Can you play the miles and points game while paying off debt?

A reader contacted me a few days ago asking me what the best overall miles and points earning credit card is. After further discussion, I found out she had another cash back earning credit card that was about $5,000 in debt.

My main point to her was that she shouldn’t even think about a miles and points earning credit card until she fully paid off the debt on her other card. Simply, playing the miles and points game is not for people who are paying off any debt on their credit cards.


The rewards you’ll earn from a card such as the American Express Premier Rewards Gold Card won’t be worth more than the debt you’re still paying off. In other words, despite the points you’ll be gaining, you’ll always be losing. In fact, you’ll be paying more for those points than someone who is debt free, since the interest rates will make the value of those points next to worthless.

Let’s Look at an Example

One of the greatest travel credit cards, in my opinion, is the Barclaycard Arrival+ World Elite MasterCard which, with the 10% rebate in points, will earn a 2.2% rewards rate. So, if your interest rate on this card is more than 2.2%, you’ll be losing money.


  • I recommend not getting any additional credit cards, until you’re debt free.
  • If you risk not paying a credit card off, consider mileage earning debit card. Though few and far between, if you can start being a responsible payer with a debit card, you will be able to “graduate” to a credit card without payment issue.
  • Pay your payments on-time. A late payment isn’t an option when you’re looking to earn and redeem miles and points.
  • Choose your cards wisely. If you have trouble keeping too many cards open, with too many revolving balances, stick with one card that tends to have the best rewards rate and is otherwise a good rewards earning card. Even though other cards may add to your repertoire, and sound nice, keeping control of your balances is key.
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Remember not to pay debt if you want to take advantage of redeeming awards for first class travel!

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  1. Andrew G says

    Well… the title of this post is a little misleading. I have a mortgage that I manage to pay down every month, which is still considered debt, even though I don’t have any outstanding debt on my credit cards. I also have student loans I’m still paying off. Those are fixed payments though, and I guess the point of the article is that it’s not worth carrying debt on credit cards. Should probably update the title of the post to say “credit card debt.” 🙂

    • says

      Good points. Some people actually pay mortgages and loans using credit cards just to accumulate miles and points, even though they don’t realize what they are losing every time.

  2. ffi says

    Not really true.
    For those with no discipline and who are very simple, this is good advice
    For those who can juggle life, it is very bad advice.

    One can float a balance while carrying debt
    Apply for the Chase Freedom card or any card that gives you free balance transfer for 15 months interest free loan
    Pay that off over 15 months = about 300$ a month
    In the meantime, apply for any 1 card that you want that carries a good bonus
    Meet minimum spend on it by doing things you would do anyway or just go to staples and buy gift cards for 1k
    You still lose cash back at 2%, but that is not too much
    Finish that and move on to the next and so on ……..

    So if you spend 1000$ on stuff you would have to spend anyway,
    you lose 20$ cash back + 80$ on annual fee
    a 50k Alaska mile for 2 trips in the US costs 100$ max will make a holiday once a year affordable.

    We survived the downturn in 2007-2011 using debt judiciously and looking at each piece as a part of the whole.
    Chase Citi, Amex and BofA all helped us – Thanks everyone!

    I will say this however, if you have ANY debt, it costs you.
    Student loans may be “fixed” but they have an interest cost.
    Mortgage has a cost.
    If you decide to save in the stock market, and you pay 5% on mortgage, you are betting that the returns from stocks will be more than 5% over the long term – may be true or may not be true for you if you are not in an index fund.

    You have to make analytical decisions about savings, IRAs, 401k match and student loans and mortgages as a whole.
    These so called advice blog posts are not a substitute for good advice
    I would tell her to get a new fee free cash back card – pay it off in full each month –
    save 2% and use that savings to pay off as well
    In meantime, cut up your old card and pay it off

    • says

      Interesting points! I especially like the Alaska example, which, in most respects is spot on and wouldn’t cost her more than a few hundred dollars, assuming she could afford that. Thanks for sharing!

  3. Andrew G says

    Well, yes you’re of course paying interest on mortgages and other debt instruments, but some people are going to be paying that anyway, and you can use things like REDbird to make payments via credit card for no fee and get points for it (especially if you can sign up for new cards often enough to make those payments go towards earning signup bonuses). Nobody would recommend taking out a mortgage or other loan just to try to get the points, but for people who have them already, as long as you can manage credit cards every month without carrying balances (i.e. paying interest), you’re still coming out WAY ahead. Since I started in this game a couple of years ago, my family has enjoyed free trips to California, Florida (Disney), and this summer Europe (the wife and I for our 10th anniversary). Our credit scores have also gone up in that time from 720-730ish to over 800.

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