airmiles Card for Vacation

It's time for a vacation and the accumulated miles on our Airmiles Credit Card has enough to get us two round-trip tickets anywhere in the lower 48. Since we're planning a trip in February, we don't have much to worry about blackout dates.

I've often considered switching over to Delta for our airmiles card but I've been using the United Mileage Plus card for quite some time; hence, long enough to accumulate two tickets for vacation. I really like Delta Air and tend to use them as our choice air carrier.

Sometimes you don't have a choice of airlines and for a while I was flying United at least once a month and eventually they offered a card through Chase. The card had no annual fee, which is unheard of for airmiles cards so I grabbed one up. Delta and the other airlines have cards, but they're fee free the first year and the $75 thereafter. Not worth it if it takes 5 years to accumulate enough frequent flyer miles on purchases alone.

So for now we're stuck with United for our airmiels card until someone offers a better deal.

To really exploit your card, you need to use it whenever you book hotel or rent a car. You get 1 mile for every dollar you spend plus 500+ ff miles for your hotel stay. Our last trip to ATL, we used our Mileage Plus card to rent a Jeep Cherokee. Since it was a driving trip, we booked our hotel rooms with Hilton and got miles just about every night we checked-in.

We've never been to NYC and that should be a nice trip to take to spend on Valentines day or on our wedding anniversary. Now if I can keep it a suprise from my Wife...

Until next time, remember to pay off your credit cards each month to avoid those hefty interest rates those companys charge use to keep us in debt.