Credit Card Rewards: Am I missing something?

Anonymous · ‎04-23-2017

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?

Anonymous · ‎04-23-2017

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.

sarge12 · ‎04-23-2017

@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.

TU fico08=824 06/16/24
EX fico08=815 06/16/24
EQ fico09=809 06/16/24
EX fico09=799 06/16/24
EQ fico bankcard08=838 06/16/24
TU Fico Bankcard 08=847 06/16/24
EQ NG1 fico=802 04/17/21
EQ Resilience index score=58 03/09/21
Unknown score from EX=784 used by Cap1 07/10/20

Anonymous · ‎04-23-2017

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.

longtimelurker · ‎04-23-2017

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.)

happypill · ‎04-23-2017

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.

Anonymous · ‎04-23-2017

@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.

Anonymous · ‎04-23-2017

@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.

Anonymous · ‎04-23-2017

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.

Anonymous · ‎04-23-2017

@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.