Why would anyone get points over cash back?

[Anonymous]

archange1 wrote:

Lets just say you have 200k points (MR) that would be equivalent to 2k dollars cash back if i used a card like BCP

humuhumunukunukuapua'a wrote:

Exactly how much do you have to spend to get 200,000 points? That would show the actual cost to the cardholder.

[Anonymous]

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@redpat wrote:

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@Anonymous wrote:

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.  

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^ This. 80,000 points is $80,000 spend.

[Open123]

This question comes up quite a bit, but a few generalities:

1.  If you travel (and know how to redeem properly and prudently) and spend < $20K per year --->  cycle sign-up bonuses.  Once exhausted, keep cards if you travel with your preferred Airline/Hotel.  If not, just go with 2% cashback & 5% rotating cards.  Likely best to avoid fee cards, except for travel benefit based cards.

2.  If you travel and spend > $20K per year --->  Travel cards, no brainer.  Just choose prudently.  May consider annual fee cards.

3.  If you don't travel and spend < $20K per year --->  Cycle sign-up cash bonus and/or utilize 2% + 5% rotating.  Stick with no fee cashback cards.  Avoid travel points.

4.  If you don't travel and spend > $20K per year --->  Cycle sign up cash bonsues and/or utilize 2% + 5% rotating.  Annual fee cards such as Arrival Plus and Venture may begin to make sense.  Avoid travel points.

That's it, really.

*Edited*  Yes, mixed up the >< things!

[Anonymous]

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@Anonymous wrote:

@Anonymous wrote:

Lets just say you have 200k points (MR) that would be equivalent to 2k dollars cash back if i used a card like BCP

@humuhumunukunukuapua'a wrote:

Exactly how much do you have to spend to get 200,000 points? That would show the actual cost to the cardholder.

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It obviously depends on the card and spending, but say with the EDP you would get 27K on $6k grocery spend and the remaining points would take $115K in spend, so about $121K.    With bonuses and higher multiple spend on the PRG, could be less.

But Archange1 point was this gets a ticket that costs $10K, so with say a Double Cash, you would need to spend $500K to get the same ticket.

[Anonymous]

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@Open123 wrote:

This question comes up quite a bit, but a few generalities:

1.  If you travel (and know how to redeem properly and prudently) and spend > $20K per year --->  cycle sign-up bonuses.  Once exhausted, keep cards if you travel with your preferred Airline/Hotel.  If not, just go with 2% cashback & 5% rotating cards.  Likely best to avoid fee cards, except for travel benefit based cards.

2.  If you travel and spend <$20K per year --->  Travel cards, no brainer.  Just choose prudently.  May consider annual fee cards.

3.  If you don't travel and spend >$20K per year --->  Cycle sign-up cash bonus and/or utilize 2% + 5% rotating.  Stick with no fee cards cashback.  Avoid travel points.

4.  If you don't travel and spend <$20K per year --->  Cycle sign up cash bonsues and/or utilize 2% + 5% rotating.  Annual fee cards such as Arrival Plus and Venture may begin to make sense.  Avoid travel points.

That's it, really.

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Haven't you mixed up ">" and "<"?

[Open123]

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longtimelurker wrote:It obviously depends on the card and spending, but say with the EDP you would get 27K on $6k grocery spend and the remaining points would take $115K in spend, so about $121K.    With bonuses and higher multiple spend on the PRG, could be less.

But Archange1 point was this gets a ticket that costs $10K, so with say a Double Cash, you would need to spend $500K to get the same ticket.

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BA F on A388 from London to SFO would cost about $15K?  Before AA devaluation, could have redeemed for 62.5K miles + $395.  Or, F transcon from SFO to NYC on AA costs around $1,500 - $2,500?  Before deval, could have been redeemed for 32.5K miles and $5.95.  Or, CX F from SFO to HK is priced at around $10K - $15K and could have been redeemd for around 60K AA miles before devaluation.

This is assuming the above are experiences important enough to forgo the equivalent 2% cash.  If it is, travel points are an excellent value.  If not, just take the cash.

[NRB525]

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@Anonymous wrote:

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@Anonymous wrote:

@Anonymous wrote:

Lets just say you have 200k points (MR) that would be equivalent to 2k dollars cash back if i used a card like BCP

@humuhumunukunukuapua'a wrote:

Exactly how much do you have to spend to get 200,000 points? That would show the actual cost to the cardholder.

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It obviously depends on the card and spending, but say with the EDP you would get 27K on $6k grocery spend and the remaining points would take $115K in spend, so about $121K.    With bonuses and higher multiple spend on the PRG, could be less.

But Archange1 point was this gets a ticket that costs $10K, so with say a Double Cash, you would need to spend $500K to get the same ticket.

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Practically, however, this is not a fair comparison.

True statement: Someone can use 200k miles (throwing out a general range number) to get a first class ticket that costs $9,000. You might get the 200k miles from a combination of one-time sign up bonus points from a series of credit cards. So you end up with 1 (one) flight from point A to point B, and back again, in comfort. Nice! The thing is, all those folks in steerage? who paid $1,000 to $1,500 for the same flight? They got to point B at the same time as you did. So while it's not the same ticket, it's the same end result once the effects of the champagne wear off.

Those who use cashback strategies earn some cash on spend, which can be used to cover travel costs of any kind. Including the $1,000 point A to point B ticket in steerage. Some someone using cashback would spend $50,000 at a 2% rate to get the $1,000 cash back to cover the cost of the flight to point B. Still a lot of spend, no doubt, but along the way, the cashback is available to contribute to reducing the $1,000 when travel is planned. With miles, one must meet a specific large threshold to even consider a reward flight, and many of the lower miles rewards flights are not so appealing for redemption. Shopping the use of those miles is critical to a good redemption, which may or may not align with where you'd really like to go.

Having said all that, the best way to use miles and hotel points cards is as an add on to travel you are already doing, either for work or personal. Being able to top up that frequent flyer account to get to that necessary threshold, or to top up SPG for 48,000 points to get 5 nights in Hawaii, that becomes a more useful route for the spend. The rewards on the spend as a top up are the best, but that requires a foundation of travel to build from.

[Open123]

Also, cashback from business deducted expenditures for personal use is taxed as ordinary income, whereas points are tax free, even when used for personal consumption.

So, earn points from business spend and travel tax free.  That alone is around a 35% bonus.

[Open123]

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NRB525 wroteo you end up with 1 (one) flight from point A to point B, and back again, in comfort. Nice! The thing is, all those folks in steerage? who paid $1,000 to $1,500 for the same flight? They got to point B at the same time as you did. So while it's not the same ticket, it's the same end result once the effects of the champagne wear off.

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For steerage, it's better to pay cash or use revenue fixed points, such as from Southwest, Virgin Elevate and JetBlue.  Even for steerage, this will likely result in a better return than cashback for people who pay for these flights, even if occasionally.

[Open123]

Here's why I like points.

Several years ago, virtually anyone could have (and, easily met whatever spend requirment for free) churned the Citi AAs on a 2/3 browser App for 200K AA miles per round.  Assuming, if successful again (Citi hadn't updated their systems to stop it), another 200K AA miles in another 90 days.

That's instantly 400K AA miles that could have been used for premium cabin seats to London, Hong Kong and New York.  It was years before Citi stopped it and many have harvested over 1 Million miles.