topic Re: Credit Card Rewards: Am I missing something? in Credit Cards

Credit Card Rewards: Am I missing something?

Anonymous — Mon, 24 Apr 2017 03:06:57 GMT

Credit card rewards are generally in the 1-3% cash back range. I hear people all the time say "I paid for our vacation with my rewards points." What I don't understand is how people reasonably get this many miles/points/cash back. I say "reasonable" because You would need to spend $100,000 to get $1,000 in cash back on 1%. $33,000 to get it on 3%. I honestly don't spend this much every year on things I can buy with my credit card.

Are people exaggerating or are people really blowing tens of thousands of dollars a year on stuff?

Re: Credit Card Rewards: Am I missing something?

Anonymous — Mon, 24 Apr 2017 03:34:30 GMT

There are different cards for different things. There are bonuses. Some signups alone are worth a grand or more. If you maximize UR points (with Chase for example), I have heard of people getting over 6x's the point value with a little know-how and little effort.

This is extreme, but Chase was handing out 100K points for signup on the reserve. 6,000 points was enough for me to do a round trip across the county recently. 6k is good, but you could probably do it for less than that with patience. Discover IT is 10% back in the first year if you use it right and it fits your spending habits. Etc.. The list goes on.

Re: Credit Card Rewards: Am I missing something?

sarge12 — Mon, 24 Apr 2017 03:17:34 GMT

@Anonymous wrote:
Credit card rewards are generally in the 1-3% cash back range. I hear people all the time say "I paid for our vacation with my rewards points." What I don't understand is how people reasonably get this many miles/points/cash back. I say "reasonable" because You would need to spend $100,000 to get $1,000 in cash back on 1%. $33,000 to get it on 3%. I honestly don't spend this much every year on things I can buy with my credit card.

Are people exaggerating or are people really blowing tens of thousands of dollars a year on stuff?

There are some cards that offer very high sign up bonuses after I think 3000 dollars spent...Chase Sapphire Reserve comes to mind, I think the SUB on that was 1000 dollars, and were worth 1500 dollars at partnered airlines. I do not travel, so I never order cards with an AF, but occasionally some of the SUB offers are insane.

Re: Credit Card Rewards: Am I missing something?

Anonymous — Mon, 24 Apr 2017 03:19:47 GMT

For most people, the vast majority of your points come from the signup bonuses. Often times, for good signup bonuses, the amount of points you get for spending $1-3k minimum spend would normally require $100k+ of spending. This is why many people around here "churn" credit card signup bonuses. They sign up for cards regularly, get the signup bonus, then find another signup bonus to do. Over time, just from signup bonuses you accrue a ridiculous amount of points.

For example, I just booked a weekend getaway using my 30,000 JetBlue miles from my Barclays JetBlue signup bonus and 50,000 Hilton points from my AMEX Hitlon signup bonus.

Of course, this isn't always the case. There are plenty of people who put nearly 100% of all of their spending through their cards (I do this, so abouty $55k a year on my cards) and there are plenty of high net worth individuals that utilize rewards on their high spending habits.

Overall, when evaluating cards, often a card with a great signup bonus but crappy cash-back/points is better than a card with little to no signup bonuses but great rewards on spending.

Re: Credit Card Rewards: Am I missing something?

Anonymous — Mon, 24 Apr 2017 03:32:56 GMT

Yes, I agree that a lot of the points will come from sign up (and, where possible, churning or signing up for multiple cards in the family) so with CSP, CSR and Ink it was possible to quickly get LOTS of points for a relatively small amount of spend.

As for paid for my vacation type stuff, a lot of this is NOT cash back, but good use of transferable points. So transferring UR/MR/TYP/SPG can allow you to get what would be very expensive (premium cabin international) flights or hotel stays. Here a ticket might have a cash value of say $20K, and most people here wouldn't pay that in cash.

For cheaper domestic travel, covering it with cashback is certainly possible but would still require fairly high spend, (either real or MS.)

Re: Credit Card Rewards: Am I missing something?

happypill — Mon, 24 Apr 2017 03:38:27 GMT

In addition to points, cash back & sign-on bonuses, some cards also give free stuff (like companion airline tickets, upgrades, lounge visits & free hotel nights) each year. Those can have serious value if you use them correctly.

Re: Credit Card Rewards: Am I missing something?

Anonymous — Mon, 24 Apr 2017 03:43:02 GMT

@happypill wrote:
In addition to points, cash back & sign-on bonuses, some cards also give free stuff (like companion airline tickets, upgrades, lounge visits & free hotel nights) each year. Those can have serious value if you use them correctly.

Great point. I was recently able to do Centurion lounge at the airport, hotel upgrade, and no worries about rental car insurance.

Re: Credit Card Rewards: Am I missing something?

