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When Does It Make Sense to Spend on a Cobranded Credit Card?

Oct. 22, 2018
8 min read
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There are many benefits to using transferable points like Chase Ultimate Rewards over using a specific airline or hotel currency, including flexibility, flexibility and... flexibility. You'll get more value out of your points when you can pick which partner within a single alliance to transfer to and when you can explore alternate routings if there's no award availability on your first-choice itinerary. And you can even decide whether to redeem your points for flights or hotels.

It should come as no surprise then that over half of TPG's top travel rewards cards earn transferable bank points instead of individual airline or hotel points. That doesn't mean there's no value to be had in cobranded airline and hotel cards, and while I put the majority of my spending on cards like the Chase Sapphire Reserve and Chase Freedom Unlimited, there are a number of times when it makes sense to use a cobranded card over a more flexible alternative.

Acquire Hard-to-Earn Miles

While Chase Ultimate Rewards and Amex Membership Rewards points give you combined access to well over 20 hotel and airline transfer partners, not all miles can be easily earned from transferable cards. A prime example of this would be Alaska Mileage Plan miles. TPG values them at 1.8 cents each, making them the single most valuable airline miles and just a hair below flexible Chase and Amex points (at 2 and 1.9 cents each, respectively). They earn this high mark because of the incredible sweet spot redemptions they can help unlock, including US-Asia in JAL or Cathay Pacific first class for only 70,000 miles one-way.

Japan Airlines 777-300ER first class. Photo by Eric Rosen
Japan Airlines 777-300ER first class. Photo by Eric Rosen

The only points that can be transferred to Alaska are Marriott points, and after the changes to the Marriott credit card earning rates, you'll come out ahead just spending directly on the Alaska Airlines Visa Signature credit card. This card happens to be offering a limited time offer of a $100 statement credit, 40,000 bonus miles and Alaska’s Famous Companion Fare from $121 ($99 fare plus taxes and fees from $22). To qualify, you'll need to spend at least $2,000 or more within the first 90 days of opening your account (worth $820 based on TPG's valuations), which will get you more than halfway toward a luxury flight.

Speaking of Marriott points, they fall into a bit of a gray area in terms of terminology. While Marriott cards are "cobranded" (even though they are issued by Chase or Amex, they earn hotel points), those points are highly flexible and can be transferred to a whopping 45 airline partners. These cards are no longer as valuable as they used to be for everyday, non-bonus spending, but if you have a specific redemption in mind like a dream flight in Emirates first class or an overwater bungalow somewhere far away, it might make sense to sacrifice an overall higher earning rate in order to earn the specific points you need.

Large Spending Bonuses

In addition to annual fees, credit card issuers make a large chunk of their profits off interchange fees (swipe fees), and are constantly looking for ways to incentivize you to use your cards more. With cobranded cards, this often takes the form of specific bonuses for high spenders. One example is the Marriott Bonvoy Brilliant® American Express® Card, which allows cardholders to earn Marriott Platinum status by spending $75,000 in a calendar year (on top of the complimentary gold status that comes with the card).

This is a large chunks of spending, and for most of us, would require careful planning throughout the year to reach. It's important to consider the opportunity cost of putting that spend on a single card, and if you're chasing status, how much value you'll get if you aren't able to qualify organically.

Travel Perks

Outside of welcome bonuses, one of the best reasons to keep cobranded credit cards open long-term is because of the brand-specific perks they offer. This might be an anniversary free night or elite status with a hotel, or free checked bags and priority boarding with an airline. Many cobranded cards link these perks directly to your loyalty account, but for some you actually need to charge your travel to the card to earn them. United, for example, generally won't honor the first free checked bag that comes with the United Club Card if you book your ticket with a different card.

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Of the several airline credit cards that offer discounts on inflight purchases, all of them specify that you must use that specific card to receive the discount. A 20-25% discount handily beats the return you'd get from a flexible travel card like the Chase Sapphire Reserve, which comes out to about 6% (3x points worth 2 cents each).

Better Earning Rates at Hotels

Most airline cobranded credit cards offer a measly double points on flights booked with that specific airline, and you can easily do better with a card like the Chase Sapphire Reserve or the Platinum Card® from American Express. But cobranded hotel credit cards offer much higher earning rates, and can end up being the most valuable way to book your stays.

To keep things, simple I'll compare all of these cards to the Chase Sapphire Reserve, and its 6% (3x points) return on hotel bookings (it offers 3x on travel, which includes hotels). The chart below shows how rewarding hotel credit cards can be when used for stays at that specific chain.

