Why would anyone get points over cash back?

[Anonymous]

Let's take Chase for an example. I have heard that a Chase Ultimate Rewards point is worth 1.25 cents when redeemed for travel. This is very good, however, why would anyone get a Chase Freedom Unlimited card with a 1.5x return (or 1.5 * 1.25 = 1.875%) instead of Citi Double Cash which gives 2% cash back. Couldn't one simply use the cash they get back from the 2% cash back card and put it towards travel? Or is there something that I am missing?

[Anonymous]

idk about chase, but yes, you are missing something.

UR is higher than MR. I only can explain what MR does and that is with Amex.

Lets just say you have 200k points (MR) that would be equivalent to 2k dollars cash back if i used a card like BCP (cash back from Amex). Using the 4.5points per dollar on the EDP for groceries and etc to gain these points.

If I use these 200k points and transfer to Delta 1:1 (other airlines can be 1:1.25, I could get a 10k dollar round trip ticket for only what would be worth 2k dollars if I went the cash back way. Example, first class from Hawaii to Europe for 200k miles (equivalent to 2k dollar) and ticket worth 10k dollars. That is all first class travel. I could go for lower class flight tickets and get more travel that would still be worth more than cash back. I will let the pros chime in and tell you about Chase

Moral of this post, 2k dollar cash back can't buy a 10k dollar ticket, but if you go the points way, you can. 

[Anonymous]

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@Anonymous wrote:

Let's take Chase for an example. I have heard that a Chase Ultimate Rewards point is worth 1.25 cents when redeemed for travel. This is very good, however, why would anyone get a Chase Freedom Unlimited card with a 1.5x return (or 1.5 * 1.25 = 1.875%) instead of Citi Double Cash which gives 2% cash back. Couldn't one simply use the cash they get back from the 2% cash back card and put it towards travel? Or is there something that I am missing?

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lol good you posted this thread late because people would have eaten this all up earlier on the day. There has been a Chase fever lately.. not sure what all the hype is all about either with the FU card. 

I think it comes down to preference - some people prefer cash back while others who have multiple products with Chase (Freedom, Ink, CSP, and FU) have ample opportunity to earn points and redeem for higher value towards travel. I think the FU alone wouldn't really be a game changer, but combined with other Chase cards it makes somewhat of a difference.

Also don't forget with Chase UR points you can redeem those points for Cashback too without losing face value - however you can get more value when you redeem the points for Travel. 

I personally don't travel as much as I want to and I don't think all the hassle of combining 3-4 cards is worth it to me to save 10-25% off. I have been savvy enough to locate good deals by some googling and watching price trends. If I see myself travelling heavily then I can see how having these Chase cards would be beneficial. To each their own!

[PowerMan572]

LOL I often find myself asking "why would people choose cash back over points?" If I'm trying to book a First Class ticket round-trip to Europe, it usually costs around 125,000 points (depending on the airline.) 

First Class tickets usually sell for $4k - $10k. In order to earn enough cash back on a measly Citi 2% card for a $5k ticket would take $250,000 in spending on a 2% cash back card! OMG! That's cRaZy!

Miles and points all the way! Cash back cards are useless in my opinion. 

[Anonymous]

Keep in mind as well that with a CSP, those UR points can be worth a lot more then 1.25 cents a point by using transfer partners. For first class tickets, they can be worth over $0.05 a point. 1.25 cents is the bare minimum you can get with your points, personally I wouldn't redeem my UR points for less the 2 cents or so.

In the end it's a personal call. Some people don't travel, want to manage points, or utilize a programs partners. For these people, a cash back card might be easier or more beneficial. Just like how a travel card might be better for someone who uses the partners and can redeem for greater value then the minimum.

[Anonymous]

It's just that sometimes points can be redeemed for higher value that the usual 2% cash back. All depends on how you use your cards. Just have to make sure you balance out your CB cards and points cards evenly. 

I can rake up SPG points very easily because they run soooooo many promos and I travel a lot. On top of that, they give you like 4x-5x points for being at their hotel and being an SPG member/using the SPG card. For my 1yr anniversary I'll be in San Fran and 6 days at the hotel I'm staying at is either $2,394 or I can just pay 80,000 SPG points. That puts the points value at about $0.03 a point. I've gotten some hotels for as much as $0.04 a point. 

It all depends 

[Anonymous]

woah, 80k for 6days....Hilton is 50k just for 1d. Maybe I need to get the spg instead of planning to app for the citi hilton reserve...

[Anonymous]

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@Anonymous wrote:

woah, 80k for 6days....Hilton is 50k just for 1d. Maybe I need to get the spg instead of planning to app for the citi hilton reserve...

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nvm, it's only 1 point for one dollar. I think it ends up being the same.

[redpat]

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@Anonymous wrote:

woah, 80k for 6days....Hilton is 50k just for 1d. Maybe I need to get the spg instead of planning to app for the citi hilton reserve...

SPG has greater value but remember 80k points is 80k spend.  So with current 25k sign-up bonus that 55k additional spend.

if you are looking for free nights and travel you need heavy spend to get there.  sure, sign-up bonuses give you a one time hit but most cannot sustain free travel through spend.  I know if I didn't have heavy business travel and business spend my free travel would diminish greatly.

[kdm31091]

You have to look at how things get skewed, also. Many people (not all) generally collect the hotel/airline cards for the sign up bonus which often provides enough rewards for a free flight / some free nights / etc. Beyond that, though, earning 1 point per dollar on everyday spending just isn't worthwhile most of the time, so the cards end up SD. So people may have a lot of the point cards, but they often don't use them much after the bonus. It would appear by glancing at  signatures  that the IHG card is quite popular, and it is, but it's because it gives an annual free night and some other perks -- it's not as if people are really using it for spending.

So, if we're talking about long term use cards for spending, I think point cards that are tied  to an airline or hotel are generally a poor choice. The more flexible point cards like a Chase Sapphire Preferred or Amex MR earning cards can give you points that you can do many things with, but the value is only going to be worthwhile for certain redemptions (otherwise, still could have earned more with using cash back). People who travel a lot, especially international, first class, will benefit the most. Otherwise, cash back may be a better choice.