Frequent Flyer Miles or Cash Back? The Game’s Afoot

For years, I have been suggesting to my readers that they should compare the value of any rewards credit card they’re considering not with another rewards card but with a cash-rebate card.

Cash always trumps loyalty points with the same value, because cash can be spent on anything, not just travel. And with loyalty programs’ value in continual freefall, who knows what the value of a loyalty point is?

Cash is solid, and flexible — two things that frequent flyer miles are not.

So cash is king. And among cash-rebate cards, the king has been the Fidelity Investments Rewards card, issued by American Express. Cardholders earn two points for every $1 charged to the card, and after every $2,500 in purchases, $50 is deposited automatically into the cardholder’s Fidelity account.

And there’s no annual fee.

No danger of hypocrisy here: It’s the card I reach for most often myself. (It helped that I was already a Fidelity customer when the card was introduced. Signing up was a no-brainer for me.)

The only downside is the American Express logo on the card’s face. As I am reminded periodically, not all companies accept Amex plastic.

My Fidelity card was declined just last week, at a cafe that accepted every other species of card. The rather inexperienced waitress seemed perplexed, until I explained to her that American Express charges higher merchant fees that the owner of her restaurant had evidently elected not to pay.

Limitations aside, the Fidelity card delivers a solid cash rebate, day in and day out, with no hassle and no annual fee.

2% Cash Back from Citi

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With the launch of Citi’s Double Cash credit card, there’s a new contender for the title of best cash-rebate card.

Like the Fidelity card, the Double Cash card rebates 2 percent, 1 percent when you buy, the second 1 percent when you pay.

Like the Fidelity card, there’s no annual fee.

Unlike the Fidelity card, it’s a MasterCard, which means it will enjoy wider acceptance than cards from American Express.

Unlike the Fidelity card, the rebate isn’t restricted to a deposit in a Fidelity account. It can be issued as a check, or redeemed as a statement credit or for a gift card.

So the new Citi card matches the Fidelity card on solid payout and no fees, and surpasses the Fidelity card on ease of earning and redemption.

I’ll probably stick with the Fidelity-linked card as my primary credit card. At this stage of my life, retirement saving is a priority, and channeling the rebate directly into my Fidelity account is a positive. But I’m seriously considering making the new Citi card my back-up, for those occasions when Amex cards aren’t welcomed.

Reader Reality Check

Points or cash back?

This article originally appeared on FrequentFlier.com.