Category: Credit Cards

Real or Perceived values of flexible points?

1/20/2019

While we all like to collect miles and points to get great redemption or travel at discounted rate, what should we consider the real value in terms of time and effort?

The traditional way of collecting miles/points is through airline travel and hotel stays but due to deluge of credit card's which earn miles or points (flexible currency) and have various partners where you can transfer your earned miles/points, it is important to understand the difference between the real and the perceived value. Let's get this straight with few popular credit card examples.

Chase Sapphire Reserve card enables points to be redeemed for travel at fix value of 50% more when you redeem through their travel portal. So, each Ultimate Reward Point can be redeemed for real value of 1.5 cent/$ but "only" when redeeming for travel through their travel portal. The annual fee for this card is $450 although you get $300 in travel credits each year.

Amex Platinum for Schwab Card allows you to redeem your American Express Membership Reward Points for "cash" at real value of 1.25 cent/$. The annual fee for this card is $550 although you get $200 airline travel incidental (in your pre-selected choice of airline), Total of $180 in Uber credits (distributed over 12 months) and $100 in credits on Saks purchase ($50 each every 6 months).

U.S. Bank Altitude Reserve card is similar to Chase Sapphire Reserve where you get fix value of 50% more when redeemed for travel through their travel portal but it does have an option of redeeming for travel directly through airlines, hotel, car rental companies using their real time reward option and get a redemption value of 1.5 cent/$ for each point. The annual fee for this card is $400 although you get $325 in travel credits each year.

As you can see from above that although the fixed value of redemption for Chase Sapphire Reserve and U.S. Bank Altitude Reserve looks same the perceived value is different. At 1.25 cent/$ the Amex Platinum for Schwab might look weaker but do note this is hard "cash" redemption. So just looking at redemption value is not enough. All the above credit cards have different annual fees and provide different benefits. When you consider that into account the above real redemption rates becomes perceived value. This is because each person would have different valuation of those benefits based on the usage of the card and its benefits.

So, always consider the total benefits of the card before you decide which of the card would be a long term keeper for you.

Disclaimer: Some of the links used in the post may be referral links and earn referral to this site. We appreciate you supporting the website.

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SOUTHWEST FOR TRAVEL CREDIT ON BoFA, BARCLAY, CNB, ETC..

3/27/2016

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I have been offline for a while so apologies for that. That being said lets explore something which is useful if you have credit cards which earns you points which you can redeem for travel credits at 1:1 ratio. Let me begin with the few cards that I am aware of which provide great value on earning or redeeming for travel credits.

Barclays arrival plus card - Earns 2% in points on all spend. Can redeem points at 1:1 ratio for travel purchases of $100 or more made with the card. So, 10,000 points can be redeemed for $100 in travel purchase. In additional earn 5% points back for each redemption. It has annual fee of $89.
Bank of America Travel Rewards card - Earn 1.5% points for all purchase + additional bonus points of up to 75% of base points for preferred BoFA banking customers, so essentially making it ~2.625% earning card. 10,000 points can be redeemed for $100 in travel purchase made with the card. Minimum redemption starts at 2,500 points. This card has no annual fee.
CNB Visa Infinite Card - Earn 3% in points on various category of expenses and 1% otherwise. This card provides $250 in travel credits every year for various domestic airlines incidentals, including Southwest Airlines. It has annual fees of $400 but benefits easily outweigh the cost.

There could be other credit cards which provide you option to redeem points for travel at 1:1 ratio but above 3 are the one I am aware of where Southwest Airlines is the most useful and here is why:

Southwest Airline has the most liberal change policy. You can change/cancel your reservation up to 10 minutes before your flight departure and still receive the difference/entire cost of ticket refunded as "Travel Credit" for future use for same passenger within 1 year of original booking date.
You can book flights by redeeming Southwest airlines points with each point valued from 1.53 to 1.67 cents/point + taxes/fees. So $100 ticket can be redeemed for ~5900 southwest points on the higher side of value. If you cancel a reward reservation you can choose to held the "taxes/fees" as travel credit for future use (not recommended) or refund it to original form of payment.

Now you might have accumulated substantial points in your "travel rewards" credit card but do not know of a way to redeem that as you have no plans of travel in near future. If you read the above point closely you will realize a way to get the statement credit without travelling. Yes, you can book an award redemption using your Southwest points for far out in the future where taxes/fees are substantial component of the award. Once those fees/taxes hit your credit card (which provides travel credit redemption) you can pay off by redeeming the travel related credit or wait for travel credit for "CNB" card. At a later date you can just cancel the award redemption and choose to get refund back to original form of payment :).

Thanks for reading!

P.S. - I do not earn any commission from the above credit card links.

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GOOD CATEGORY BONUS CREDIT CARDS TO HAVE?

