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Should I Get a Travel Credit Card That Earns Points or Miles?

Feb. 18, 2015
Credit Cards
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Let’s face it: The travel credit cards market is pretty confusing. One big stumbling block for many consumers is deciding whether it’s best to get a travel credit card that earns points or miles.

If you’re facing this same dilemma, don’t worry – the Nerds are here to help. Take a look at the details below for everything you’ll need to make the right choice.

Travel credit cards that earn miles

Travel credit cards that earn miles are usually co-branded with a particular airline. This means you’re earning the frequent flyer currency of a certain airline every time you swipe. For example, with the United℠ Explorer Card, you’ll earn 1 mile for every $1 you spend, and 2 miles per dollar spent on eligible United purchases, restaurants and hotel stays.

It’s important to understand that a “mile” you earn in one of these programs (with a credit card or otherwise) isn’t the same thing as a mile you’d walk on the ground. This is just the nomenclature most frequent flyer programs use to describe a unit of their rewards currency. The number of “miles” it takes to get to a destination depends entirely on the awards charts developed by each airline.

The good thing about choosing a travel credit card that earns miles is that you’ll be building up good rewards not only when you swipe, but when you fly, too. If you’re very faithful to a particular airline, you could end up with a pile of miles pretty quickly.

Co-branded cards usually also come with a bevy of extra perks, like free checked bags, companion passes, airport lounge access, etc. For people who spend a lot of time on planes and in airports, these amenities can be very valuable.

The major drawback to choosing a credit card that earns miles is they lack flexibility. You’ll be locked into redeeming your rewards with just one airline, or at best a handful if that airline has partners or is a member of an alliance.

Also, if the airline you’ve pledged your loyalty to devalues its frequent flyer currency, the rewards you’ve been racking up can lose a lot of their worth overnight. This is definitely something to consider, especially since major carriers like Delta, United and Southwest have done so in recent years.

MORE>> How to Pick the Best Credit Card for You: 4 Easy Steps

Travel credit cards that earn points

With travel credit cards that earn points, you’ll be accumulating the rewards currency offered by a particular credit card issuer. You can then cash your points to book travel directly through the issuer. Some cards even offer the option to transfer points to participating frequent traveler programs.

Let’s use the Chase Sapphire Preferred® Card as an example. With this card, you’ll earn 2 Ultimate Rewards points (Chase’s rewards currency) for every dollar you spend on dining and travel and 1 Ultimate Rewards point for every dollar you spend elsewhere. When you’re ready to redeem, you can use Chase’s online travel tool – which functions a lot like – to book flights or hotels with your points.

But if you want to, you can also transfer your points to certain frequent traveler programs at a 1:1 ratio. In the case of the Chase Sapphire Preferred® Card, these include British Airways, United Airlines, Southwest Airlines, Hyatt hotels and more. There are several distinct benefits to using a travel credit card that earns points, like the Chase Sapphire Preferred® Card. For one thing, you’ll have a lot of choices when it comes time to book a trip. In many cases, transferring points to travel partners is the cheapest way to fly. But if you bump up against a bunch of blackout dates, you’ll still be able to use your points to book directly through the issuer with almost any airline or hotel chain you’d like.

Another advantage to this type of credit card is that you’re diversifying your rewards. If one airline devalues its frequent flyer miles, you’ll still have several others to choose from – and, of course, the option to book without using frequent flyer miles at all.

The drawback to using a travel credit card that earns points is that you won’t be getting the fringe benefits that usually come with miles cards. This might not seem like a big deal, but consider the value of free checked bags. Since most airlines charge $25 per bag, a family of four will end up saving $400 in a year that they take just two round-trip flights if they booked with a miles card that offers this perk.

‘General’ travel credit cards

Aside from cards that earn points or miles, there’s a third class of travel plastic you should also consider, the so-called “general” travel card. These cards actually function much like cash-back cards.

But instead of redeeming for a regular statement credit, you cash in your rewards to pay off a travel purchase you’ve recently made. One example of a good “general” travel credit card is the Barclaycard Arrival Plus® World Elite Mastercard®. With it, you’ll earn 2 miles for every dollar you spend.

Nerd note: Don’t be thrown by the fact that rewards earned with this card are called “miles.” Again, this is just nomenclature to describe a unit of rewards currency.

When it’s time to redeem your rewards, you’ll buy an airline ticket or book a hotel as you normally would with your Barclaycard Arrival Plus® World Elite Mastercard®. Then later, you’ll go online and cash in your miles for a travel statement credit for the expense.

The benefit to using a “general” travel credit card is that you’ll be able to use your rewards on nearly any travel purchase of your choice. Plus, you won’t be stuck redeeming with just one airline or hotel chain. You also won’t have to deal with hassles like blackout dates, or worry about your rewards getting devalued.

The drawback to “general” travel credit cards is that you won’t be able to reap some of the benefits that come with using a frequent flyer program – this could mean missing out on seat upgrades or deep mileage discounts on off-season flights.

The bottom line: Which type of travel credit card is right for you?

Making a final decision about which travel credit card is right for you boils down to a lot of factors. You’ll need to take a qualitative and quantitative look at your lifestyle, travel habits, and willingness to spend time learning about frequent flyer programs. But in general, here are some guidelines:

You should think about a miles credit card if:

  • You’re very loyal to a particular airline.
  • You’re skilled at making the most of frequent flyer award charts.
  • You value the “extras” that come with using co-branded cards (free checked bags, lounge access, etc.).
  • You have a flexible schedule; this will give you the ability to make the most of your miles.

You should think about a points credit card if:

  • You’re not loyal to a particular airline.
  • You want the option to book travel directly through a travel platform or use a frequent flyer program.
  • You’re interested in becoming more skilled at hacking frequent flyer award charts.

You should think about a “general” travel credit card if:

  • You want to be able to redeem your rewards for all types of travel purchases.
  • You want to be able to book your travel however you want (with any airline or hotel chain, or through a discount travel site).
  • You don’t have a flexible schedule; if you can only fly during the holidays and in the summer, finding award seats might be tough.
  • You’re not interested in a luxury travel experience; seat or room upgrades aren’t important to you.

» MORE: NerdWallet’s best travel credit cards