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Points or cash back?

By ATB Financial 3 December 2019 1 min read

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With the promise of free flights, gift cards, and other useful goodies, credit card points can sound great. But a little analysis can help you figure out if points or cash back provides the biggest benefit.

About 60% of consumers use a rewards credit card, and in Canada, many of those are linked to Air Miles and Aeroplan. These two behemoths of the rewards world have long been fighting for space in your wallet. Recently, cash back​ has gained some significant ground by attacking Air Miles and Aeroplan on their restrictions, booking fees, and limited flexibility.


What does a flight really cost you?

To compare the two rewards platforms, we researched a return flight from Edmonton to Toronto. This flight was $169 each way ($338 total), with another $174.52 going to taxes and fees. Because you have to pay taxes and fees no matter what reward platform you choose, we're going to compare only the flat fares for this study. We also tried to find credit cards with similar annual fees for a fair comparison.

Next, we broke down the actual total flight costs into what you'd have to spend on your card to earn this flight:

In this example, cash is king. Not only can you earn enough cash for your flight faster, you also don't have to forfeit over a cent for the annual fee. Sure, with cash you often have to wait to redeem, but in the end, wouldn't you rather earn at a much faster rate and get real cash you can use for anything?


A closer look at gift cards

In the next example, we take the same approach but focus on one of the most popular rewards redemption items: gift cards. You would think that gift card prices would be pretty standard across the board, but the results may also surprise you. Here's a look at what it takes to earn $100 in cash/gift cards:

As this whole-brain study shows, not only can you earn at a faster rate (sometimes double) with cash back, you also don't have to pay an annual fee to earn.

So if you're a point junkie, you may want to do the math on your points card. If the points don't add up, try converting to cash back.​​​​

Need help?

Our Client Care team will be happy to assist.