Anonymous — Mon, 24 Apr 2017 03:52:41 GMT

@Anonymous wrote:
@happypill wrote:
In addition to points, cash back & sign-on bonuses, some cards also give free stuff (like companion airline tickets, upgrades, lounge visits & free hotel nights) each year. Those can have serious value if you use them correctly.
Great point. I was recently able to do Centurion lounge at the airport, hotel upgrade, and no worries about rental car insurance.

In fairness though, these are typically annual fee based cards. If you use it a lot then its highly worth keeping it even after the signup bonuses.

Re: Credit Card Rewards: Am I missing something?

Anonymous — Mon, 24 Apr 2017 03:53:32 GMT

I think the people that are saying that they pay for vacations and such with rewards by definition are those that are traveling, unless they are taking a vacation down the block or something. That said, rewards for travel from what I've seen are always far more lucrative than mere CB rewards. I don't travel so I know nothing about this, but from some of the stuff I've read those that travel have been able to redeem rewards which save them a lot more money than what standard CB would have yielded.

Re: Credit Card Rewards: Am I missing something?

Anonymous — Mon, 24 Apr 2017 03:56:16 GMT

@Anonymous wrote:
I think the people that are saying that they pay for vacations and such with rewards by definition are those that are traveling, unless they are taking a vacation down the block or something. That said, rewards for travel from what I've seen are always far more lucrative than mere CB rewards. I don't travel so I know nothing about this, but from some of the stuff I've read those that travel have been able to redeem rewards which save them a lot more money than what standard CB would have yielded.

This is 100% accurate. Travel rewards are the big thing right now.

Re: Credit Card Rewards: Am I missing something?

Anonymous — Mon, 24 Apr 2017 05:16:16 GMT

My old boss used to book everything for the executive team on his travel card, then get reimbursed for it. That's travel for 5-10 people with everyone traveling at least once a quarter and some traveling more than once a month. He'd book all of our hotels on his Marriott card and plug in his rewards number on all of the rooms. For conferences, this was a dozen or more for 3+ nights.

I know he isn't the norm but needless to say he never paid much for vacation travel or hotel.

Re: Credit Card Rewards: Am I missing something?

Dalmus — Mon, 24 Apr 2017 05:44:10 GMT

The thing to remember is that the more disposable income you have, the more you can spend, which means more rewards. Your average guy making $35k a year most likely isn't spending enough to get free plane tickets or hotel stays... But it's totally likely that they are getting several free meals at decent restaurants every year using cash back.

Also, these people use their cards for virtually everything. $8 lunches 5 days a week at work add up if you have a 3% card. Add in 5% categories, and it's relatively easy to get a couple hundred dollars over the course of the year.

Re: Credit Card Rewards: Am I missing something?

Anonymous — Mon, 24 Apr 2017 07:23:42 GMT

If you pay cash or use debit cards... then yes you are definitely missing something. Learning how to use the proper cards at the proper time is priceless. I save a hell of a lot of money and get lots of free stuff (airline tickets, hotel rooms etc) by doing this.

Re: Credit Card Rewards: Am I missing something?

Anonymous — Mon, 24 Apr 2017 07:33:56 GMT

I agree with @Dalmus the avg Joe/Joanna is in a h/h with the median American income of 51k per HOUSEHOLD with 2 earners that are NOT flying for conferences every other month

But marketing is a wonderful, powerful thing...It has the avg clerk believing they NEED the fastest internet, the lastest phone and this 'brand' CC

Marketing has ppl over estimate what they NEED by creating a STORY that many will defend, actually qoute the 'sales pitch' is there "some" truth and some value, of course...Is it over stated by the public in general ABSOLUTELY!

Back when I used to do alarm systems...I smirked a bit when ppl would proclaim how they 'won' their system or got the 'Free' keypad in exchange for "fill-in-the-blank" not a smirk of arrogance or pity just one of 'that STILL works, huh?'

Marketing is powerful, especially when the former prospects can TELL, You the story...It just proves it works...If you want your buyers to focus 'left' they'll eventually do so w/o question and DEFEND even Champion going 'left'....The more you have folks looking and thinking 'left' the least time they spend evaluating 'right'....= Big Business wet dream

Re: Credit Card Rewards: Am I missing something?

Anonymous — Mon, 24 Apr 2017 14:43:40 GMT

1) As previously stated, signup bonuses account for a large portion of most peoples' points.

2) Some people travel a lot for business and they rack up frequent flyer and/or hotel loyalty points that way in addition to having the cards for the hotel and airline that they use the most. I know of a couple guys who's companies let them or expect them to put expenses on their personal cards and then get reimbursed on their pay check.

3) Business spending. I have a relatively small construction company and we pay all of our material bills with credit cards and then turn around and pay off the card shortly after the transaction posts. We use the Capital One Spark card (2% cash back). We've been saving our cash back for about a year and we're more than half way to a trip for 4 to Bora Bora......and we were slow the last half of last year.....probably could have done it in a year if we would have stayed as busy as we were in the first half of the year.

