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Update: Some offers mentioned below are no longer available. View the current offers here – Premier Rewards Gold Card from American Express
When you spend a large chunk of your waking hours talking about, researching, and writing about miles and points it is no shocker that it seems to become a common topic of conversation. With my mom out of town, we invited my dad over to grill with us this weekend. At dinner he didn’t bring a casserole, but instead he brought something better. He showed me an article he printed from NextAdvisor.com about their Travel Rewards Credit Card Analysis since he thought it would interest me… and of course it did. I had never personally heard of NextAdvisor but they advertize themselves as offering “In-depth, Independent Research”.
Anyway, in this article they ranked 15 of the leading rewards credit cards by the amount of rewards value you get for every $100 charged on each card. They booked actual flights and hotel rooms with each card’s reward currency and then used that info to calculate the value of each card’s rewards. You can read their full results here, but I will share a few things from the article that were either interesting.
- The Chase Sapphire Preferred® Card was dramatically under-valued in this analysis. My only logical assumption is that the author(s) just don’t understand how the card works. Based on emails I get from those new into the miles and points world, I actually think this is a very, very common issue with this card. Most seem to just focus on using the points earned at a fixed price toward travel. That is certainly a feature of the card, but it is usually not the most rewarding way to use Ultimate Reward points. The value of this card is in the transferability of Ultimate Reward points to partners like United, Hyatt, British Airways, Marriott, and more. The article essentially ranks those type of points as high as $1.75 per $100 charged, but yet has Ultimate Rewards at $1.05 per $100 charged – I would think that UR points need to be valued at least as high as the points from programs that they can transfer into. To me Ultimate Reward points are even more valuable because I can pick and choose how to use them – though that value isn’t as easily quantified in a study. I personally rank this as the best personal rewards earning credit card because it is so versatile, but I do think that many folks don’t even realize how or why they would want to transfer points to airline and hotel loyalty programs instead of use them as cash (sounds like a good post for another day…)
- The article ranked each card’s value toward hotels and flights individually, which is fair. However, I personally don’t think that one credit card needs to excel in both. Even if you don’t want a couple dozen rewards credit cards it is simple enough to have one that specializes in earning points valuable for airfare, and one for hotels (though the Chase Sapphire Preferred actually does both very well). For example, you could have the Starwood Preferred Guest® Credit Card from American Express for your hotel stays (though it actually works pretty well toward airline miles as well) since even this article ranked its hotel point earning as the highest at $2.61 per $100 charged. I think that is a very fair number, even though I usually redeem SPG points higher than that. You could then choose the airline card that offers perks like free checked bags and/or early boarding on an airline you frequent, and be pretty well covered.
- Where’s the Membership Rewards program? I know that no study can realistically cover every single card, but the total omission of cards that earn Amex Membership Rewards seems like an oversight. I’d be interested to see how the study would value those points since they can go to so many different hotel and airline programs like British Airways, Delta, Hilton, etc, sometimes with a transfer bonus. Many of the cards, like the American Express Premier Rewards Gold Card, also have bonus earning categories such as 3x on airfare and 2x on gas and groceries. I think that certainly deserves to be in the top 15 personal card listing.
- Bonus categories matter. Another thing that was mentioned in some of the analysis, but not really fleshed out, was how powerful bonus categories on rewards cards can be. If you are earning 2x, 3x, or 5x on certain types of spending, that will add up much faster than a straight 1x. Obviously the more cards you have with varying bonus categories on things like gas, groceries, drug stores, office supply stores, phone bills, etc., the greater proportion of your spending that can earn more than 1x. Again, that is assuming you have multiple cards, but I think it is still worth mentioning.
Honestly I think the article did a reasonable job at calculating the value of points earned, but I think that what cards like the Barclaycard Arrival World Elite Mastercard and Capital One Venture Card Credit Card have in simplicity, they lack in exciting redemptions. Even if you normally redeem flights for domestic coach flights, it is still nice to have the reasonable option to redeem for a lie flat seat to Europe or a hotel like the Grand Hyatt Kauai. Both of those are rewards best obtained by points that are transferred to programs like Hyatt or United since the cash price and subsequent number of points redeemed at fixed cash value would be so large.
What cards do you use for your everyday purchases? Do you prefer the simplicity and flexibility that comes with fixed value points or do you go for the points that can go into hotel and/or airline loyalty programs? Do you agree with the article’s ranking of the most valuable cards?
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