topic Cash back vs. Points systems? in Credit Cards

Cash back vs. Points systems?

Anonymous — Mon, 24 Sep 2018 15:28:36 GMT

Is there ever a reason to go with points over cash back if you don't travel or frequent hotels? Do Mr or UR rewards translate well to gift cards or other physical items(based on many points programs I'd think not...)

I do have the Barclay's Uber card for any occasional travel and hotels earns 3%

Re: Cash back vs. Points systems?

Anonymous — Mon, 24 Sep 2018 15:37:21 GMT

MR isn't the best for gift cards. If you want gift cards the Citi Thank You Premier is a much better option. As all their gift cards are 1cpp. Where with Amex MR Points a lot of gift cards are less than 1CPP. I am not sure if any of these systems will be better for you than cash back after the first year. But CSP, PRG, and Citi Ty Premier should all be no brainers for the first year even for the non-traveler. You should be able to get over $500 of value the first year and they all waive their fee the first year. After that a cash back card is probably going to be better for you.

Re: Cash back vs. Points systems?

JustBPatient — Mon, 24 Sep 2018 15:37:27 GMT

There are a lot of point experts on here that can expand that discussion but if you don't travel messing with points imo is a waste.

Re: Cash back vs. Points systems?

K-in-Boston — Mon, 24 Sep 2018 16:04:23 GMT

With limited exceptions, I totally agree that after the SUB (for instance if you just took cash, both the CSP and ThankYou Premier are $500 rather than 50k points or $625 portal travel credit) it would be a poor choice. The category bonuses on some travel cards (for example, with Citi and Chase "travel" means a lot more than just airfare, hotels, cruises, etc.) can be worthwhile if you have a lot of spend in those categories, but otherwise getting 3% back on a travel card for limited spending is going to be pretty much the same or worse after factoring in the AF than just getting 2% cash back if you are going to go for gift cards. As a best-case scenario most gift cards will be 1 cent per point. Amex gift cards are typically less than 1 cent, but places like Home Depot can consistently be 1 cent per point for eGift Certificates, and there are sometimes bonuses - still I've not seen better than 1.2 cents on gift cards with Amex, and that may have only been on a business gold or platinum. With limited spend it can also be quite difficult to rack up enough points after the SUB is gone to meet the minimum redemption for a gift card unless you're putting decent spend on a card; and putting everyday spending on a travel card that you plan to cash out for 1% cash back would be a poor choice of rewards.

Re: Cash back vs. Points systems?

mongstradamus — Mon, 24 Sep 2018 16:24:57 GMT

In most cases if you aren't travelling then points will never give you enough value over cash back. One thing to account for is most of the "better" points cards have annual fees , while some of the better pure cash back cards don't like citi 2% cash back , chase 1.5% cash back and most of the 3/2/1 cards.

If you are looking to travel then thats another story you can get up to 3 times the value.

Re: Cash back vs. Points systems?

staticvoidmain — Mon, 24 Sep 2018 18:35:11 GMT

@Anonymous wrote:
Is there ever a reason to go with points over cash back if you don't travel or frequent hotels? Do Mr or UR rewards translate well to gift cards or other physical items(based on many points programs I'd think not...)

I do have the Barclay's Uber card for any occasional travel and hotels earns 3%

It really depends on your spend. If you want straightforward rewards, the cashback route is the way to go. It is a very simple system. My idea is same as yours, in that points is almost always good only for travel-related spend and rewards. But that is not true. It is just that, usually, the point system has the best redemption for travel, and worse for cash.

Example:

Card Type	Spend	Reward
3% Cashback Card	$5,000	$150
3× Points Card	$5,000	150,000 points

Where the points can be redeemed as:

Target	Redemption	Total Cash Value
Cash	1500pts = $1	$100
Hotel	75K pts = 1 night 150K points = 2 night where 1 night = $100	$200

Of course, this is just an example and in some cases, an exaggeration. The other thing is, you have to think in maximizing your points. For some people, they'd gladly trade thinking with a litte less reward.

For me, I have a cashback system because of it's simplicity. I don't have to think. A 5% cashback is essentially a 5% discount off. (But then, I have also been planning on switching to the points system (or a combination) because my spending is about to look much, much different.)

Re: Cash back vs. Points systems?

mongstradamus — Mon, 24 Sep 2018 18:52:48 GMT

@staticvoidmain wrote:
@Anonymous wrote:
Is there ever a reason to go with points over cash back if you don't travel or frequent hotels? Do Mr or UR rewards translate well to gift cards or other physical items(based on many points programs I'd think not...)

I do have the Barclay's Uber card for any occasional travel and hotels earns 3%
It really depends on your spend. If you want straightforward rewards, the cashback route is the way to go. It is a very simple system. My idea is same as yours, in that points is almost always good only for travel-related spend and rewards. But that is not true. It is just that, usually, the point system has the best redemption for travel, and worse for cash.

Example:
Card Type Spend Reward
3% Cashback Card $5,000 $150
3× Points Card $5,000 150,000 points

Where the points can be redeemed as:
Target Redemption Total Cash Value
Cash 1500pts = $1 $100
Hotel 75K pts = 1 night
150K points = 2 night
where
1 night = $100 $200

Of course, this is just an example and in some cases, an exaggeration. The other thing is, you have to think in maximizing your points. For some people, they'd gladly trade thinking with a litte less reward.

For me, I have a cashback system because of it's simplicity. I don't have to think. A 5% cashback is essentially a 5% discount off. (But then, I have also been planning on switching to the points system (or a combination) because my spending is about to look much, much different.)

If you want to go to the extreme with that example , you would really want to use your reward points for business or first class to maximize the value.

I can give an example of something i actually did. I use 67.5k AA points i accrued to fly back home from BKK on Cathay first. 67.5 k would just be 675 dollars with cash back, with my rewards points got 25x the value. Not that i would have ever spent $17000 on a flight ever but its an example of where reward points can be quite useful compared to just pure cash back.

Re: Cash back vs. Points systems?

UpperNwGuy — Mon, 24 Sep 2018 18:56:46 GMT

Travel cards (points or miles) are designed for people who travel. Cash back cards are designed for people who don't travel. Get the card that fits your situation.

Re: Cash back vs. Points systems?

SomewhereIn505 — Mon, 24 Sep 2018 19:03:04 GMT

I personally prefer cash back.

MP has not been useful to me. While I have downscaled my travel plans, I'm probably going to bank airline points for a year and then try to fly with them.

Re: Cash back vs. Points systems?

Anonymous — Mon, 24 Sep 2018 19:23:46 GMT

That's just it for me.... Simplicity.

If I'm ordering fast food or out eating, I can use the Uber. If the girlfriend has my wallet, it's "the black one." Gassing up her car...same

If I'm out somewhere that's non-category spend I'll use the Citi DC(even for big Amazon purchases that may have rewinds) That's "the green one." Ha.

I have the discover chrome for quarterly spend.

Re: Cash back vs. Points systems?

staticvoidmain — Mon, 24 Sep 2018 19:36:51 GMT

@Anonymous wrote:
... ... ... it's "the black one." Gassing up her car...same
... ... ... "the green one." Ha.

I wish I can say the same. If I say they "gray one", or the "blue one" DW is gonna toss all my cards at my face. I swear credit cards are starting to look the same.

**for reference look at my cards in my sig.🡫🡫🡫