Cash back vs travel points

[red259]

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@yfan wrote:

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@red259 wrote:

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@Anonymous wrote:
Looking at the travel cards it strikes me that if I just used the equivalent cash back card it would be just as good as the points cards, even for travel. Meaning if U spent my cash back on a plane ticket it would be just like spending points.[snip]

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This isn't necessarily true. The value is determined on how you renew your points. Normally you can get much more than .01 per point. The margin is much more noticable if you renew for premium travel suchg as business or first class. There are many factors to look at and each type of point has a different value. For example, I would value an MR point at about 1.8 cents and starpoints at 2.4 cents per point.

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Yes and no. The entire concept of points being worth more than one cent each based on transfer values centers, in my opinion, around a necessary but inaccurate assumption: the straight conversion fails to account for sales. "I converted this many UR points to this many avios and booked this flight, and had I paid for cash, it would have cost me this." For a calculation, this assumption is necessary. But it is selective and often incorrect. It fails to account for sale prices - air, hotel, whatever - only available to cash. Just like some points are more valuale than others as a currency, so are some sales more attractive than others.

When an airline or hotel gives deep discounts on a fare in cash, almost never do they offer the same discount in points - in fact, most hotels use the category system where the same category costs the same year-round, regardless of what cash sales are available.

Lastly, points have no value at all without having enough for redemption. Cash thresholds, even where they do exist, are not nearly as high. There is also the fact that you often cannot transfer the exact number of points needed for a booking, and as such end up with a few thousand extra points sitting somewhere doing nothing - and that loss is rarely accounted for in the popular points-to-cash conversion models.

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Yes you may be able to get sale prices etc, although I find the bonus signup offers to be much better on travel cards than the cash back cards. In addition, you are unlikely to find substantial sale prices on premium travel to make the cash back more valuable than the points. That being said your logic is correct if someone is merely looking to redeem economy and has additional flexibility in their schedule. Again it comes down to how you redeem. For me points are better, but they require a lot more study than a cash back card. If someone is just looking for economy flights (or does not want to spend extra time firguring out redemptions) then a points card may not necessarily be worth it for them. I really believe it comes down to what a person's travel goals are.  

[kdm31091]

I think for the average person who isn't traveling more than a few times a year, cash back makes much more sense and is more flexible. Remember that with points you have to out earn the annual fee before you even make a profit. Without high spending and travel, its not worth it. I think people sometimes get sucked into the travel cards for the bonuses, and fail to realize that long term maybe it doesn't make sense.

For those who travel enough to justify it, its wonderful, but I think in general it can be a bit over hyped and many websites act as though the travel cards are the best. They are - if you travel heavily! That doesn't apply to everyone or even a large majority.

I like cash back better for me. I can save up my cash and deduct it from my occasional travels if I want. Flexible and easy and no worrying about transferring points to x, redeem for y to maximize points, etc etc. Cash back is better for the casual traveler by far. Plus you can use it for anything else obviously.

[Blodreina]

C.R.E.A.M.

[juggalo9er]

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@Simba501 wrote:

C.R.E.A.M.

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the hell?

i believe the answer to this is in the card users travel frequency. i was just approved for arrival elite plus with 40k bonus, with the 2.2222222% cash back i am placing a very high value on this card.

[Anonymous]

Its all about your usage and expected travel plans. My best friend spends 200+ days a year traveling for work, 4-6 flights a week, 3-6 nights in a hotel a week. Every week allyear. He also books convention halls and such, so he can rack up points across multiple sysyems. He then has the ability to shop around and move points and avios and all the other crap around from system to system. and has 15 hours a week on a plane to figure out his best usages. For him, having all the travel cards etc its a steal. For me, who maybe travels 30 days a year, primarily in a car, and half the time with someone else paying for the hotels etc, I will take cash back all day. There are plenty of sites dedicated to maximizing travel benefits with miles calculators and transfer rates out there. If you spend the time on the road, it may well be worth it to look into some of those. Travel hacking is great, if you travel. For the average joe, it may well be more work than it is worth. Especially if you don't earn enough points to use them quickly as it seems every week somebody is making a "change" (read devaluation) to their programs. The flip side may be if you want to earn points toward a dream trip and you arent good at leaving your cash back alone to save it up. points or miles may be easier to not use as soon as you hit a redemtion level thus you may have an easier time allowing them to accumulate.

I personally have no problem with discover telling me I have a couple hundred bucks sitting in cash back bonus, or BOA saying I have a hundred. I know at some time I will have to make a relatively major probably unexpected purchase and having that sitting in my account will take some of the sting out of it. Yea I know I could have it sitting in one of my 20 savings accounts or some other interest earning vehicle,but its like a built in triple secret reserve fund. If I have a car repair for a thousand bucks, toss it on the discover, use the cash back and basically give myself a 20+ percent discount.

[Anonymous]

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@Anonymous wrote:

Its all about your usage and expected travel plans. My best friend spends 200+ days a year traveling for work, 4-6 flights a week, 3-6 nights in a hotel a week. Every week allyear. He also books convention halls and such, so he can rack up points across multiple sysyems. He then has the ability to shop around and move points and avios and all the other crap around from system to system. and has 15 hours a week on a plane to figure out his best usages. For him, having all the travel cards etc its a steal. For me, who maybe travels 30 days a year, primarily in a car, and half the time with someone else paying for the hotels etc, I will take cash back all day. There are plenty of sites dedicated to maximizing travel benefits with miles calculators and transfer rates out there. If you spend the time on the road, it may well be worth it to look into some of those. Travel hacking is great, if you travel. For the average joe, it may well be more work than it is worth. Especially if you don't earn enough points to use them quickly as it seems every week somebody is making a "change" (read devaluation) to their programs. The flip side may be if you want to earn points toward a dream trip and you arent good at leaving your cash back alone to save it up. points or miles may be easier to not use as soon as you hit a redemtion level thus you may have an easier time allowing them to accumulate.

