#1 Travel Rewards Credit Card?

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When you spend a large chunk of your waking hours talking about, researching, and writing about miles and points it is no shocker that it seems to become a common topic of conversation.  With my mom out of town, we invited my dad over to grill with us this weekend.  At dinner he didn’t bring a casserole, but instead he brought something better.  He showed me an article he printed from NextAdvisor.com about their Travel Rewards Credit Card Analysis since he thought it would interest me… and of course it did.  I had never personally heard of NextAdvisor but they advertize themselves as offering “In-depth, Independent Research”.

Anyway, in this article they ranked 15 of the leading rewards credit cards by the amount of rewards value you get for every $100 charged on each card.  They booked actual flights and hotel rooms with each card’s reward currency and then used that info to calculate the value of each card’s rewards.  You can read their full results here, but I will share a few things from the article that were either interesting.

  • The Chase Sapphire Preferred® Card was dramatically under-valued in this analysis.  My only logical assumption is that the author(s) just don’t understand how the card works.  Based on emails I get from those new into the miles and points world, I actually think this is a very, very common issue with this card.  Most seem to just focus on using the points earned at a fixed price toward travel.  That is certainly a feature of the card, but it is usually not the most rewarding way to use Ultimate Reward points.  The value of this card is in the transferability of Ultimate Reward points to partners like United, Hyatt, British Airways, Marriott, and more.  The article essentially ranks those type of points as high as $1.75 per $100 charged, but yet has Ultimate Rewards at $1.05 per $100 charged – I would think that UR points need to be valued at least as high as the points from programs that they can transfer into.  To me Ultimate Reward points are even more valuable because I can pick and choose how to use them – though that value isn’t as easily quantified in a study.  I personally rank this as the best personal rewards earning credit card because it is so versatile, but I do think that many folks don’t even realize how or why they would want to transfer points to airline and hotel loyalty programs instead of use them as cash (sounds like a good post for another day…)
  • The article ranked each card’s value toward hotels and flights individually, which is fair.  However, I personally don’t think that one credit card needs to excel in both.  Even if you don’t want a couple dozen rewards credit cards it is simple enough to have one that specializes in earning points valuable for airfare, and one for hotels (though the Chase Sapphire Preferred actually does both very well).  For example, you could have the Starwood Preferred Guest® Credit Card from American Express for your hotel stays (though it actually works pretty well toward airline miles as well) since even this article ranked its hotel point earning as the highest at $2.61 per $100 charged.  I think that is a very fair number, even though I usually redeem SPG points higher than that.  You could then choose the airline card that offers perks like free checked bags and/or early boarding on an airline you frequent, and be pretty well covered.
  • Where’s the Membership Rewards program?  I know that no study can realistically cover every single card, but the total omission of cards that earn Amex Membership Rewards seems like an oversight.  I’d be interested to see how the study would value those points since they can go to so many different hotel and airline programs like British Airways, Delta, Hilton, etc, sometimes with a transfer bonusMany of the cards, like the American Express(R) Premier Rewards Gold Card, also have bonus earning categories such as 3x on airfare and 2x on gas and groceries.  I think that certainly deserves to be in the top 15 personal card listing.
  • Bonus categories matter.  Another thing that was mentioned in some of the analysis, but not really fleshed out, was how powerful bonus categories on rewards cards can be.  If you are earning 2x, 3x, or 5x on certain types of spending, that will add up much faster than a straight 1x.  Obviously the more cards you have with varying bonus categories on things like gas, groceries, drug stores, office supply stores, phone bills, etc., the greater proportion of your spending that can earn more than 1x.  Again, that is assuming you have multiple cards, but I think it is still worth mentioning.

Honestly I think the article did a reasonable job at calculating the value of points earned, but I think that what cards like the Barclaycard Arrival World MasterCard and Capital One Venture Card have in simplicity, they lack in exciting redemptions.  Even if you normally redeem flights for domestic coach flights, it is still nice to have the reasonable option to redeem for a lie flat seat to Europe or a hotel like the Grand Hyatt Kauai.  Both of those are rewards best obtained by points that are transferred to programs like Hyatt or United since the cash price and subsequent number of points redeemed at fixed cash value would be so large.

Grand Hyatt Kauai -22K Hyatt points per night

Grand Hyatt Kauai -22K Hyatt points per night

United BusinessFirst - 100K United miles RT to Europe

United BusinessFirst – 100K United miles RT to Europe

What cards do you use for your everyday purchases?  Do you prefer the simplicity and flexibility that comes with fixed value points or do you go for the points that can go into hotel and/or airline loyalty programs?  Do you agree with the article’s ranking of the most valuable cards?

