topic Re: Check my math - cash back vs points in Credit Cards

Check my math - cash back vs points

Anonymous — Sun, 23 Feb 2014 23:51:31 GMT

Still trying to wrap my head around this, give me your thoughts:

I can buy a RT to BOS for $226.00, or 15,200 points on Jet Blue.

Using my BCP, if I spend $3800 on groceries I get $228.00 cash back

Using a PRG I would need to spend $7600 on groceries to accrue the necessary 15,200 points

I can get a RT to DEN for $368, or 20,000 points

Using BCP I spend $6,000 on groceries for $360 cash back

Using PRG I would need to spend $10,000 for 20,000 points.

Re: Check my math - cash back vs points

bada_bing — Mon, 24 Feb 2014 00:27:16 GMT

Your math looks good as far as it goes. Miles don't have a fixed value and are

worth more for some trips than for others. You have appeared to have picked

some fairly low priced tickets, so the comparison is going to show an advantage

to paying cash. I would never use miles for a low price advance purchase ticket.

I save miles for short notice or premium time ticketing. Your comparison is

even a bit worse than you calculated because you'll earn miles for a purchased

ticket but not for an award ticket.

Also BCP has a $6000 annual limit on the 6% groceries, so that is a further consideration.

Generally, if you have a BCP, the first $6000 of grocery spend should always go to it,

there isn't anything likely to beat that return. For other spend, there are a lot of personal

circumstance calculations for what is the best use of spend. If you fly infrequently and

only using budget fares, miles programs will have a lower value than other rewards.

Re: Check my math - cash back vs points

Anonymous — Mon, 24 Feb 2014 00:27:54 GMT

@bada_bing wrote:

Also BCP has a $6000 annual limit on the 6% groceries, so that is a further consideration.
Generally, if you have a BCP, the first $6000 of grocery spend should always go to it,
there isn't anything likely to beat that return.

Actually, if you are just using your BCP for groceries (because you have better cards for gas and don't use the department stores for example) AND you can get 5% (e.g. 2 Sallie Mae, 5% off gift cards at Amazon or Office supply) then the BCP isn't worth it either, because the total reward is $285, compared to $300 with 5% spend).

But I agree that OP chose flights that favor cash back. Also, heavy spend on the PRG is rewarded with the 15K bonus, whereas, as you note, the BCP quickly becomes a 1% card.

Re: Check my math - cash back vs points

bada_bing — Mon, 24 Feb 2014 00:39:54 GMT

Yeah, I sort of factored in the AF on the BCP by assuming the OP

already had the BCP and the AF was already committed. The BCP

Isn't a true 6% card because of the AF and spend limits. If you already

have it in your pocket though, it does earn 6% on the choice to use it

because the AF is already gone.

It's a slightly different calculation between deciding to get the card

and deciding to use it if you've already paid the AF.

Re: Check my math - cash back vs points

Anonymous — Mon, 24 Feb 2014 01:17:08 GMT

I do have the BCP and even with the AF, can't see how 6% can be beaten with points. Use discover IT for category spending and have a Costoc AMEX for 4% back on fuel.

I was considering the PRG for all spending however, we fly domestically and only once or twice per year. The flights above were PBI to BOS and FLL to DEN

Re: Check my math - cash back vs points

Anonymous — Mon, 24 Feb 2014 02:53:12 GMT

@Anonymous wrote:
I do have the BCP and even with the AF, can't see how 6% can be beaten with points. Use discover IT for category spending and have a Costoc AMEX for 4% back on fuel.

I was considering the PRG for all spending however, we fly domestically and only once or twice per year. The flights above were PBI to BOS and FLL to DEN

Well, firstly because of the cap. You are limited to earning $285 after the fee. For point redemptions, people are particularly talking about premium cabin, especially international flights. Redemptions in the range of 3.5 cents per point are certainly possible. So, if you get 2x points on groceries, that is already more than the BCP, and doesn't have a cap. This ignores things like the 15K bonus on the PRG after 30K spend.

But for pure cash back on supermarkets, the BCP is good. It's just no longer the best for me, which is why I PCd it to the BCE, which I won;t use.

Re: Check my math - cash back vs points

Anonymous — Mon, 24 Feb 2014 11:54:15 GMT

Using my real life numbers $10k groceries nets $305 on BCP after AF

$5k gas nets $200 on Costco AMEX no AF so total $505

PRG 20,000 points groceries and 10,000 fuel for 30,000 total.

For or our situation, flying domestically am I better off with cash or points? I realize this may be an over simplification, but just trying to figure this out.

Total spending in all categories would probably be $60-75k/yr

Re: Check my math - cash back vs points

irrational — Mon, 24 Feb 2014 12:15:53 GMT

@Anonymous wrote:
Using my real life numbers $10k groceries nets $305 on BCP after AF
$5k gas nets $200 on Costco AMEX no AF so total $505

PRG 20,000 points groceries and 10,000 fuel for 30,000 total.

For or our situation, flying domestically am I better off with cash or points? I realize this may be an over simplification, but just trying to figure this out.

Total spending in all categories would probably be $60-75k/yr

Personally, I prefer the cash back as it's more flexible. Using you cash back you get a total of $505/year.

if you value MR points at only $0.01/points, that's $300... But, if you transfer to a FF program, depending on the flights you book, those could be worth a lot more. At $0.02/points, you're looking at $600/year.

so, yes, the PRG is worth it but only if you absolutely will be flying. If you ever change you're mind, you're looking at $300 worth of Home Depot gift cards, or $150 worth of statement credits. Lol.

Re: Check my math - cash back vs points

370Z — Tue, 25 Feb 2014 00:40:20 GMT

BCP: 6k grocery and 5k gas: 6000x0.06 +5000x0.03 - 75 = 435

Fidelity Amex: 4k grocery and 50k miscellaneous: 54000x0.02 = 1080

Total = 1515

PRG: average value of 2 quoted flights is 1.66 cpp

(20000 grocery + 10000 gas + 50000 miscellaneous + 15000 bonus) x 0.0166 -175 = 1402

The 2 card combo comes out ahead. You could save even more by adding the Barclay Sallie Mae (5% for grocery & gas up to $250 each per month). However, you'll be doing a lot of card juggling, and it may or may not be worth it. If you compare only the BCP and PRG, the latter comes out ahead.

Re: Check my math - cash back vs points

cottoncrown — Tue, 25 Feb 2014 01:54:56 GMT

Well, just to be fair you would really have to spend 6800 on groceries to get the $368 flight. I'm not too impressed with the PRG other than the sign up bonus.