To Transfer or Not to Transfer: What to Do With Capital One Miles

Nov 30, 2018

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Back in November 2018, Capital One announced that holders of the Capital One Venture Rewards Credit Card and Capital One Spark Miles for Business would be able to transfer their reward miles to a dozen airline partners, a list that was expanded to 14 when the transfer functionality went live. This update significantly enhanced an already-competitive card, but at the same time, this new feature adds additional complexity to the redemption process. You’ll now have to make the choice between redeeming your miles for statement credits or choosing an airline partner, and for many cardholders, this won’t be an easy decision.

In today’s post, I’ll guide you through the pros and cons of each option and provide a concrete example of this so that you can make the best choice for your award travel needs.

The Statement Credit Option

From the day the Venture card was introduced, it has offered 2x miles on all purchases along with the ability to redeem your miles for statement credits towards any qualifying travel expense. Capital One defines travel expenses as purchases made from airlines, hotels, rail lines, car rental agencies, limousine services, bus lines, cruise lines, taxi cabs, travel agents and time shares.

The Pros

1. It’s simple: The beauty of travel statement credits is that you can make all of your travel reservations any way you’d like. For example, you can book directly with the travel provider, go through an online travel agency or even work with a traditional travel agent. As long as the purchase codes under one of the above merchant categories, you can use your Capital One miles to “erase” these transactions. There are no award charts to consult, no blackout dates or capacity controls to worry about and no additional taxes, fees and surcharges to pay.

For more information on this process, read Benji Stawski’s post on How to Redeem Capital One Venture Miles.

2. You have flexibility: Capital One’s definition of travel is broad enough to include purchases that you otherwise couldn’t effectively use your points and miles for, such as taxis, bus fares or rail lines. These types of rewards sets award travelers free from large airlines and chain hotels and lets you redeem rewards for stays at small, independent hotels and flights on any airline in the world.

3. Awards are treated like regular purchases: Unlike many award bookings, you can use your Capital One earnings in this way and still get points and/or miles for your award travel. Hotel stays or flights booked with your Venture or Spark Miles card should also count towards elite status qualification, and if you already have status, you should also be eligible for perks like upgrades and bonus points.

The Cons

1. It only gets you a fixed value. The downside to using Capital One miles for travel statement credits is that you’ll always receive a fixed value of one cent per mile redeemed. Granted, this is a solid rate of return, considering both the Venture and the Spark Miles cards offer unlimited 2x miles for every dollar (giving you a return of 2%). But at the same time, you’ll never be able to redeem your miles this way to find an exceptional award that offers you any more than one cent in value per mile redeemed.

The Option of Transferring Your Rewards to Airline Miles

United 787-8 Business Class (Photo by Zach Honig / TPG)
If you’re looking to travel in premium classes, like United’s 787-8 business class, you’ll likely be better off transferring your Capital One miles to airline partners. (Photo by Zach Honig / TPG)

With the November announcement of transfer partners, Capital One joins other major card issuers in offering you a way to transfer your credit card rewards directly to airline miles. This can open up ways to get out-sized value from your miles, but it also has a few potential pitfalls to consider.

As a reminder, Capital One offers 14 airline programs from which to choose, and these partners range from exceptional to ho-hum. The points transfer at a 2:1.5 ratio for all but two of them (indicated below):

  • Aeromexico Club Premier
  • Air Canada Aeroplan
  • Air France/KLM Flying Blue
  • Alitalia MilleMiglia
  • Avianca LifeMiles
  • Cathay Pacific Asia Miles
  • Emirates Skywards (2:1)
  • Etihad Guest
  • EVA Infinity MileageLands
  • Finnair Plus
  • Hainan Fortune Wings Club
  • Qantas Frequent Flyer
  • Qatar Airways Privilege Club
  • Singapore KrisFlyer (2:1)

The issuer has also indicated that it plans on adding more transfer partners in the future. For complete details on this process, be sure to check out our post on How to Transfer Capital One Miles to Airline Partners.

The Pros

1. You have the potential to redeem miles for exceptional value: According to TPG’s latest monthly valuations, the most valuable partner on this list is the Avianca LifeMiles program, which are worth 1.7 miles apiece. When adjusting for the 2:1.5 transfer ratio, that means that each Capital One mile is getting you 1.275 cents of value, which is significantly greater than the 1 cent that you’d get when redeeming for statement credits towards travel purchases.

But as award travel enthusiasts know, there’s always the chance to redeem your miles for exceptional value. For example, Avianca LifeMiles and Air Canada Aeroplan are two of the best programs for booking awards on Star Alliance carriers. And if you can redeem LifeMiles for a Lufthansa first class award without fuel surcharges, then you’ll find yourself receiving far more than 1.7 cents per mile in value.

