The Wall Street Journal's article a few days ago, Credit-Card Rewards Get Richer, isn't news for most TravelSort readers in terms of its main point, that there are some great credit card bonuses out there, especially targeted offers.
What I think is more interesting is that the article largely ignores the best deal that these miles and points offer–premium class international travel. Take a look at these quotes:
“The best deals usually involve so-called bonus points, which are redeemable for travel, merchandise and even cash. In some cases the points are worth hundreds of dollars”
At least travel was mentioned first; but merchandise and cash are the lowest value uses of those points. And personally, I wouldn't bother applying for a travel credit card unless it either comes with a bonus worth about $1000 or more in the context of international travel, or it's easy to get that value out of the card in the course of normal spending during the year, i.e. with the Chase Freedom Card (which also has the benefit of no annual fee).
“To get a free trip to Hawaii for shifting some spending seemed like a pretty good proposition”
Of course everyone has their idea of the perfect trip, but a trip to Hawaii isn't particularly expensive if planned ahead and not during peak winter holiday time.
Even more revealing are some of the comments to the article:
“Every $2500 in purchases earns us 5000 points, which is transferred to our Fidelity account as $50”
Ok, 2% cash back. But let's suppose that instead of this one Fidelity card, the commenter used the Chase Sapphire Preferred for 2x points on travel and dining, the AMEX Premier Rewards Gold Card for 3x on airfare and the Chase Freedom for 5x on quarterly bonus categories (currently Amazon and gas spend, but about to change to grocery stores and movie theaters for Q2).
Further assume that the $2500 in spend was on:
$1000: airfare >>3x Membership Rewards points using AMEX Premier Rewards Gold Card: 3000 MR points
$700: dining >> 2x Ultimate Rewards points using Chase Sapphire Preferred: 1400 UR points
$800: Amazon purchases and gas >> 5x Ultimate Rewards points using Chase Freedom Q1 category bonus: 4000 UR points
Let's further assume that we transfer the 5400 Ultimate Rewards points to United miles, and the 3000 Membership Rewards points to British Airways Avios, taking advantage of the current 50% AMEX transfer bonus to British Airways Avios.
Now for the valuation. While I aim to get at least 3 cents per mile or point with my redemptions, let's go with the more conservative ones Ben provided in his analysis, What a Mile is Worth of 2 cents for United miles and 1.3 cents for each Avios point.
That gives us 5400 x .02 = $108 and 4500 x .013 = 58.5 for a total of $166.5. That's over triple the value of the $50 the commenter is getting with the Fidelity 2% cash back, and could be even more, depending on the award redemption and if you value United miles or Avios points more highly than the values we used. Of course, we made an assumption on the purchase category breakdown, and not everyone will be able to have frequent airfare spend or fully leverage the Chase Freedom 5x bonuses, but directionally, the example still stands.
And then there's this comment:
“You should see my shiny new Weber gas grill which makes killer bacon wrapped filets. BTW, it cost me exactly zero dollars. I assume the card company made their money off the merchant because they sure as fire didn't make it off me.”
Glad you love those bacon wrapped filets, because in terms of alternative international travel awards, that Weber grill is worth…oh, I don't know…maybe $1500?
For those of us that enjoy just paying taxes on otherwise free international business and first class tickets, just be glad there are enough others perfectly contented with their free gas grills and waffle makers.
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