 

Disclaimer: I do receive commission if you are approved for some of the credit cards mentioned in this post.  As always, your support is very much appreciated.

The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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Comments

  1. Like many such articles it depends on who pays the bill for that author or news organization. This will impact who gets ranked where. Just like automotive magazines range cars. It’s biased.

  2. ^^^^This

    For my spending, I just go for the sign-up bonues then move along.

    That being said, I did pull the Barclay US Airways Dividens cards back out of the SD, as they are offering 15k miles for $750 spend during the month of July, Aug., and Sept.

    So I gladly moved my daily spend from my Chase SWA card, to this one – for the time being.

  3. I can see the Barclay Arrival card for the enrollment bonus. Beyond that, I just don’t have enough spending that isn’t for enrollment bonuses or category bonuses to make it worthwhile to use. The fact is that to build up even to a $350 domestic round-trip ticket, you’d have to spend $17,500 on the card. How many years (and annual fees) would it take me to do that, and at what opportunity cost?

    The other downside of the cashback cards is that there is no way to combine the cashback with other streams of points into the program to accelerate getting to a worthwhile level. For example, if I’m working on earning United awards, I can combine miles earned with a relevant credit card with other revenue streams – BIS miles, partner flights, Fidelity, shopping malls, hotel and car rental programs, boring surveys, and the list goes on. To get to $350 with the Arrival card, you just have the slow slog of spending $17,500.

    So, yes, for those not really engaged in the miles and points hobby, the Arrival might be a worthwhile deal for its reliability and simplicity. I think for most readers who pay attention to a blog like this, it’s probably not worth it (apart, again, from the original bonus).

  4. For the beginner at the travel/credit card game, the non-miles benefits of an airline affiliated card are the biggest benefit. Free checked bags have cash value right away and the early boarding group can really help with the carryons. The beginner is less likely to have elite status that comes with these. Of course, picking one airline, getting their credit card, and showing some loyalty in your bookings is a good first step to elite status.

  5. Even if you neglect the transfer partners (which is the best value) you still should get 1.07 with the annual bonus. With the transfer partners I agree it’s significantly better.

  6. That picture of you and little C reminds me of something… It seems like so many first/business class configurations are isolating each seat as much as possible from each other, for obvious reasons. But if you’re flying with little kids, you want them near enough to be comforted by your presence. You two look reasonably close there (but not too close). I’d love to see an analysis of premium cabins that are best for traveling with kids. For example, Aer Lingus has a pretty basic business class product, with old style recliner seats. But they are 2-2-2, so our daughters could each have a parent next to them to snuggle with while they are falling asleep. Being able to at least see mommy or daddy and reach out to hold someone’s hand if you wake up in a strange place is more important to us than the brand of champagne being served. (I can’t believe I just said that! 🙂 )

  7. Thanks mommy,
    going for the Barclay Card using your link, will be interesting, already have their Princess Cruises one… got the predictable

    “Unfortunately, we are not able to provide you with an immediate decision on the application you just submitted. Your application requires further review, which can take up to 10 days.” – that’s due to fraud alert, it’s all good.

    Have decided to cut my Alaska Airlines credit card loose before the renewal – I have NEVER been able to utilize their companion fare promo, even when flying Alaska. I put in the search using no coupon, and get $x for two seats, then repeat same search using the companion coupon code, and get same $x or HIGHER, with less desirable flights. Not sure what’s up with that!

  8. Hands down – Chase Sapphire is my daily spending card. Since I don’t spend thousands of dollars each month, I stick to that card for it’s flexibility and use it when I need to top off my account for awards like Hyatt, Southwest or United. No other card allows me to do that @ a 1:1 rate. It means I can determine where to spend my points as the need arises. It’s my go-to stash, my rainy day points bank.

    ***Case in point: My father-in-law is very ill so my Sister-in-law wants to go see him right away, but the fare was outrageously expensive for a last minute flight from the Caribbean. I didn’t want to use my Skymiles (saving that for Europe) so told her to book a ticket into Miami(half the cost) then I transferred funds to build up my Southwest balance and booked her a ticket for the rest of the trip to see her Dad. She was very grateful. As a bonus, flying in and out of Miami means she gets to see her brother too.

    ***LOVE SAPPHIRE***

  9. @ VG: I agree that for a beginner, free checked bag as a perk of having an airline card can be a tremendous value. My husband and I have saved a bundle every time we fly. But I would definitely recommend having the Sapphire along with that other card, especially if the first card is a UR partner. Reason is that they’ll always have a backup when you fall short on miles/points because personally I find the rates for buying miles/points utterly ridiculous (unless of course there’s an excellent promotion going on for buying them)

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