topic Re: Points or Cashback? in Credit Cards

Points or Cashback?

Anonymous — Fri, 28 Sep 2018 22:02:36 GMT

What’s your strategy? Do you use a mixture of both or do you prioritize one over the other? However, I would expect one to prioritize cashback on purchases that net you 4-5% back though unless you own chase cards. How about for those purchases that earn less than 4-5%?

Re: Points or Cashback?

HeavenOhio — Sat, 29 Sep 2018 00:58:56 GMT

I'm purely cashback*. I don't travel enough to be able to justify a travel card. And I value the relative simplicity of cash.

*Some cards, such as my Chase Amazon card, give you "points," but in the end, the points are really cash.

Re: Points or Cashback?

Anonymous — Sat, 29 Sep 2018 00:54:27 GMT

Since I don't travel often, I prefer cashback. Cashback is also simpler than doing the math to make points worth the trouble, I just turn in my cashback bonuses for statement credit and done. You'll typically end up with a better value on redemption with cashback cards as opposed to using points. However, if you're using points for travel expenses, the opposite is usually true--you'll get more mileage on points vs points that are redeemed as cash.

Re: Points or Cashback?

Anonymous — Sat, 29 Sep 2018 02:21:01 GMT

I have a "healthy" mix of both, but at the end of the day i'm more of a cashback kinda guy. Honestly, it just depends on what you spend and if you travel a lot. I always try to get 4-5% back on every purchase, so far that strategy is working out.

Re: Points or Cashback?

UpperNwGuy — Sat, 29 Sep 2018 03:07:24 GMT

I have both. Because I was a frequent business traveler before I retired, I've had hefty points and miles balances for the last ten years, so one of my two primary credit cards adds to the points balance. On the other hand, I don't want those balances to get too high, so I put more than half my spending on a 2% cash back card. When I finally take enough international trips to run the points and miles balances down to zero, I will decide whether to go all points or all cash back.

Re: Points or Cashback?

staticvoidmain — Sat, 29 Sep 2018 04:09:04 GMT

Currently, cashback. I will be moving towards a mix of both next year, because my travel spending is going to look a lot different. But as it is, without much travel, cashback for its simplicity.

There are points system out there that is as good as cashback (as the "cash" rate is 1:1 with the potential to earn more - Wells Fargo rewards for example, has a 1:1 on gift cards). There was a similar thread recenty, and this was my opinion.

Re: Points or Cashback?

Anonymous — Sat, 29 Sep 2018 06:44:19 GMT

@Anonymous wrote:
What’s your strategy? Do you use a mixture of both or do you prioritize one over the other? However, I would expect one to prioritize cashback on purchases that net you 4-5% back though unless you own chase cards. How about for those purchases that earn less than 4-5%?

Another school of thought is to prioritize SUBs at first

For a 'new' guy/gal, there are enough 'above average' SUBs on the market to last many people a few years and the banks are coming up with new ones every now and then. SUBs in general are like 20%-ish cash back, give or take.

Beyond a few years, it starts to depend on time/personal interest, some would then get interested in this and starts to churn, in good years they might even be able to sustain 20% for quite a while, while some would get tired of spending time on this and resort to "no AF 2% all the way" method. Many others would fall into the wide spectrum in between these two extremes.

It also seems to be related to CC spending rate but this is far from 'linear'. For example, for some people that spend at very high rates, there're simply not enough SUBs to keep up with them, nor can they burn points fast enough, so they are 'forced' to take the CB route; while others who spend slower might find SUB chasing/point cards not only feasible but actually a better value; and as one continue to push the spending rate down there is a point where the floor of redemption (such as min amount of pts needed for a flight/room) starts to get in the way (letting points sit there idle while waiting to hit the floor is not efficient and the general trend of points devaluation doesn't help either), so CB might again become the better way, although SUB can still make sense here as long as min spend is attainable.

Re: Points or Cashback?

Noctilum — Sat, 29 Sep 2018 14:44:38 GMT

I am now focused on pure cash back. I had focused on Delta Amex cards previously then there was the MQM change so I don't spend a dime on those cards any more. Technically Chase UR can be considered points or cash back, and I may use them for travel in the end, but I try and maximize based on cash back first.

Re: Points or Cashback?

Anonymous — Sat, 29 Sep 2018 15:00:38 GMT

@Noctilum wrote:
I am now focused on pure cash back. I had focused on Delta Amex cards previously then there was the MQM change so I don't spend a dime on those cards any more. Technically Chase UR can be considered points or cash back, and I may use them for travel in the end, but I try and maximize based on cash back first.

