Cashback vs miles comes down to one number: what a mile is worth to you. Cashback cards pay you in dollars. Miles cards pay you in points you hope to turn into flights, so their value depends on how you redeem them.
Both are pitched as “free money”, and both can be.
The way to choose is to put them on the same footing. Turn the miles into a dollar value, subtract the costs, and see which is left with more. This piece shows the maths with clearly made-up numbers. It does not compare or rank real cards.
Step 1: Work Out What Your Spending Earns in Cashback
Start with your real monthly card spend. Then apply the card’s rules, not just its headline rate:
- Minimum spend. Some cashback rates apply only after you spend a set amount each month.
- Caps. Cashback is often capped per month or per category.
- Categories. Higher rates may apply only to certain types of spending, with a low rate on everything else.
Illustration (hypothetical): you spend S$2,000 a month, or $24,000 a year. After caps and category rules, your cashback card works out to an effective 1.5%. That is $360 a year in cash, with nothing left to redeem.
Step 2: Work Out What Your Spending Earns in Miles
Do the same for the miles card: how many miles per dollar on your actual spending, after any caps or exclusions.
Illustration (hypothetical): the miles card earns 1.2 miles per dollar on all your spending. On $24,000 a year, that is 28,800 miles.
Now subtract any cost of turning card points into airline miles, such as a conversion fee. Note the minimum blocks you must convert in.
Step 3: Put a Value on a Mile (This Is an Assumption)
A mile has no fixed cash value. Its value depends on what you redeem it for. That makes it the assumption the whole decision rests on, so work it out from a trip you would actually take.
The formula:
Value per mile = (cash price of the ticket − taxes and surcharges you still pay on the award) ÷ miles needed
Illustration (hypothetical): an economy return ticket you would otherwise buy costs $700. The award ticket needs 35,000 miles plus $150 in taxes and surcharges. So ($700 − $150) ÷ 35,000 = about 1.57 cents per mile.
A premium-cabin award can produce a much higher figure on paper. Count that value only if you would have paid for that cabin in cash. If you would never pay $5,000 for a seat, the “value” of using miles on it is not $5,000.
Step 4: Find Your Cashback vs Miles Break-Even
Divide the cashback by the miles:
Break-even = $360 ÷ 28,800 miles = 1.25 cents per mile
In this example:
- If a mile is worth more than 1.25 cents to you, the miles card comes out ahead.
- If it is worth less, the cashback card wins.
At the 1.57 cents from Step 3, the miles are worth about $452 (28,800 × 1.57 cents), against $360 in cashback. That is roughly $92 more a year, before fees. Our cashback vs miles calculator runs the same sum on your own spending.
The short version: Divide your yearly cashback by your yearly miles to get a break-even value per mile. If the trips you actually take give each mile more value than that, miles win. If you are unsure you will redeem at all, cashback wins.
Step 5: Subtract the Costs That Erase Both
MoneySense lists the charges that apply even when you pay in full: the annual fee, card replacement fees, and cash advance fees.
| Cost | Why it matters |
|---|---|
| Annual fee | A fee you do not get waived comes straight off your reward |
| Conversion fees | Reduce the value of each mile |
| Expiry | Points or miles that lapse are worth nothing |
| Minimum-spend chasing | Spending more to qualify is not a saving |
| Interest | Wipes out any reward (see below) |
The biggest cost is interest. MoneySense notes that if you do not pay your bill in full, interest of around 25% to 29% a year applies to the balance and to new purchases. It also notes that the late fee is often a flat $100.
A 1.5% reward cannot keep up with that. Rewards cards make sense only if you clear the full statement balance every month. If you are carrying a balance, our debt payoff calculator shows how long it takes to clear.
Questions That Usually Settle It
- Will I actually redeem? If you rarely fly, or your travel dates are fixed and award seats are scarce, miles may sit unused. Cashback needs no planning.
- Do I have a specific trip in mind? Miles work best when you are collecting towards a known redemption whose value per mile you have already worked out.
- Is my spending concentrated in one area? Both types of card often pay more in certain categories. Match the card to where your money already goes, not the other way round. For spending abroad, see our guide to card FX fees, DCC and multi-currency accounts.
- Do I want simplicity? One card that you understand fully is often worth more than two whose rules you half-remember.
What To Do Next
- Add up your last three months of card spending by category, so you work from real figures.
- Read each card’s terms for caps, minimum spend, exclusions, conversion fees and expiry. MoneySense’s guide to credit cards lists what to compare.
- Price one real trip in both cash and miles to find your own value per mile.
- If you are carrying a card balance, focus on clearing it first. MoneySense has guidance on managing debt.
