topic Re: How do miles work? in Credit Cards

How do miles work?

Anonymous — Mon, 29 Jun 2015 18:30:27 GMT

I have all cash-back cards at the moment, but was looking to get into miles cards to prepare for eventual honeymoon travel. Compared to cash-back, miles seem quite confusing. I think I understand the basic cards like the Venture (basically 2% cash back but limited to travel?) but I'm having trouble understanding cards with transferable points like the CSP. I'm especially interested in that card since I already have a Freedom, but any tips on others such as the PRG, Arrival+, or ThankYou line would be appreciated!

Re: How do miles work?

Anonymous — Mon, 29 Jun 2015 18:56:49 GMT

@Anonymous wrote:
I have all cash-back cards at the moment, but was looking to get into miles cards to prepare for eventual honeymoon travel. Compared to cash-back, miles seem quite confusing. I think I understand the basic cards like the Venture (basically 2% cash back but limited to travel?) but I'm having trouble understanding cards with transferable points like the CSP. I'm especially interested in that card since I already have a Freedom, but any tips on others such as the PRG, Arrival+, or ThankYou line would be appreciated!

One of the mods here, NewGuy, has put together this guide to travel cards and it's a great place to start:

http://ficoforums.myfico.com/t5/Credit-Cards/Guide-to-travel-cards/m-p/2918668/highlight/true#M828524?filter=labels%2Clocation&location=forum-board%3Acreditcard&q=Travel+guide

Re: How do miles work?

Anonymous — Mon, 29 Jun 2015 19:19:12 GMT

Awesome post. Thanks so much! Are point values the same across an alliance? For example, if I transfer points to British Airways, can I book American for the same value?

Re: How do miles work?

DaveInAZ — Mon, 29 Jun 2015 20:08:48 GMT

@Anonymous wrote:

One of the mods here, NewGuy, has put together this guide to travel cards and it's a great place to start:

http://ficoforums.myfico.com/t5/Credit-Cards/Guide-to-travel-cards/m-p/2918668/highlight/true#M828524?filter=labels%2Clocation&location=forum-board%3Acreditcard&q=Travel+guide

That is a good guide, thanks for the link. I've considered app'ing for Venture a couple times because of the large CLs, it would pad my overall CLs for utilization, but I'd never use the card as I have no interest in air travel, flew 60k+ miles/yr for 10 years for business and got my fill of travel. That guide confirmed for me that I'll stick with cashback reward cards.

Re: How do miles work?

Anonymous — Tue, 30 Jun 2015 12:42:20 GMT

Nothing wrong with that. Some folks like to game the system and extract maximum value from travel points, for example, flying a pricey first class ticket for comparatively few miles. Others may find it more worthwhile to have the cash over a posh airplane seat.
Glad you found the answer you wanted!

Re: How do miles work?

takeshi74 — Tue, 30 Jun 2015 13:16:18 GMT

First of, miles cards aren't all the same. Some are "true" miles cards. Others are just restricted cash back cards. You just have to carefully look at the details of the rewards programs. You can also use credit blogs and threads here as resources.

@Anonymous wrote:
Awesome post. Thanks so much! Are point values the same across an alliance? For example, if I transfer points to British Airways, can I book American for the same value?

I wouldn't make that assumption. If you take just one airline as an example the miles/points needed for a given reward may be the same amount but the dollar cost of the airfare (what you would pay for the flight if you were not redeeming miles/points) can vary quite a bit and that's what determines the equivalent value of those miles/points.

People rely on generalizations about the value of a point or mile based on what they assume that can reliably redeem for but the value can fluctuate quite a bit depending on the specifics of a given redemption. It's not just the cash value of the airfare but factors such as conversion ratios, fuel surcharges, etc that should all be taken into account. There's defintely much more effort involved in determining reward value on miles/points cards than there is with cash back. That said, I don't always run all the numbers when redeeming. There are some generalizations you can kind of rely on. One of them is that the better values are generally attained by redeeming for premium international travel. Domestic economy rewards are generally of lesser value and, in some cases (i.e. where the airfare for a given flight is on sale at a low price) can a poor value.

Here are 2 examples using United because they're the airline I travel on most of the time and I'm familiar enough to quickly flip through their site for some examples.