For more information on maximizing these transfer partners, read our posts on:

2. You can combine miles with existing balances: There are times where you have a frequent flyer account with a decent-sized balance but one that’s not quite large enough for the award you want. This is a great time to have access to transferable rewards like Capital One Miles. For example, if you had credited a flight to the Qantas Frequent Flyer program, but you lacked enough for an an award, then you could transfer some of your Capital One Miles to top off that account and book the ticket.

The Cons

1. Choosing a transfer partner and booking awards can be confusing: If booking award travel was easy, then everyone would be doing it. The result would be far fewer award seats to go around, especially in premium cabins. Those of us that take the time to understand the various frequent flyer programs and hunt for the best awards will often find ourselves sitting in business and first class seats that we could never afford to pay for otherwise. However, it takes a significant level of effort to get to this level of knowledge, and it’s a far cry from the simplicity of redeeming your miles for statement credits to cover travel purchases.

2. You won’t earn miles elite status from traditional frequent flyer awards: If the award you’re considering will cost roughly the same number of Capital One miles via transferring or redeeming for statement credits, then it’s better to pay your flights with your credit card and erase the cost with your miles. That’s because purchasing the flights directly will allow you to earn miles from the flight and will give you credit towards elite status. You’ll also be eligible for travel insurance protections that require you to pay for your trip with your card. And if you already have elite status, you can qualify for upgrades when you book a paid ticket with your credit card instead of redeeming frequent flyer miles.

3. Transfers may not be instant: Whenever you’re dealing with a transferable currency, converting those earnings to airline miles can take some time. Fortunately, half of Capital One’s transfer partners received the miles instantly, and all but one (Cathay Pacific Asia Miles) received them within 36 hours. Nevertheless, a coveted premium class award seat could be gone if there’s any sort of delay, so you’ll want to either put your desired award ticket on hold (if that’s an option) or have a back-up plan in place.

How to decide for yourself

Image by krisanapong detraphiphat / Getty Images
Crunching the numbers to compare the value you’d get by transferring vs. statement credits is the best way to make a decision. Image by krisanapong detraphiphat / Getty Images

If you have a Venture or Spark Miles card, you should take some time to familiarize yourself with the best of the 14 airline transfer partners. Read our guides and take a look at their award charts to get an idea of where the sweet spots are. When you’re able to receive significantly more value than one cent per Capital One mile, then it will always be worth transferring your rewards to airline miles rather than redeeming them as travel statement credits.

And most importantly, you need to consider the value of the lowest priced flight you could have booked, not the current price of the award ticket you could book. For example, you might find an expensive United flight that you could book with Aeroplan or Avianca miles, and think that you’re getting a great deal. But if you could have purchased a lower priced flight on a discount carrier (and get a statement credit), then you have to consider that price when making your decision.

Finally, be sure to compare the award rates when you’re booking a flight on a carrier that partners with multiple Capital One transfer partners. For example, Aeromexico, Alitalia and Flying Blue (the loyalty program of Air France and KLM, among others) allow you to book SkyTeam flights with their respective miles, while you can use Finnair, Asia Miles, Qantas, Qatar or Etihad to book American Airlines-operated flights.

For example, let’s say that you were looking at a round-trip flight from New York-JFK to Zurich (ZRH) in March 2019. Here are the main options for nonstop economy flights on Swiss, departing March 6 and returning March 13:

  • Paid ticket: $467.03 (46,703 Capital One miles)
  • Award ticket through Aeroplan: 60,000 miles + ~$57.50 in taxes and fees (equivalent to 80,000 Capital One miles)
  • Award ticket through Avianca: 46,500 miles + ~$82 in taxes and fees (equivalent to 62,000 Capital One miles)

In this case, you are much better off paying for the flights directly with your card and then using your miles to “erase” the purchase via a statement credit.

For this itinerary, you
For this itinerary, you’re much better off transferring your Capital One miles.

However, this calculation changes significantly when you consider business class. Here are the options for getting to Zurich in business class on the same dates:

  • Paid ticket (note that this is the lowest business class ticket but not the nonstop): $2,230.93 (223,093 Capital One miles)
  • Award ticket through Aeroplan: 110,000 miles + ~$57.50 (equivalent to 146,667 Capital One miles)
  • Award ticket through Avianca: 126,000 miles + ~$82 (equivalent to 168,000 Capital One miles)

For this trip, you’re now much better off transferring your Capital One miles (to Aeroplan in this case). Based on the paid ticket price and taking out the taxes and fees you’d be paying, you’re getting a redemption value of 1.48 cents per mile, slightly above TPG’s most recent valuations.

Again, be sure to carefully consider the two options do you don’t redeem more Capital One miles than you need to.

Bottom Line

Capital One’s addition of transfer partners was fantastic news and has greatly enhanced the value proposition on cards like the Capital One Venture Rewards Credit Card and Capital One Spark Miles for Business. However, this does adds complexity; when should you transfer, and when should you redeem directly for statement credits? By carefully weighing both of these options using the above framework, you can make the right choice when it comes time to redeem your Capital One miles.

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

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