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What My Midlife Crisis Has Taught Me About Travel Points and Miles

I’ve been earning travel rewards since I got my first credit card, and at a certain point in the late 1990’s the Starwood card became the best.

Over the intervening years, I have earned tons of points and miles through credit card spends, putting both my own personal spend and business spend on credit cards that maximize my travel rewards whenever possible.  For a long period, I even deposited my cash in savings and CD products offered by a Texas bank that paid interest in American Advantage miles.

As a result, I have traveled personally for leisure and taken family vacations that might have otherwise been too expensive.   And, as credit card companies have benefitted from higher interchange fees over the last several years (and passed some of those benefits on to the customer in terms of higher sign-up bonuses and more points per dollar spent on certain products) the opportunities have only increased.

Conventional wisdom, expressed just the other day in this New York Times piece, is that the greatest value in each mile or point accrued is ordinarily extracted when points are used to redeem for travel in Business or First Class on routes where airlines charge a real premium for fares in those classes (eg., New York to London, New York to LA or New York to San Francisco).   It is true,, in fact, that  it is ordinarily on these routes where you can achieve 8, 9 or even 10 cents per mile redeemed.

Now that I am in my late 40s, I view the opportunities associated with travel rewards very differently.  Most importantly, I no longer need to travel in business class or first class just to get the highest value per point or mile.   Rather, because I have reached a point in my life where I now spend literally hours at a time sitting on hard benches next to unsavory people (think of jury duty), I have no trouble traveling for 5 or 6 hours in coach class.  Since I am based in New York, that pretty much means that I can get anywhere in this country or Europe on a coach fare. 

Likewise, the idea of traveling Singapore Suites to Asia and Frankfurt, and being pampered with caviar and champagne, while very attractive and a great redemption value, is wasteful to me.   I do perfectly well in a business class seat to Singapore or Australia.  Plus, I really don’t like caviar and I don’t drink alcohol at all when I fly.

At this age, what I really need is to be very comfortable when I get where I am going.   Since I do not do AirBNB, hotel points are much more valuable to me.  While the redemption value for hotels compared with business or first class air travel is almost never as high (althought I have found one or two occasions where they are – such as 8,000 points for the Hyatt Place in Portland, Maine in August when rates are over $500), I can easily find Starwood and Hyatt redemptions that are well over 4 cents per dollar.   Fairmont, Hilton, and Club Carlson (Radisson), while significantly devalued over the last several years, are also decent programs.

Hence, as I age, my own preferences have moved significantly towards earning hotel travel rewards points, and for that I tend to look especially closely at the Starwood Preferred Guest card, the Hyatt card, and the Chase Ultimate Rewards program as my cards of choice.

See the best sign up travel bonuses today.

See BestCashCow's ranking of the most valuable cards for racking up points and miles.

Editorial Disclosure: Opinions expressed here are author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.

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Barclays Study Suggests Amex Platinum Card Falling Behind Competitors

American Express recently announced changes to its flagship credit card product.  The Platinum Card ®, which recently began giving 5x points per dollar spent directly on airlines, will now also offer 5x points per dollar spent at hotels when booked through Amex travel, and a $200 annual Uber credit.  The annual fee is rising from $450 a year to $550.

A recent Barclays credit card use study suggests that these changes are still not strong enough to for Amex to remain competitive with Citibank’s Prestige card and Chase’s Sapphire Reserve card.

The Barclays study assumes an average customer earning $150,000 a year and uses government data on average household spending across different categories to estimate which card offers best rewards.

The study suggests that the Amex Platinum card now delivers an effective rewards rate per dollar of 1.48% (up from 1.22%) whereas the Citi Prestige cards delivers 1.78% and the Chase Sapphire Reserve 2.06%.

