In the past I would never even consider a cash back credit card, mainly because 1% cash back just isn’t exciting, and more importantly I love miles. Part of my obsession with miles is all in my mind (it’s a big game, after all), but at the same time they do get me some killer vacations. A good chunk of the miles I earn from credit cards, though, are from sign-up bonuses, which can be pretty darm rewarding.
That being said, I have to wonder whether it’s time to consider a cash back card again. Take, for example, the Charles Schwab Invest First Visa. It has no annual fee, no foreign transaction fees, and most importantly, offers 2% cash back. With mileage earning credit cards, you typically earn one mile or point per dollar, which it would be hard to argue is worth two cents. I would argue an airline mile in any program isn’t worth two cents, and I don’t even think an SPG point is worth that much. 1.5 to 1.75 cents per mile seems right, and that’s on the high side.
But I still don’t think I’ll be getting a cash back card, and it’s mostly my mind playing games with me. If I buy a cookie at Panera for $1, I earn one mile. That’s a mile closer to a first class trip to some place 10,000 miles away. If I paid with a cash back card, on the other hand, I’d earn two cents. What are two cents? 2% of another cookie?
So what am I missing here? Why aren’t all of us mileage addicts being rational and switching to a 2% cash back credit card?