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Goodbye frequent flyer miles, hello cash back?
Airfarewatchblog
Goodbye frequent flyer miles, hello cash back?
Posted by George Hobica on Sunday, December 27, 2009
$25000 spent on a frequent flyer credit card vs. an Amex Blue Cash cash back card
| Grocery | Gas | Drugstore | All other purchases |
Annual Fee
|
Fee to obtain ticket | Total cashback (total miles plus cash cost of "free" domestic flight) | |
| The Spend | $10,400 ($200/week) |
$3000 | $1000 | $10,600 | |||
| American Express Blue Cash (5% on groceries, gas, pharmacy; 1.25% on everything else after you spend $6500 annually) | $520 | $150 | $50 | $132 | $0 | $0 | $852 |
| Airline credit card (miles earned) | 10,400 | 3000 | 1000 | 10,600 | up to $100 | up to $50 | (25,000 plus $150 in fees) |
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Mad Dog
I used USAir points to book 1st class to Japan - 120K miles vs. about $10K. It was a hassle because US does not fly to Japan, so I had to go through the Star Alliance and fly UA. It took me weeks of calling a few times every day to finally get the flights and dates I wanted. And they only hold the rez for 3 days, so you have to make one small change on the 3rd day (or get a sympathetic agent to override) to "reset" the clock. It was well worth it for the long flight.
I have also been successful upgrading UA flights to Japan - 15K miles will upgrade a Y-class coach to business. That is worth it even if you have to buy the miles (still cheaper than upgrading to E-Plus)
The American Express cash card only rewards 5% after spending $6500 in a year. Prior to that, the reward is 1%. $25000 over 12 months is $2083.33 per month and it takes 3.12 months earning 1% to get to the $6500 after which points for groceries, gas and drugstores earn 5%.
By my math and your numbers, I estimate an annual reward of $522.32 which, although still good, is well short of the $712 you calculate.
I believe the Chase Freedom Card rewards are also capped at $300 a year.