@Anonymous wrote:
Wondering what peoples experiences are with these two products?
My fiances Mom is wanting to apply for a CC that will earn her miles towards flights/hotel stays.
Are the miles on each card valued at the same rate (e.g. 100 miles = $1 etc).
I know the venture is unlimited 2 miles per dollar but the Discover is 1.5 but I know they are running a double miles at the end of the year which would make it 3/$.
I just wanted to figure out which one would offer the best cashback rate if say exactly $10K was run through it this year?
Which one would be the best option?
It all depends on how she wants to use the rewards. Remember, both these cards are pseudo-travel cards; or essentially cashback cards.
Some back of the hand calculation:
(a) The Discover card is zero-AF. $10k / year = 3%*$10k = $300 CB first year, and $150 second year onwards. It results in $150 bonus effectively in the first year. Redemption is pretty straightforward. Either use it as a purchase eraser for travel or redeem it as pure cash, same value.
A comparable card is Cap One Quicksilver with 1.5% cashback. The QS also comes with $100 bonus in the first year. At the spend you mention, the Discover will be ahead by $50. Also, free FICO score with Discover.
(b) The Venture is zero-AF first year, then $59. It gives 40k points first year bonus ($3k spend in 3 months), and 2 points / dollar. The same spend will net 60k points first year and 20k second year onwards. To get full value of points, you must redeem against travel (airfare, trains, taxi, hotel etc.). Cash redemption is at 50% value. Assuming she always redeems for travel, she nets $600 first year, and $200-$59 = $141 second year onwards.
Effectively, there's an extra $300 in the first year over Discover, and second year onwards she earns $10 less, which should break even in 30 years. Not bad.
Other options:
(c) Barclays Arrival+: At $89 AF second year onwards, it has the same structure as Venture, but gives 5% miles back everytime you redeem, so it's 2.1 points / dollar. She'll earn 40k (for $3k spend in 3 months) + 21k = 61k in the first year and 21k second year onwards. But remember, unlike Venture where you can redeem any travel purchase, Arrival+ needs the travel cost to be $100 or more to redeem. So you can't redeem $20 taxi / uber fares. Anyway, assuming she gets past that hurdle, she earns $610 in the first year and $210-$89 = $121 second year onwards.
Note: Barclays offers a shopping mall for extra points, which is not there with the Venture currently. You may consider that as well; do some independent research.
If she decides to keep both cards for more than a year, without the shopping mall, the Arrival+ seems less lucrative than the Venture.
(d) Chase Sapphire Preferred: $95 AF second year onwards, 50k sign up bonus ($4k spend in 3 months) + 5k AU adding bonus. Does she have a Freedom as well? Then it can be kind of a no-brainer. If she doesn't, she might get that too while she's at it. (15k signup + 2.5k AU bonus, 5x points on rotating categories every quarter)
I'll assume $10k is exclusively run through the CSP, and she also has say 10k points from the Freedom (with category bonuses, this can come from $2k/year spending). The CSP spend is probably 30% travel, 30% dining, and 40% general. Then she has (3k+3k)*2+4k = 16k from the CSP and 10k from the Freedom, totalling 26k UR points / year.
UR points are best redeemed through frequent flier transfers, where they get at least 1.5 cents per point easily, so 26k UR points get you $390 / year. First year is 26k + 50k + 5k (keeping aside any bonus from Freedom) = 81k points = $1,215 when redeemed through frequent flier miles.
So she'll have $1,215 in year 1 and $390 - $95 = $295 second year onwards. If you take Freedom completely out of the picture, the numbers reduce by 10k * 1.5cpp = $150 per year.
However, note that such travel redemption takes some effort, i.e. choosing the right travel partner to transfer, and booking at the right time to get good value from miles. I have taken a relatively conservative valuation; pro-travellers get 3 or more cpp per point.