Re: Credit Card Rewards: Am I missing something?

Anonymous — Mon, 24 Apr 2017 15:24:00 GMT

I will agree it is all sign-up bonuses, and working for a company with perks. You're also probably reading multiple stories. those people aren't taking multiple vacations lol Everyone just goes once if they're lucky. And don't get me started on Facebook! No one post daily grind just vacation pics.

Re: Credit Card Rewards: Am I missing something?

nachoslibres — Mon, 24 Apr 2017 18:33:10 GMT

@Anonymous wrote:
Credit card rewards are generally in the 1-3% cash back range. I hear people all the time say "I paid for our vacation with my rewards points." What I don't understand is how people reasonably get this many miles/points/cash back. I say "reasonable" because You would need to spend $100,000 to get $1,000 in cash back on 1%. $33,000 to get it on 3%. I honestly don't spend this much every year on things I can buy with my credit card.

Are people exaggerating or are people really blowing tens of thousands of dollars a year on stuff?

Besides what every one else said, typically the credit card rewards earned and used for these type of trips aren't in the 1%-3% cash back range.

Before when I used my Citi DC card for all my unbonused purchases I earned a minimum of 2% for all my purchases. Now that I'm focused solely on points I'm getting at minimum 2.25% on my purchases (assuming Freeom Unlimited at 1.5 points per $ then used for travel through Chase Sapphire Reserve portal at $0.015 per point) - but typically I get at least $0.02 per Ultimate Reward point by leveraging the UR transfer partners. This means that even at $0.02 per Ultimate Reward Point I'm earning 3% back on all my purchases on my Chase Freedom Unlimited, 4% on my gas purchases on my Ink Cash, 6% on my travel and dining out on my Sapphire Reserve, and 10% on office supplies, cell phone, internet, TV, Spotify, and Freedom bonused categories. I've even been able to get $0.04 per point a couple of times when transferring to Hyatt so in those instances you could just double all the earning percentages in the previous sentence (so 6%, 8%, 12%, and 20%).

I can't speak for others but I personally don't blow money to earn points. I see this as a way to maximize a return on the stuff I would have already bought. My wife and I live on a budget - we track everything to the penny - but we also have spend from our businesses. We put roughly $7k-$10k a month on credit cards and in the last 3 years that we've used credit cards for points I've been able to earn over 500,000 in UR points and 200,000 in Marriott points while still earning between $100-$150 a month in cash back from our Double Cash card. If I had used my debit card for these purchases, like I used to do, I would have earned nothing from all these purchases.

We are finally taking our first real trip in August using our points - we were able to get round trip airfare on United from Houston to Aruba for both of us for 110,000 UR points and 5 nights at the Ritz in Aruba for 200,000 Marriott points. This is definitely doable for anyone who has enough personal/business spend and can take the time to maximize bonus spending (knowing which card to use for which purchases) and then being able to figure out the best way to redeem for award travel.

Re: Credit Card Rewards: Am I missing something?

Anonymous — Mon, 24 Apr 2017 19:13:22 GMT

I'm not a big spender and refuse to go out of my way to spend in order to earn points. However, sign up bonuses? I have tons sitting in various accounts ready for use. I went to Canada, stayed in Vancouver downtown free with the Marriot bonus points I got. It was worth it to me to apply and pay the annual fee that one time. I still have about 50k left in the account. While my travel isn't all free because I still have to pay for Disney park tickets which is a large chunk! Alaska Airlines gave me points and companion ticket. So I got to travel to CA with all three of us for 200.00 roundtrip right in the middle of summer (not cheap). It's not free but beats paying full price. I still have 50k mileage points sitting in my account. All to say, they really do add up fast! And you don't have to be a big spender. Because I'm not. I just pay my bills with the cards to earn points. Some of these travel rewards card comes with wonderful perks! I get free baggage check in for each passenger which is one of my favorite. When I travel with family, I hate hate hate carrying extra stuff! It's a hassle.

Others you can get airport lounge, Global TSA check in, Uber credits, and more.

Re: Credit Card Rewards: Am I missing something?

Anonymous — Mon, 24 Apr 2017 20:10:53 GMT

Ah yes, now the puzzle pieces are fitting. Yes, I remember the $200 travel bonus when I got my Capital One VentureOne card. It was easy to spend $2,000 (or $3,000, I don't remember) in the first 90 days.

Business and signon bonuses make sense. I'm more interested in just building up my FICO from bankruptcy rather than opening and closing a bunch of accounts, but I understand that rewards churning could be a fun hobby and lucrative for people in the right position in life. And if I owned my own business, you better believe I would put everything on one of those cards!

Re: Credit Card Rewards: Am I missing something?

steel_string — Tue, 25 Apr 2017 05:48:41 GMT

Don't forget all those extra points you can get from credit card issuers' online shopping malls and the extra airline miles you can get by shopping, eating, or booking travel with their partners.