A flight I selected from Houston to Narita in Business First would cost $5,972,20. A Business Saver reward would take 150K miles round trip. That works out to about 4 cents per mile. There are probably better deals out there but even without considering them let's look at a different situation.

A flight I selected from Houston to Denver in economy would cost $352.20. An Economy Saver reward would take 25K miles round trip. That works out to 1 cent (1.4 actually) per mile. If an Economy Saver reward wasn't avaialble and if the reward was redeemed at the standard rate of 50K then the value would drop to 0.7 cents per mile.

@Anonymous wrote:
I'm having trouble understanding cards with transferable points like the CSP.

Not too difficult in theory as the points just transfer 1:1 with UR. The work required comes into play when you have to research the rewards programs of the travel partners.

@Anonymous wrote:
but any tips on others such as the PRG, Arrival+, or ThankYou line would be appreciated!

It's basically the same process. There may be some different variables at play but you have to perform the same sort of analysis. MR's points don't always convert 1:1, for example. IIRC the Arrival+ is another restricted cash back card but don't take my word on that. Haven't really dug into TY.

Re: How do miles work?

kdm31091 — Tue, 30 Jun 2015 12:47:52 GMT

+1 what takeshi said. Cards like Venture and Arrival+ are merely restricted cashback cards with excellent marketing to make people think theyre getting some type of "travel" benefit. Why people pay fees for those cards l have no idea, as there are free unrestricted alternatives.

Actual miles cards with transfers and whatnot require fairly large spend generally to justify. If you dont spend much or intend to travel much theyre a waste of money. Some people jump in too quickly because of hype or popularity without running some simple numbers to see if it makes sense for them.

Glad you thought things through and made an informed decision OP

Re: How do miles work?

Anonymous — Tue, 30 Jun 2015 13:45:40 GMT

Thank you all for the great info! That's why I come to this forum.

Re: How do miles work?

Anonymous — Tue, 30 Jun 2015 13:48:54 GMT

As of now, I think I'll go with the CSP to "unlock" my Freedom UR points. I know I can get 20% off travel that way at the very least, even if I don't mess with the points transfers at all.

Re: How do miles work?

Anonymous — Tue, 30 Jun 2015 13:56:23 GMT

@Anonymous wrote:
As of now, I think I'll go with the CSP to "unlock" my Freedom UR points. I know I can get 20% off travel that way at the very least, even if I don't mess with the points transfers at all.

Good luck with your application! The CSP/Freedom combo is great, enjoy it!

Re: How do miles work?

kdm31091 — Tue, 30 Jun 2015 14:10:26 GMT

Not trying to discourage you OP but do you have more than 5 new accounts in the past 2 years? If so CSP will be auto declined.

Also you have a BCP with an AF to justify. Are you sure you spend enough to justify CSPs fee?

Re: How do miles work?

Anonymous — Tue, 30 Jun 2015 15:02:00 GMT

Thanks Ik_!
I have exactly 5 accounts opened over the past two years, 4 revolving and 1 auto.
To be honest, I'm not sure I could justify it currently. However, the spend bonus covers a lot of annual fees and the fee is waived the first year. I also expect a substantial jump in income in a few years which will increase its usefulness. Regardless, I'll be waiting for a pre-qual before I pull the trigger.

Re: How do miles work?

Anonymous — Tue, 30 Jun 2015 15:11:27 GMT

How do miles work? - Horribly

Is this 20% off based on booking through the Chase travel option? Ultimate Rewards I think its called. I ask bc I recall when I browsed through it last year the travel choices seemed quite overpriced compared to other options. 20% off sounds nice but not if the listed price is 30% over what you can find elsewhere. If its truly a good deal after comparison shopping then go for it GL

Re: How do miles work?

Anonymous — Tue, 30 Jun 2015 15:28:26 GMT

As far as I could tell, the rates are the same as the airline websites, but I'll definitely check around before booking!

Re: How do miles work?

kdm31091 — Tue, 30 Jun 2015 15:50:40 GMT

Do your due dillegence OP, like heavenly said. 20 percent off isnt worthwhile if you can pay less elsewhere. Its all psychological. They want you to think its a great discount, but that doesnt mean its the best price.

To be honest it doesnt seem to me like you can justify or need a CSP. Dont be swayed by what is popular. Make sure it actually fits you.