The Barclays study, in our view, is flawed on at least three levels.  First, it fails to identify how the rewards rate is calculated (for example, while all points are transferable to Singapore, Amex points remain transferrable to British Airways and Delta which may allow a more valuable redemption than Citibank points which are not).  Second, it fails to account for the fact that most cardholders have two or more cards in their wallet and spend according to category bonuses; Amex is arguably more valuable than the other cards to those who travel because of the 4x and 5x categories (Citi and Chase have only 2x and 3x categories).   The use of, say, an Amex Platinum card, coupled with the use of a Chase Freedom Unlimited card (which offers 1.50% cash back or 1.5x transferrable points on a spend that can be worth well over 3 cents per dollar at Hyatt, enables a customer to generate far more valuable rewards than Prestige or Sapphire Reserve alone.  Third, the study fails to take into account other factors, including service and purchase protection.  To many, Amex continues to be the gold standard in purchase protection and in resolving disputes with vendors.

It is, therefore, BestCashCow’s position that, while Prestige and Sapphire Reserve are both very compelling and while Chase has significantly better transfer flexibility than Amex, the Platinum card is an important tool in a strong travel rewards strategy.

See the best cards for racking up travel rewards here.

Editorial Disclosure: Opinions expressed here are author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.

Advertising Disclosure: This site may be compensated for hosting offers.

Is the Credit Card Flipping Game Ending?

The game of flipping credit cards to earn free travel may be nearing an end.

Here is why.   There is talk in Washington that the Republican legislature may seek to limit the interchange fees that credit card companies can charge to small vendors, and to peel back legislation that previously forbade offering a discount for cash payments.  These actions would significantly limit the ability of credit card issuers to become profitable quickly with virtually each new cardholder.

JP Morgan Chase, the largest credit card issuer in the US, is already limiting the ability of cardholders to flip cards through its 5-24 rule.  As we discussed in this article, the rule is being applied with a heavy hand, regardless of the number of transactions, number of business cards or other transactions that you conduct with bank.  Chase has control of many of the most attractive areas of this market and driven this market.  Its actions would seem to indicate that, even without legislative change, it may not be so easy to rack up travel rewards through just quickly flipping credit cards going forward.

See the best credit card sign up bonuses.

As the game ends, or at least gets a little more challenging, it is time to look at the best strategy for continuing to maximize the money you receive from your credit card usage, and to plan to keep the cards that work best for you and your needs while discarding those where your recurring spend may not work as well.

See the best credit travel and reward cards for recurring spend.

As you do that, here are some things that I recommend.

First, consider going back to what you were doing before you started the flipping game.  For me, the Starwood card provided the most value for more than 2 decades.  While Amex only lets you get the sign up bonus twice (once for a personal account and once for a business account), the points have always had real value, arguably even more now that they are convertible to Marriott points at 3 to 1.

Second, look at those cards that provide added value over the long term.  The Amex Platinum card provides all sorts of purchase protection that other cards do not offer, the Chase Sapphire cards offer better liability protection for rental cars, and the Citi Prestige card offers a fourth night free on hotels booked through the card’s service center.  These cards have hefty fees, but may be worth renewing if the value is there. And, importantly, you probably should not cancel them with the intent of getting them again later for a new bonus, as that may no longer be possible soon.

Third, consider those cards that give you the most flexibility.  In our view the cards that provide the most flexibility are the Barclays Arrival World Elite Mastercard which sets your redemption value at 2.10%. and the Bank Americard Travel Rewards Credit Card which sets your redemption value at 2.625% and requires that you have $100,000 on deposit with either Bank America or Merrill Lynch.  Among the major point earning programs, Chase gives you the most flexibility and when you are done flipping, the Chase Freedom Unlimited is well worth a look.  It provides you with 1.5 points on every dollar spent, and those points can be transferred to a host of great travel partners so long as you also maintain a Sapphire Reserve, Sapphire Preferred or Ink Plus account. 

Editorial Disclosure: Opinions expressed here are author's alone, not those of any bank, credit card issuer, hotel, airline, or other entity. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.

Advertising Disclosure: This site may be compensated for hosting offers.