I personally have no problem with discover telling me I have a couple hundred bucks sitting in cash back bonus, or BOA saying I have a hundred. I know at some time I will have to make a relatively major probably unexpected purchase and having that sitting in my account will take some of the sting out of it. Yea I know I could have it sitting in one of my 20 savings accounts or some other interest earning vehicle,but its like a built in triple secret reserve fund. If I have a car repair for a thousand bucks, toss it on the discover, use the cash back and basically give myself a 20+ percent discount.

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You can't ever save money from cashback for a dream trip. 

A first class ticket for two people to Paris or Bali or whatever costs what, like 8k? 

A week's stay in a nice hotel in those places probably another 2-3k. 

To earn 10k from a 2% cashback card, you will have to spend literally a half million dollars. 

The truth is, if you don't make a lot, miles and points from credit card bonus churning is pretty much the only way to take nice vacations. For example, a round trip business class ticket from Chicago to Tokyo (arbitrarily chosen route) next November is 7.4k for the cheapest ticket possible. Or you could sign up for the citi aadvantage and the barclay's US airways and collect the 100k miles needed to fly business on Cathay Pacific for the same route. Total cost: $85 per person (annual fee on the barclay's). Even if you choose to keep one of the cards, you could both keep it for 37 years (!!!!) before the annual fees cancel out, and that is assuming you get absolutely no use out of having the card. 

I know people here sometimes get to carried away with AAoA, inquiries and such, but you tell me: is two HPs for each person and an AAoA ding not worth over 4k each? 

[kdm31091]

If the only reason you can afford a nice trip is because of a card bonus you probably shouldn't be going. There are other expenses besides just getting there!

[Anonymous]

That is nonsense, Sir.

One is allowed to be savvy about how they choose to travel.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

Its all about your usage and expected travel plans. My best friend spends 200+ days a year traveling for work, 4-6 flights a week, 3-6 nights in a hotel a week. Every week allyear. He also books convention halls and such, so he can rack up points across multiple sysyems. He then has the ability to shop around and move points and avios and all the other crap around from system to system. and has 15 hours a week on a plane to figure out his best usages. For him, having all the travel cards etc its a steal. For me, who maybe travels 30 days a year, primarily in a car, and half the time with someone else paying for the hotels etc, I will take cash back all day. There are plenty of sites dedicated to maximizing travel benefits with miles calculators and transfer rates out there. If you spend the time on the road, it may well be worth it to look into some of those. Travel hacking is great, if you travel. For the average joe, it may well be more work than it is worth. Especially if you don't earn enough points to use them quickly as it seems every week somebody is making a "change" (read devaluation) to their programs. The flip side may be if you want to earn points toward a dream trip and you arent good at leaving your cash back alone to save it up. points or miles may be easier to not use as soon as you hit a redemtion level thus you may have an easier time allowing them to accumulate.

I personally have no problem with discover telling me I have a couple hundred bucks sitting in cash back bonus, or BOA saying I have a hundred. I know at some time I will have to make a relatively major probably unexpected purchase and having that sitting in my account will take some of the sting out of it. Yea I know I could have it sitting in one of my 20 savings accounts or some other interest earning vehicle,but its like a built in triple secret reserve fund. If I have a car repair for a thousand bucks, toss it on the discover, use the cash back and basically give myself a 20+ percent discount.

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You can't ever save money from cashback for a dream trip. 

A first class ticket for two people to Paris or Bali or whatever costs what, like 8k? 

A week's stay in a nice hotel in those places probably another 2-3k. 

To earn 10k from a 2% cashback card, you will have to spend literally a half million dollars. 

The truth is, if you don't make a lot, miles and points from credit card bonus churning is pretty much the only way to take nice vacations. For example, a round trip business class ticket from Chicago to Tokyo (arbitrarily chosen route) next November is 7.4k for the cheapest ticket possible. Or you could sign up for the citi aadvantage and the barclay's US airways and collect the 100k miles needed to fly business on Cathay Pacific for the same route. Total cost: $85 per person (annual fee on the barclay's). Even if you choose to keep one of the cards, you could both keep it for 37 years (!!!!) before the annual fees cancel out, and that is assuming you get absolutely no use out of having the card. 

I know people here sometimes get to carried away with AAoA, inquiries and such, but you tell me: is two HPs for each person and an AAoA ding not worth over 4k each? 

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You willnever get an argument from me that the sign up bonus is a fantastic use. But I kind of doubt they are ever going to approve me for that card with the bonus offer on a 25k income.Even with an 850 credit score, they know they are never going to recoup the sign up bonus. And as soon as I took the flight, card closed because there is no value to me beyond that.

[mongstradamus]

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@kdm31091 wrote:
If the only reason you can afford a nice trip is because of a card bonus you probably shouldn't be going. There are other expenses besides just getting there!

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I don't quite agree with that if you use the card to buy stuff you would normally buy with cash that i don't really see the problem. I have recently just got citi aa and barclays us airways to use to fly on cathay business to BKK. If you use citi aa for purchases you would normally make i don't think 3000 over 3 months is that difficult to do for bills and such , meals , gas and groceries. Its all about using card you would normally use with cash, if you do that there are some really nice benefits for using points. In my particular situation I will be getting 8 or 9 cpp , thats an lot more than any cashback card would give me. If you don't have any plans to travel then signing up for travel cards really loses its appeal.