The way I see it, points/miles are only worth it if you want premium seats on international flights. Otherwise, cashback will almost always win out.
I have mentioned this before, and I think it bears repeating: the "cpp" evaluations are necessarily imprecise because they fail to account for opportunity costs of cash sales. To use an example, let's say you get a British Airways flight from New York to London, round-trip, for 50K points. You figure that if you were paying cash for the same exact itinerary, you would pay $1200. Nice, you think. I just got 2.4 cents per point!
Not necessarily. The above calculation assumes that you have no other vacation option except to take that specific set of flights on those specific dates. But that's not really true, is it? If you did not have those points as an option, it's not set in stone that you would pay cash for the flight, go on vacation at that time, or even pick London as your destination. I at least would be more likely to shop around for cash sales and use a different flight on a different date from a different airline to take a vacation in Costa Rica if American was offering a sale for a couple of round tickets for $400 or even $300 a piece on an off-season ticket.
Considering the above opportunity cost, I would say that I didn't at all save money - in fact, I spent 50K points when I could have spent $400 in cash, meaning I only got 0.8 cpp when the opportunity cost is taken into account. Sure, it's not BA, and it's not London - and it's comparing apples to oranges. But the thing is, when it comes to vacations, apples are often perfectly replaceable with oranges.
At the end, it all depends on what you want, and what makes you feel rewarded. Remember, these are your rewards - whether points or cashback. Hunting for off-season vacation spots and great cash sales makes me feel rewarded. Maybe flying first class on BA makes you feel rewarded. The value is entirely dependent on you.
