Why would anyone get points over cash back?

[redpat]

I love the double dip of getting 2x UR points, Airline miles and hotel points when booking business travel.

[NRB525]

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@Open123 wrote:

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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.

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You've got a lot going on in those two sentences

My main point is, as with many questions about credit card usage, It Depends. There are many possibilities for where the points came from, there are many possibilities for how to earn points. I

I earn points on flights, try to stay at hotel chains to gather points there.

I have cards that contribute to those points, with perks at those airlines and hotels.

I have cards that can contribute generally to those airlines and hotels. These I have to watch that the AF doesn't get in the way of any value.

I also have cash back cards that can earn 5% category and 10% merchant cash back, which get used when the timing is right.

There's no one answer for where spend should go.

[Anonymous]

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@NRB525 wrote:

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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.

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I sort of agree, although there are certainly several schools of thought about valuing points this way.  One is to ask "What would you be actually willing to pay?" so if you would never be willing to pay more than say $2K for a transatlantic ticket, that $10K ticket is "really" worth $2K to you.  On the other hand, if you want the F-class experience, the cash price IS $10K, so maybe the reward is worth $10K.

The big valuations come from premium cabin, if coach is good enough, points are much less compelling, at least for flights

[Anonymous]

NRB wrote: 

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.

humuhumunukunukuapua'a wrote:

I do agree. I've upgraded to first class about 5 times total using a certificate and while nice (especially on long flights), I don't think I care to do 130k spend on a card to get that. There are other things I value more, like longer-term experiences. Everyone is different.  

[Open123]

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NRB525 wrote:You've got a lot going on in those two sentences

My main point is, as with many questions about credit card usage, It Depends. There are many possibilities for where the points came from, there are many possibilities for how to earn points. I

I earn points on flights, try to stay at hotel chains to gather points there.

I have cards that contribute to those points, with perks at those airlines and hotels.

I have cards that can contribute generally to those airlines and hotels. These I have to watch that the AF doesn't get in the way of any value.

I also have cash back cards that can earn 5% category and 10% merchant cash back, which get used when the timing is right.

There's no one answer for where spend should go.

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I'm making an assumption that anyone who flies coach several times per year (say, 3?) would "likely" benefit from a dedicated Airline card from their chosen carrier.  Any non-Airline expenditures (at least $10K, right?) should to to either 2% or 5% rotating.  For a person who flies infrequently on the lowest fares, the best carriers are likely going to be JetBlue, Southwest or Virgin Elevate, whose fixed point system is better than a dynamic/mileage based one for a person who doesn't value the premium cabin experience.

For instance, a 50K Southwest bonus will pay for literally almost 10 round trip flights from SFO to LAS if redeemed prudently.  For anyone who flies Southwest a few times per year, getting their card should be the "one" answer, as it would for a person who flies Virgin/JetBlue several times per year.

[Anonymous]

Members who always travel also know how to build their points as they go. the confusing thing is how to use bonus points when you are a total homebody and haven't signed up for any loyalties. Lots of reading to do.

[redpat]

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@Anonymous wrote:
Members who always travel also know how to build their points as they go. the confusing thing is how to use bonus points when you are a total homebody and haven't signed up for any loyalties. Lots of reading to do.

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And this is another reason I apped for Citi Prestige is for the additional perks that Amex plat doesn't offer.

I'm finding that Amex FHR and Prestige 4th night free will fit in nicely for additional hotel perks.  How many points do you need to get a free night or a $100 property credit and daily full breakfast.  This isn't including AA, Centurion and Priority Pass lounges, Gold SPG and Hilton, golf, rental car upgrades, global enty and TSA Pre to name a few.

For a net $450 (200 citi and 250 amex) I'm finding that you can get unbelievable value out of these cards, more so than some loyalty cards.  Now through in MR and UR points on top of that and you will have many options and perks for travel. 

Cashback could never equal all these benefits.

[red259]

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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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A chase ultimate reward point can be worth way over 1.25 cents if you have a card that allows you to transfer it to a travel partner. As a cashback card yes your calculations make sense, but that is because the real value with chase is redeeming for travel rewards with their partners. 

[red259]

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@Open123 wrote:

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.

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Great point.

[red259]

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@Anonymous wrote:
Members who always travel also know how to build their points as they go. the confusing thing is how to use bonus points when you are a total homebody and haven't signed up for any loyalties. Lots of reading to do.

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Yea, it is possible to learn to do, but it is a lot of reading and then constantly following all the changes. Some people like myself enjoy it. Others will not want to deal with the hassle.