It’s no secret that The Milelion and SG Budget Babe are fierce online rivals, ever since he called us cashback folks “evil” and “noobs”. I kid you not. What an insult!
Back in October, The MileLion was at it again, arguing why air miles cards offer better value than cashback. He even issued an open #nevercashback challenge on Facebook. Now that I’m back to blogging after delivering my baby boy, here's my response to why you should choose cashback over miles any day. #teamcashback
Miles give you access to experiences, but you can go further with cashback
The MileLion brings up a fair point that most people probably wouldn’t be willing to spend S$10,000 to buy a First Class seat, but yet be more than happy to claim that with their miles.
But here’s my take:
- That joy is short-lived (and is over in a matter of hours).
- Cashback brings you further. Just like how I have no desire for branded bags, I similarly don’t need to experience a First Class or Business Class. When I fly, all I care about is the flight is safe, on time and gets me to where I need to be. Of course, it has to also be reasonably comfortable (economy aisle seats are good enough for me).
- My idea of a travel experience doesn’t come from flying premium class; I prefer travelling via budget or economy any day, and save cashback money for sightseeing and other activities when I land.
Cash saved from cashback pays you interest while miles lose value over time
Over the years as more people joined the miles-chasing bandwagon (otherwise known as “travel hacking”), the airline industry has responded by making it harder for one to claim a trip using miles.
Just take a look at the Krisflyer frequent flyer programme (arguably the most popular in Singapore) and how often they’ve changed their awards redemption system in the last few years. Even The MileLion himself has acknowledged this - as seen from his post on the horrible devaluations since 2012.
Let’s assume you started collecting miles in 2014, working towards a goal of 215,000 miles so you and your spouse can redeem a Krisflyer Suites experience to London. Even with an air miles card that gives you a generous 4 miles per dollar, you’ll need to spend over $53,000*, or slightly over $1,000 per month for 4 years. Just as you’re about to happily redeem your tickets in 2018, imagine being told that you’re now 21,000 miles short!
My heart can't take such surprises. Old liao. Next!
*You can reduce the amount spent by paying annual fees for the cards and getting a bonus miles for doing so, but you’ll still need to spend a significant amount.
Miles chasers tend to spend more than cashback chasers
The miles game fuels you to spend more and more so you can reach your intended goal. After all, *cues music* You’ve tried so hard, and got so far, but in the end, it doesn’t even matterrr.
As a cashback girl, I spend much less than most of my friends in the miles camp. To make my cashback go further, I put any cash saved into a high-yield bank account that earns interest, therefore giving me even more for every dollar saved. A few months ago, I withdrew from that account to pay just $890 for a pair of economy class tickets to London.
Cash is king over miles redemptions
Airlines have limited inventory set aside for miles redemptions, so many people end up on the waitlist… or they settle for a less-than-ideal flight in order to redeem their miles. Experiences are also best shared with a loved one. And if you thought redeeming one ticket via miles is hard enough, try redeeming for two, side-by-side seats on the same flight. Enough said.
However, if you pay cash, you get to choose when and how you want to fly.
In addition, the airlines run rather attractive promotions from time to time, when you can snag tickets at a heavily discounted rate. On the contrary, I’ve hardly ever seen them do promotions for miles redemptions!
Miles cards have too many (confusing) caveats
Merchant exclusions on air miles cards are so complicated (and random, if I might add). There’s even an entire spreadsheet on HardWareZone dedicated to verifying miles rewards across merchants, across banks. If that isn’t tiring, I don’t know what is.
Compare this to cashback credit cards, which are a lot more transparent on payments that do not entitle you to cashback. Payments to government institutions, charitable or religious organisations, trading platforms, AXS, EZ-Link top-ups, and Paypal are typically excluded. I’ve not personally encountered any situation where a cashback card advertises “X% cashback for online spend!” only to find out "payment at Merchant Y is not under our list of participating retail merchants”.
In conclusion, here’s my lowdown on why earning cashback is better value than chasing miles:
- Joy from miles is short-lived; cashback gives you more options
- You can’t earn interest on your miles, unlike cashback
- Miles are subject to devaluation year after year
- Air miles chasing encourages you to spend more and more
- You’ll often find yourself waitlisted for flight redemptions through miles
- Miles credit cards come with too many caveats and exclusions
That’s why I’d pick cashback cards over miles cards any day. Cashback gives me the freedom to decide when and how I want to spend the extra cash saved.
That’s not to say a miles card is bad. It depends on your spending habits and categories. If you have a big-ticket item to pay for, such as a $60,000 wedding restaurant bill, you’re better off using a miles card than cashback card (even the most generous 1.6% uncapped cashback card only gives you $960 vs. 240,000 miles with a 4 mpd card, enough for a pair of economy class tickets to the U.S.)
But if you have no particular desire to fly premium, then cashback cards truly offer you better value. Still think miles are ALWAYS better? I disagree. Cash will (almost) always be king. #teamcashback
What to read next:
Budget Babe is an ordinary lady striving to achieve financial freedom in Singapore before the age of 45. She writes about getting more interest on one’s savings, insurance, CPF, investments and more in order to empower fellow Singaporeans to take charge of their own finances.