Right, so it really all comes down to how you redeem. So to me the acid test of points vs cashback would be something like:

"You can use a pure cashback card for this purchase (say Discover or Cash +) and get 5%, or use CFU and get 1.5UR, or the Amex business to get 2MR. What do you do?" and assume this is a normal transaction (i.e. not too big, not meeting SUB, not needed to get the final few UR/MR for a particular award.)

Re: Points or Cashback?

wasCB14 — Sat, 29 Sep 2018 17:53:11 GMT

My choice of card is not always determined by rewards. Benefits and promotions play a role, and for some purchases I favor Amex for organizational tools.

When focused on rewards, I use cent-per-point estimates and compare them to cash options.

Probably 95% of my spend earns MR/UR points or miles.

When do I go for cash back?

Discover for an occasional rotating category

BCE for offers (good ones have been rare for a while...if I have to close a card for a new Amex bonus sometime, this is the one that will go)

DC for price rewinds

Costco for rewinds and gas (Visa only at Costco, and I don't want other gas eating up the BBP cap)

Arrival (restricted travel cash) for PIN (if I close Aviator).

Re: Points or Cashback?

creditfan — Sat, 29 Sep 2018 22:47:26 GMT

if you travel often then get points card

I don't travel, I prefer cashback card

as simple as it can be

Re: Points or Cashback?

Anonymous — Sun, 30 Sep 2018 12:31:32 GMT

@creditfan

wrote:

if you travel often then get points card

I don't travel, I prefer cashback card

as simple as it can be

Couldn’t said better myself.

Re: Points or Cashback?

kerplunk — Sun, 30 Sep 2018 15:14:45 GMT

I suppose there is nothing stopping me from doing this, but I'd love to just use my Citi Double Cash card (2% cash back) for all purchases and not have to worry about anything else. I seriously might do this.

The problem is that I have the Chase trifecta (CSR, CFU, CF) and I'm earning so many points...

Re: Points or Cashback?

Anonymous — Sun, 30 Sep 2018 19:41:06 GMT

Thanks for the responses!

I’m certainly not a frequent traveler by no means but I have been trying to travel more as of late. As of now, I probably maybe travel via plane 3 times a year. However, I do stay at hotels that are within driving distance a little more. If I had to guess, I probably stay in hotels maybe 10 times a year and sometimes more.

I’ve been leaning towards going to a 2 card system to simplify things. I would use my Savor for 4% cash Dining and Entertainment while using my Premiere for all other purchases (including travel obviously) to add to my stash of points. I know the premier gets 2x points on dining but imo it’s hard to turn down 4 or 5% cashback on purchases.

Thoughts? I know logically it makes sense to use a 2% cashback card for non category expenses since the premiere only gets 1x points on other purchases. My reasoning for this is that it’s easier to use points for travel than it is for using cash back towards travel if that makes any sense.

Re: Points or Cashback?

Anonymous — Sun, 30 Sep 2018 23:45:23 GMT

@creditfan wrote:
if you travel often then get points card
I don't travel, I prefer cashback card
as simple as it can be

I think it also depends on the type of travel. If you want premium cabin international flights (and/or top category hotels) without enormous spend, cashback simply won't get you there. With cash price of $15K, you need to spend $750K on a 2% card, much much less is needed for points. For domestic coach, frequently cashback will be at least as good as points (exceptions for Avios on AA and maybe some other choices).

Re: Points or Cashback?

wasCB14 — Mon, 01 Oct 2018 00:34:21 GMT

@Anonymous wrote:
@creditfan wrote:
if you travel often then get points card
I don't travel, I prefer cashback card
as simple as it can be
I think it also depends on the type of travel. If you want premium cabin international flights (and/or top category hotels) without enormous spend, cashback simply won't get you there. With cash price of $15K, you need to spend $750K on a 2% card, much much less is needed for points. For domestic coach, frequently cashback will be at least as good as points (exceptions for Avios on AA and maybe some other choices).

Agreed, it's not so simple.

Some people travel fairly often and aren't loyal to a given hotel or airline, preferring a 3rd party booking service (e.g. Travelocity) to keeping track of a bunch of loyalty programs.

Likewise, some people are loyal to a particular program but don't have good card options for that program. I like IHG hotels but I'd go for something like the Alliant 2.5% card before putting most or all of my spend on my IHG Select.