MR points converted to a cash equivalent are worth $0.006. The value in them is transferring to partners. Depending on how much work you put in you could make them worth $0.02. Amex adds additional value with perks such as status, lounge access or companion certificates depending on card. You have to factor those in as well when determining value.
For example, my Delta reserve offers a 1st class companion pass and access to skylounge and the centurion lounge. The only benefit of a platinum to me is for hotel status or access to book skylofts at mgm through them. Not really worth it for me since I pretty much only stay at Marriott. The companion pass on the other hand, makes the reserve worth it. $450 AF, and I'm getting a free $800 1st class ticket later this year. The point earning isn't very good, but I'm basically being paid to keep it every year as long as I use the pass. That benefit alone makes the card more valuable than most of my other ones.
@Cory88 wrote:From what I have found that card that offer points instead of cash back that the points are a lot less in value even if you have it were you get 4x points. I know people are going to say differently I was looking at my AMEX Gold and my Citi Custom Cash card even though Citi said you are getting 5x on what you are each month but the value is about a little over 1%. For example on my AMEX Gold I was calculating my points that I'm getting to have a percent of .70% to 1% far less if I had a Cash back card having a 4% cash back. Is this correct in the way I'm calculating the points? Thanks!
If your main objective is really to get cash back from a card, then an AMEX Gold card is not a good choice.
Yes, you would be better off with a no Annual Fee card that gives straight 4% cash back for dining, or even the Custom Cash for 5% back up to $500 of dining if that is your main use of the card.
@Cory88 , I can't speak to all points systems, but regarding Chase and Citi, the cash back for UR and TY points redemption is $0.01 per point, or effectively 1%. So let's say you make a purchase on the Citi Custom Cash card that earns 5X points, you're effectively 5 x 1%, or 5% back on that purchase.
With respect to Amex, I know the MR points redemption for cash back is lower at $0.006, or 0.6%; however, if you have an Amex Schwab Platinum card, MR points redemption for a cash deposit into your Schwab brokerage account is $0.011, or 1.1%. So let's say you make a purchase on your Amex Gold card that earns 4X points, you're effectively getting 4 x 1.1%, or 4.4% cash deposit into your Schwab brokerage account on that purchase.
In general, the value from rewards points systems is greater when leveraged for booking travel or transferring points to travel partners (e.g. hotels and airlines).
@Cory88 wrote:From what I have found that card that offer points instead of cash back that the points are a lot less in value even if you have it were you get 4x points. I know people are going to say differently I was looking at my AMEX Gold and my Citi Custom Cash card even though Citi said you are getting 5x on what you are each month but the value is about a little over 1%. For example on my AMEX Gold I was calculating my points that I'm getting to have a percent of .70% to 1% far less if I had a Cash back card having a 4% cash back. Is this correct in the way I'm calculating the points? Thanks!
@Cory88 wrote:From what I have found that card that offer points instead of cash back that the points are a lot less in value even if you have it were you get 4x points. I know people are going to say differently I was looking at my AMEX Gold and my Citi Custom Cash card even though Citi said you are getting 5x on what you are each month but the value is about a little over 1%. For example on my AMEX Gold I was calculating my points that I'm getting to have a percent of .70% to 1% far less if I had a Cash back card having a 4% cash back. Is this correct in the way I'm calculating the points? Thanks!
Speaking in generalities about Points versus Cash without specific details about which card and how points are redeemed, Cash-is-Cash-is-Cash. It's easy and straightforward. Points always require a more skeptical approach and YMMV depending on how points are redeemed. Points *CAN* be worth either much greater than 1 cent per point or much less than 1 cent per point. And everyone won't get the same valuation. If you want simple, stick with cash back. If you're willing to do your homework (and keep doing your homework since values may change), points may be more lucrative.
Another issue with any points system is that you don't EVER know the value of any points until AFTER you've redeemed them. You may have an idea of what to expect, but you won't know what you got for your spend. Some smaller lenders have cards similar to "cash back" cards that use points, which enables the lender to quickly and discreetly devalue your earnings if they choose to do so. Devaluation can and does come on major points systems from airlines, hotel, and the leading travel points systems such as AMEX MRs, Chase URs, and Citi TY's. Consequently, Points (can) be more lucrative but they also carry more risk. They can be more of a gamble.
Another issue with points is when someone invests their spending into too many points-based systems. Cash can be redeemed effectively in low amounts, sometimes starting at a penny and often by the time someone accrues $25 or so in rewards. Since points redemption is often more profitable when redeemed for more expensive things like travel, you must have enough points in any one "currency" to make a purchase. Business travelers or consumers with heavy personal spending can more easily play in more travel points systems than the average consumer with average income.
If you're checking a redemption portal whether for any program that allows redemption beyond cash, make sure to check the other options. For example, I've been able to redeem for gift cards sometimes at an elevated value instead of taking cash. Merchandise is usually a poor redemption value but I check that sometimes just to see what I would get by comparing the market value of something from the web against the points required. Travel portals also may give different values for direct redemption, so compare to purchases from other websites or other travel portals if you have more than one rewards program.
I agree with above answers that points values are often better when transferred to partners, although sometimes this isn't even true. Again, that's why you have to do your homework with points. For example, AMEX MRs or Chase URs can be worth far more in value when transferred to certain airline partners than to most hotel partners.
Another factor with cash-back versus points is when you pair certain cards together which enhance value. With Chase, the "bi-fecta, tri-fecta, quad-fecta" cards can enhance the value of cash back to more profitable Ultimate Rewards points. You can take rewards in cash-back from the Freedom and INK Business series cards, but that "cash" is worth at least 25% more when combined with a Chase Sapphire Preferred and 50% more with Chase Sapphire Reserve, and 100% or higher with either card if those UR points are transferred to travel partners. Redemption intentions matter. There are other lenders with similar types of programs.
@Cory88 wrote:From what I have found that card that offer points instead of cash back that the points are a lot less in value even if you have it were you get 4x points. I know people are going to say differently I was looking at my AMEX Gold and my Citi Custom Cash card even though Citi said you are getting 5x on what you are each month but the value is about a little over 1%. For example on my AMEX Gold I was calculating my points that I'm getting to have a percent of .70% to 1% far less if I had a Cash back card having a 4% cash back. Is this correct in the way I'm calculating the points? Thanks!
You can't generalize about points vs cash, because:
1. Each lender's points are different
2. Points usually have a variety of redemption methods, and the value of the points can differ dramatically depending on the method of redemption
3. The method of redemption may vary based on your lifestyle. (E.g. budget travel vs luxury travel)
If you have a specific question about specific points, this forum is full of super-experts on how to maximize the value of the points.
I personally have limited knowledge of that subject, based upon my own personal experiences.
