Despite Claims, Capital One’s Cards Aren’t the Best for Award Travel
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Today, TPG Contributor Richard Kerr looks at some of the claims made by Capital One about its travel rewards cards, and separates the truths from the half-truths.
Several years ago, Capital One launched a new marketing campaign touting the virtues of its travel rewards credit cards, featuring celebrity endorsements from Samuel L. Jackson and (more recently) Jennifer Garner. To say the campaign has been a success would be an understatement. A straw poll around my office of American expats (in Japan nonetheless) found that 10 out of 10 coworkers could identify Capital One as the advertiser when shown only a screenshot of one of the commercials. Bravo to Capital One and its marketing team for generating that degree of brand recognition.
However, accepting Capital One’s message at face value can be costly to aspiring award travelers. In this post, I want to dive into the details of several well-known Capital One commercials, debate the arguments made by both Mrs. Garner and Mr. Jackson in favor of becoming a cardholder, and finally, examine when adding a Capital One product to your travel rewards portfolio does make sense.
Let’s start with a look at this commercial for the Capital One Venture Rewards Credit Card. Pay close attention and see if you can pick out the more contentious bits.
Let’s start at the very beginning (a very good place to start). Garner leads with the following statement:
“You’re all set to book a flight using rewards miles from your airline credit card …”
From the outset, Garner is framing the conversation to exclude some of the top competition. She compares the Capital One Venture Rewards card to co-branded airline credit cards such as the United MileagePlus Explorer Card, but completely ignores cards that earn highly lucrative transferable points like the Chase Sapphire Preferred or Citi Premier Card. Not to knock airline miles, but transferable points tend to be more valuable in general. Leaving those other options out of the discussion plants the false notion of limited choices, which makes it easier to talk up the benefits of Venture Rewards.
“The flights you really want … aren’t available because they cost a ridiculous number of miles.”
I’ll agree that award seat availability can be difficult to find within airline loyalty programs, but availability and mileage requirements are not the same thing. Airline programs such as Delta SkyMiles, American AAdvantage and United MileagePlus allocate a certain number of award seats at specific prices on each flight, so peak flights on high-occupancy routes may have only a few seats (or none) available. However, those problems can be overcome.
As for the argument that free flights through airline programs cost a ridiculous number of miles, there’s plenty of evidence to the contrary. For example, British Airways offers economy short-haul flights (under 600 miles) for just 4,500 Avios. American Airlines offers one-way flights from the US to Asia in business class for just 50,000 AAdvantage miles. You can even fly in the pinnacle of luxury on Emirates from Los Angeles to the Middle East for 90,000 miles. While there are some programs that overcharge for free flights, the list of good deals on award flights is by no means short.
“With Venture you’ll earn unlimited double miles.”
What Garner says is true, but the story she’s telling is incomplete. Praising the Venture Rewards card for earning 2 miles per dollar reminds me of the Shel Silverstein poem Smart, which satirically points out the importance of quality over quantity. Venture Rewards miles can be redeemed for 1 cent apiece toward travel (i.e. a $400 flight will cost you 40,000 miles). Other points and miles are valued between 0.5 and 2.4 cents per point, and many of the associated rewards programs have credit cards with bonus categories that can double, triple or even quintuple your earnings for each dollar spent.
Let’s look at the second commercial, which features Samuel L. Jackson advertising the Capital One Quicksilver Card:
Once again, the narrative in this commercial is incomplete:
“Why do some cash-back cards limit where you can earn bonus cash back?”
While he doesn’t mention the competition by name, Jackson is ostensibly comparing Quicksilver (and its consistent 1.5% cash-back rate) to cards like Chase Freedom and Discover it, which offer 5% cash back on rotating quarterly categories (generally capped at $1,500 of purchases). The answer to Jackson’s rhetorical question is simple: Bonuses are limited on those cards because they offer a greater return. However, that limitation doesn’t mean they’re necessarily less valuable.
For example, if you spend less than $4,000 each month on your card, and if more than one eighth of that spending qualifies for a 5% bonus category, then you’ll come out ahead with Chase Freedom or Discover it. However, this presumes that you’re only using one card for all your purchases. In reality, you can easily take advantage of 5% categories for qualifying purchases and use a different card that earns a better return on other spending. I, for one, am willing to pay more attention to which card I use in order to earn more rewards.
If you prefer to just earn cash back at a a consistent rate so you don’t have to think about which card to use, I understand. However, Quicksilver still isn’t the best option in that case, because there are several cards that offer up to 2% cash back on all purchases, such as Fidelity Investment Rewards American Express. Last time I checked, 2% was more than 1.5%.
When Do Capital One Cards Make Sense?
Right off the bat, the Quicksilver card makes sense for all Uber users, as Capital One is currently offering a 20% discount when you use it to pay for your ride. Setting that aside, there’s not much incentive to choose Quicksilver when there are 2% cash-back options out there.
The Capital One Venture Rewards card also has its virtues. For example, if I want to book award travel but I can’t redeem other points or miles — perhaps because I’m flying a non-alliance airline or there’s no award availability — I can book a revenue ticket and still fly for free using Capital One’s “Purchase Eraser,” which lets me redeem Venture Rewards for eligible purchases within 90 days.
That being said, there are other options even for these kinds of rewards. The Barclaycard Arrival Plus World Elite Mastercard effectively earns 2.2% cash back toward travel redemptions on similar qualifying purchases.
While Capital One makes a convincing argument to the general public, it’s important to recognize that Venture Rewards miles and frequent flyer miles are different currencies. You can redeem 25,000 United miles for a free round-trip flight anywhere in the lower 48 states, regardless of the cash price. 25,000 Venture Rewards miles will also get you a free round-trip flight on United, so long as it costs $250 or less. The ability to earn double miles on all purchases makes the Venture Rewards card competitive, but it’s definitely not at the front of the pack.