Credit CardPoints Earned at Hotels (% return)
Hilton Honors American Express Aspire Card14x (8.4%)
The World Of Hyatt Credit Card4x (7.2%)
IHG Rewards Premier Credit Card10x (6%)
Marriott Bonvoy Brilliant6x (4.8%)

By not using the CSR, you would be sacrificing some perks like travel insurance, but the increased rewards might make it worthwhile. Even the Marriott cards (all of which earn 6x points at Marriott hotels) can be a better value than the CSR. While TPG values those points at 0.8 cents each, it's easy to get several times more value than that if you're transferring to airline partners for premium cabin rewards.

Keep Miles From Expiring

One problem with travel rewards (that's especially difficult for frequent international travelers) is keeping track of small mileage balances in different accounts and preventing them from expiring. You can use tools like Award Wallet to stay on top of your various accounts, but even if you know an account is about to expire it can still be hard to stop it.

Most airlines simply require you to have some kind of mileage activity every 1-2 years (terms vary by program), and so when someone's miles are about to expire I'll often hear people suggest transferring the minimum 1,000 points from Chase or Amex to keep the miles active. This certainly works, but if you aren't planning on using the miles anytime soon you've just wasted 1,000 valuable miles that could have been used elsewhere!

A far simpler option, if you have the right cobranded card, is to simply walk into a convenience store and buy a pack of gum or any other small purchase. You'll earn a few miles on your statement, which should be enough to reset the expiration date on your loyalty account. Just keep an eye on your calendar and make sure your statement will close/your miles will post before the expiration date.

Bottom Line

Cobranded cards are certainly not the foundation that you should build your rewards strategy on, but there are scenarios where they can be useful even outside of the welcome bonus. You'll find more generous perks and bonus categories with flexible points cards, but cobranded cards can offer uniquely valuable rewards at the specific airline or hotel that issues them. In case I haven't said it enough, flexibility is one of the most valuable things in travel rewards. But if you have loyalty to a single airline or hotel, engaging directly with their individual credit cards can help increase your returns.

Updated on 2/27/20

Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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TPG featured card

Best premium travel card for value
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards

1 - 10X points
10xEarn 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards®.
5xEarn 5x total points on flights through Chase Ultimate Rewards®.
3xEarn 3x points on other travel and dining.
1xEarn 1 point per $1 spent on all other purchases

Intro offer

80,000 bonus points
Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®

Annual Fee

$550

Recommended Credit

740-850
Excellent
Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

Why We Chose It

If you are looking to take your premium rewards to the highest level, this card is really a no brainer in our eyes. Chase's Ultimate Rewards make points easy to redeem, with a wide range of 10 airline and three hotel transfer partners and a friendly user interface. Despite the high annual fee, Chase is consistently adding new benefits to keep the card competitive in a fierce premium rewards field.

Pros

  • $300 annual travel credit as reimbursement for travel purchases charged to your card each account anniversary year
  • Access to Chase Ultimate Rewards hotel and airline travel partners
  • Unlimited 3x points on the broad category of travel and dining
  • 50% more value when you redeem your points for travel through Chase Ultimate Rewards®
  • Broad definitions for travel and dining bonus categories

Cons

  • Steep $550 annual fee
  • May not make sense for people that don't travel frequently
  • You must spend the $300 travel credit before earning 3x points for travel and dining
  • No automatic hotel elite status
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
  • Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases
  • Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,200 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit every four years for Global Entry, NEXUS, or TSA PreCheck®
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more
Best premium travel card for value
TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10xEarn 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards®.
5xEarn 5x total points on flights through Chase Ultimate Rewards®.
3xEarn 3x points on other travel and dining.
1xEarn 1 point per $1 spent on all other purchases
  • Intro Offer
    Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®

    80,000 bonus points
  • Annual Fee

    $550
  • Recommended Credit
    Credit ranges are a variation of FICO© Score 8, one of many types of credit scores lenders may use when considering your credit card application.

    740-850
    Excellent

Why We Chose It

If you are looking to take your premium rewards to the highest level, this card is really a no brainer in our eyes. Chase's Ultimate Rewards make points easy to redeem, with a wide range of 10 airline and three hotel transfer partners and a friendly user interface. Despite the high annual fee, Chase is consistently adding new benefits to keep the card competitive in a fierce premium rewards field.

Pros

  • $300 annual travel credit as reimbursement for travel purchases charged to your card each account anniversary year
  • Access to Chase Ultimate Rewards hotel and airline travel partners
  • Unlimited 3x points on the broad category of travel and dining
  • 50% more value when you redeem your points for travel through Chase Ultimate Rewards®
  • Broad definitions for travel and dining bonus categories

Cons

  • Steep $550 annual fee
  • May not make sense for people that don't travel frequently
  • You must spend the $300 travel credit before earning 3x points for travel and dining
  • No automatic hotel elite status
  • Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,200 toward travel when you redeem through Chase Ultimate Rewards®
  • $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year.
  • Earn 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases
  • Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,200 toward travel
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Access to 1,300+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select and up to $100 application fee credit every four years for Global Entry, NEXUS, or TSA PreCheck®
  • Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more