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Wealth and Wants

Booking with points cemented my preference for cash back

While travel cards can offer perks for travel, cash back might give more flexibility for your next trip

Summary

The pandemic made travel impossible for many, but as it eases, more and more people are traveling once more. Travel credit cards may give incentives for travelers, but read our take on why cash back might be the better option.

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In early 2020, I made my first (and still only) points transfer from a credit card rewards program to an airline loyalty plan. I transferred 75,000 Citi ThankYou points, which I earned via my Citi Premier® Card, to JetBlue.

Including some previously earned JetBlue TrueBlue points, I spent a total of 85,400 points for three roundtrip flights between New York and San Francisco. Since the tickets retailed for a total of $1,235 (not including checked bags or government taxes and fees), that worked out to a value of 1.45 cents per point.

Unfortunately, my family was not able to make the cross-country trip to visit my wife’s parents because of the coronavirus pandemic, but I got a full refund of the TrueBlue points and the taxes and fees. The points sat in my account for more than a year as we sorted out next steps and waited for the pandemic to improve.

Recently, we decided to try again.

JetBlue Cash + Points

While researching the logistics, the first thing that caught my eye was JetBlue’s Cash + Points redemption option. This launched in June 2020, and as the name suggests, it lets you pay for part of your reservation with points and the remainder with cash.

I figured I might as well liquidate as many points as I could since I don’t travel that much and I’d rather extract value from my rewards points as soon as possible. It already bugged me that I had so much value tied up (for more than a year) in this canceled trip.

Our desired itinerary was priced out at $2,427.92 (not including checked bags or government taxes and fees) for four tickets (yes, our family has grown over the past year). That equated to 191,200 TrueBlue points (1.27 cents per point). I only had 86,831 points in my account, so I tried to use all of those and figured I’d put the rest on my credit card (earning more rewards and paying in full to avoid interest, of course).

My jaw dropped when I saw the “Cash + Points” option would still cost $1,686 out of pocket. In other words, my 86,831 points would only trim $741.92 off the price. That’s a measly 0.85 cents per point. Cash + Points sounds like a way better deal than it really is: TrueBlue points are normally worth something in the neighborhood of 1.3 or 1.4 cents apiece.

I decided to forget about Cash + Points and book as many free tickets as possible, even if that meant making separate reservations and leaving some points in my account. Fortunately, I had just enough points to secure our return tickets. Made as a one-way reservation, I nabbed four free seats worth $1,152.72 for 83,200 points (that’s 1.39 cents per point, way better than the Cash + Points valuation).

Purchasing airfare with the Chase Freedom Flex

I bought our four outbound tickets with my Chase Freedom Flex℠ card. I looked into booking via the Chase Ultimate Rewards Travel Portal because I would have gotten 5% cash back, but I decided against it.

JetBlue gave me twice as many TrueBlue points (6X per dollar instead of 3X) by booking directly through it. Even though buying from JetBlue earned only 1% cash back on the Freedom Flex, the additional TrueBlue points helped close the gap.

Also, if we need to change our plans, it’s generally easier to deal directly with an airline rather than an intermediary such as an online travel agency. Unfortunately, that’s a real concern, since COVID-19 cases are surging again and neither of our daughters is currently eligible to be vaccinated.

Other Freedom Flex travel benefits

If I want to, I can enter this travel purchase into a My Chase Plan and avoid interest or plan fees for up to 18 months. That’s a way better deal than the MarcusPay offer JetBlue showed me at checkout, which was a payment plan for 12 or 18 months at 10.99% to 25.99% fixed APR.

I think I’ll pay in full before my next due date, but the interest-free My Chase Plan is an interesting promotion that might make sense if you need more time to pay off a travel purchase. Just make sure you don’t view it as an excuse to overspend.

I also like how the Freedom Flex includes trip cancellation/trip interruption insurance worth up to $1,500 per person and $6,000 per trip. That’s unusual, especially among no-annual-fee cards.

If we need to change our plans, we’ll probably be covered by JetBlue’s 2020 decision to do away with change and cancellation fees on most fares, but the added protection certainly doesn’t hurt. It’s possible we could run into a situation in which the Chase coverage would apply (like the time I got stranded in Washington, D.C., at 2 a.m. after my flight from Chicago to New York was diverted due to severe weather).

Why I wish I had redeemed for cash back all along

I have long been a cash back credit card loyalist. I appreciate the simple, straightforward nature of these cards. I don’t love to travel, and it’s not easy with two young kids. Even though travel credit card redemptions can be more lucrative, they’re also a lot more complicated.

A year and a half ago, I could have cashed in those 75,000 ThankYou points for $750 in gift cards or $750 toward our mortgage payments. While the points ultimately took about $1,043 off our trip costs, it has been a hassle. By the time we actually take this trip, even if the new plan works out, it will be about two years since I earned the points.

I probably could have made more money by taking the cash up-front and investing it in an S&P 500 index fund. Finally, because those points have been tied up with JetBlue, it limited my flexibility to investigate other airlines, airports and flight times.

Many people love travel credit cards, and I understand the potential benefits (free trips, airport lounge access, travel insurance and more). But I also see why cash back is the most popular redemption option. It’s certainly my preferred route. I’m happy to sacrifice a little value in exchange for more simplicity and more immediate benefits.

Also, with cash back, what you see is what you get. With travel redemptions, we’re likely to see even more devaluations as struggling airlines and hotels change their rules and require more points or miles to secure free flights or nights. That trend was well underway before the pandemic, and it’s even more likely moving forward. Cash is king, my friends. 

Have a question about credit cards? Email me at ted.rossman@creditcards.com and I’d be happy to help.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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Credit Card Rate Report
Business
14.16%
Airline
15.46%
Cash Back
16.23%
Reward
15.94%
Student
16.78%

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