Is it me or doesn't it seem better to use cards with x amount of points per dollar spent vs a certain % cash back ?
Example :
PayPal Extras MC gives 3x points for every dollar at Gas and Resturants
Discover IT gives 1% unlimited cash back, and during the quarters 5%, in this case, its 5% at Target and Gas.
But if I spent $100 on gas w/ PayPal, I'd get 300 points vs $5 with Discover
I guess it depends on the conversion rate of points to cash back ?
Exactly, it's all about the conversion rate for points. If you can get 1 cent per point (cpp), you're earning the same rate as cash back.
Many banks/CUs let you redeem points for cash back at 1ccp, but some cards are lower than that (e.g. Amex Gold at 0.6cpp, X1 at 0.7cpp ) while others maybe be higher (e.g. Amex Schwab Platinum at 1.1ccp).
@socalchef00 wrote:Is it me or doesn't it seem better to use cards with x amount of points per dollar spent vs a certain % cash back ?
Example :
PayPal Extras MC gives 3x points for every dollar at Gas and Resturants
Discover IT gives 1% unlimited cash back, and during the quarters 5%, in this case, its 5% at Target and Gas.
But if I spent $100 on gas w/ PayPal, I'd get 300 points vs $5 with Discover
I guess it depends on the conversion rate of points to cash back ?
Yes, definitely. Saying "3x points per dollar" or whatever SOUNDS great, but what does it actually MEAN? We need to compare apples and apples, not apples and oranges. If points equal cents, then 100 points equals $1.00, and you can compare that to a percentage card one-to-one to see which is better. If its point value isn't that cut and dry, then you just need to do the math to figure out what you're actually getting.
Personally, I gave up on points cards. I mean I'm not getting any cards now that are not cash back. For me, the straightforwardness of knowing that when I spend $100 I'm getting $6 CB is just cleaner and less of a hassle than working out points.
@SoCalGardener wrote:
@socalchef00 wrote:Is it me or doesn't it seem better to use cards with x amount of points per dollar spent vs a certain % cash back ?
Example :
PayPal Extras MC gives 3x points for every dollar at Gas and Resturants
Discover IT gives 1% unlimited cash back, and during the quarters 5%, in this case, its 5% at Target and Gas.
But if I spent $100 on gas w/ PayPal, I'd get 300 points vs $5 with Discover
I guess it depends on the conversion rate of points to cash back ?
Yes, definitely. Saying "3x points per dollar" or whatever SOUNDS great, but what does it actually MEAN? We need to compare apples and apples, not apples and oranges. If points equal cents, then 100 points equals $1.00, and you can compare that to a percentage card one-to-one to see which is better. If its point value isn't that cut and dry, then you just need to do the math to figure out what you're actually getting.
Personally, I gave up on points cards. I mean I'm not getting any cards now that are not cash back. For me, the straightforwardness of knowing that when I spend $100 I'm getting $6 CB is just cleaner and less of a hassle than working out points.
Awesome thanks. Most of my cards are points , believe i only have 2 cash back cards.
I'll do some research on my cards with points and find out which ones are better than the others.
Thanks!
+1 ^ Good explanation from @longtimelurker.
And this is why with points systems, you never know what they were worth until after you've redeemed them.
And points-based systems are more subject to devaluation that cash back. Point devaluation can be insidious and easy to miss if a consumer is not paying close attention.
Also, if there is an annual fee on the card, doing the math to see what your actual earnings rate will be is crucial. Many premium cards that are rewards points-based have annual fees. Sometimes, much or all of that AF can be reduced by "credits" against it, so annual fees in-and-of themselves are not always a bad thing. However, if a consumer can't or doesn't use the credits, they become a further drag on earnings rates. Doing your own calculations to see what value you're getting out of points-based cards is always suggested.
I can tell you from experience the Pay Pal Extras MC points are only worth about .8cpp---not a full 1cpp.
BUSINESS 
About a week or so I posted regarding points vs cash back and most responses were for cash back percent being better than the typical 2x, 3x, 5x etc on points.
I want to double check I'm calculating this correct as I'm looking to reorganize my cards to the ones that will give me most benefits.
Currently my everyday use card is Fidelity Signature Rewards as I get 2% cash back.
I do have the Paypal Extra's MC that gives 3x points on Gas and Resturants.
I checked the conversion rate at Paypal, and it is 6,000 points = $50
Fidelity is $2500 spent = $50 cash back
To me, If I spend $2,500 with Fidelity thats $50, but if I spend $2,000 in Gas/Resturants, thats 6,000 points and I get $50 back
Seems like I should use Paypal MC for only Gas and Resturants and Fidelity for everything else?
Now of course, not all cards have the same conversion ratio, so it may vary card to card and I just want to make sure I'm not missing anything.
@longtimelurker wrote:
@socalchef00 wrote:About a week or so I posted regarding points vs cash back and most responses were for cash back percent being better than the typical 2x, 3x, 5x etc on points.
I want to double check I'm calculating this correct as I'm looking to reorganize my cards to the ones that will give me most benefits.
Currently my everyday use card is Fidelity Signature Rewards as I get 2% cash back.
I do have the Paypal Extra's MC that gives 3x points on Gas and Resturants.
I checked the conversion rate at Paypal, and it is 6,000 points = $50
Fidelity is $2500 spent = $50 cash back
To me, If I spend $2,500 with Fidelity thats $50, but if I spend $2,000 in Gas/Resturants, thats 6,000 points and I get $50 back
Seems like I should use Paypal MC for only Gas and Resturants and Fidelity for everything else?
Now of course, not all cards have the same conversion ratio, so it may vary card to card and I just want to make sure I'm not missing anything.
Yes. The math really isn't very hard! The factors are simply:
1) What does the card earn, in points or %. This will vary from card to card, and within a card from category to category.
2) If points, how much are they worth when redeemed. Again, this varies from card to card, and within a card, how they are redeemed.
So, for a given purchase, does (points earned on card 1 * redemption rate for those points) exceed (points earned on card 2 * redemption rate for those points)
In your example, if 6000 Paypal Extra points are worth $50, a point is worth $50/6000, or approx 0.83c. A Fidelity point (redeemed into a fidelity account for example) is worth 1c
On gas and restaurants, Paypal Extra earns 3 points, which, from above is worth 3*.83 or about 2.5c. The fidelity card earns 2, each worth 1c, so that is worth 2c. SInce 2.5 > 2, yes, use paypal extra on those categories, and Fidelity for the rest, if those are the only cards.
Thank you!