8/3/2014

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In the miles/points collection one of the important ingredients is having credit cards which provide category spend bonuses. This would help speed up the collection time as well as reduces the overall cost for earning points/miles. Some of these might be limited time offer while others would be limited to $dollar amount cap you could earn in a given year or a quarter. Still having these cards would get you going faster then not having them in your arsenal. Below is the list of few cards which has great potential in maximizing your miles/points earnings! (I have purposefully omitted the cards which have 5% rotating category bonus which changes every quarter. Some of them are Chase Freedom, Citi Dividend, Discover It.

Old Blue Cash:
This card gives 5% category bonus at U.S. Supermarkets, U.S. Stand alone Gas stations and Select U.S. Drug Stores which are classified as "Everyday Purchases" after you hit initial spend of $6500 on the card. This card is not available for application directly from the American Express Website, but you could still get to working application. Below are some interesting details:

1% cashback for "Everyday Purchases" and 0.5% on all other purchases till you hit $6500 total spend on the card.
5% cashback for "Everyday Purchases" and 1% on all other purchases after you hit $6500. total spend on the card (Note: You earn 5% on gas purchases at Gas station only up to purchase of $400).
There is no annual fee for this card.

You need to click on the "link" in Chrome Incognito mode to load the application. Similarly you could use "private browsing mode of other browsers". You can get more detailed information on this flyertalk thread.

Blue Cash Preferred:
This card is newer version of "Old Blue Cash" and gives 6% cash back at U.S. Supermarkets up to $6000 of spend per year (after that only 1% cashback), 3% cash back at stand alone U.S. gas stations, and certain department stores without any cap limits (details about different stores and Supermarkets eligible can be found here).

Sign up bonus which could be as high as $250.
6% of $6000 which is $360 cash back for purchases at U.S. Supermarkets.
3% without cap for purchase at gas stations and department stores.
$75 annual fee which is not waived.

Here is the application link available from American Express website (might not have best sign-up bonus).

Wells Fargo Rewards Card:
This card gives 5 rewards points/$ spend or 5% cash back for gas, groceries and drugstore purchases without any cap for the first 6 months you have this card. After that the cash back goes to 1% only. Also note that the folks who had any credit card from Wells Fargo earlier are excluded from getting this bonus. Since there is no spend cap, it is real good for folks who are heavy on spending and can maximize this limited time promotion. You can redeem the reward points for travel and get good value based on your redemption. For more discussion about this card check out this flyertalk thread.

Use for travel with no black out dates.
$0 annual fee.

Citizens Bank Platinum MasterCard:
This is another limited time promotional card which gives 10% cash back on gas purchases (maximum $1000 purchase) and after that 5% unlimited cash back on gas, groceries and drug store purchases for the first 90 days of keeping this card. After first 90 days you earn 1% cash back on all the purchases regardless of category. In my personal view having this bonus available for first 90 days only is a limiting factor but still would be useful for some folks who would have niche for high spending within the 5% category for the 90 days of promotion period.

10% cash back on gas purchase for first 90 days (limit of $1,000 purchase) and 5% cash back after that.
5% cash back on groceries and drug store purchases.
$0 annual fee.

Ink Bold and Ink Plus Business Card:
Given that both Ink Bold (Charge Card where you need to pay your card balance in full) and Ink Plus (Credit Card) are Business Cards, this might not be something available to all the folks. But given that these cards provide "5% cash back at office supply stores and on cellular phone, landline, internet and cable TV services each account anniversary year" up to first $50,000 spend each year makes them a "must-have" cards for lot of folks. Also these points can be transferred to lot of Ultimate Rewards partner airlines & hotels or can be redeemed as statement credit for 1:1 basis or can be used to book travel through Ultimate Rewards Travel for 1:1.25 ratio makes them really valuable.

5x Ultimate Reward points or 5% cash back at office supply stores or on cellular phone, landline, internet and cable TV.
2x Ultimate Reward points or 2% cash back at gas stations and hotel accommodations.
$95 annual fee (waived off first year of card membership).

Also currently (as of 08/03/2014) there is 70,000 points bonus offer after $5k spend in 3 months available at chase branches for the Ink Plus Credit Card Application for new applicants. So, if this is something you are looking for it would be a good time to get this card.

Disclosure - None of the above links provide me with any referral credit or bonus. Some of the links might not give the best sign-on bonus available. Credit Card application requires your own due diligence and is worth only if you pay your bills on time and in full. Thanks for reading!

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Real or Perceived values of flexible points?

SOUTHWEST FOR TRAVEL CREDIT ON BoFA, BARCLAY, CNB, ETC..

GOOD CATEGORY BONUS CREDIT CARDS TO HAVE?

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