The Value of Travel Rewards Programs and Credit Card Points

[jonat]

I've got a bunch of Ultimate Rewards points that I've never used. Question for those people who have used them to book airfare - can you purchase some of the airline extras (like "coach comfort seats") if you book through UR? I usually like to book travel directly with the provider to avoid complications if there are any problems with the reservations or travel delays but I compared a few ticket prices for trips I'm planning and UR seemed to have better rates.

It depends. If the airline allows you to buy those after ticketing, then yes - I've done this. If you need to buy a "premium economy" fare ticket, then no.

I haven't found the prices through UR to be any better for airfare, but, depending on the card you have, each point can be worth up to 50% more. I do wish UR would show multiple ticket classes per flight instead of always the cheapest (which I usually don't want.)

Where UR has been especially valuable to me has been hotel reservations, as the prices are often excellent and not readily available elsewhere.

 

[Chuckanut]

I just read this article on the value of getting a few bank travel reward cards.

These 5 Best Credit Cards Are The Only Ones You Need - Travel Codex

real value of the card. It’s the 1.5 cents per point fixed value on direct travel redemptions. Meaning you can use the points to purchase any airfare (or hotel room, rental car, whatever) and get 1.5 cents for every point. That’s excellent.

The big deal seems to be getting 1.5¢ to maybe as much as 2.2¢ per point earned when redeeming the points for travel through the bank. And, of course, there are the signup bonuses to consider, some at 100,000 points. And the very large yearly fees, but you do get some of that back in travel redemptions year after year.

Here's my problem: The point value of 1.5¢ seems rather pittiful when I can get 2% cash back on everything with my Fidelity card, 3% cash back on travel and meals with my Costco Visa card, 4% cash back on gasoline with my Costco Visa, and, sometimes, 5% cash back with my Discover Card at places like Amazon and various rotating businesses like hardware stores, department stores, etc.

Why not just get the cash and use it to buy the tickets and pay for the hotel rooms?
Once the bonus points are used up (not hard to do given how often they are devalued these days) there does not seem to be good value in these bank travel cards.

Note: I have one hotel card with a low fee that gives me one free night a year - a savings of $50 to $100 depending upon where and when I use the free night. That seems to be a keeper for now. But, now there is talk of them raising the fee and limiting the 'quality' of the hotels the free night can be used in. Not so good.

Am I missing something? Is my math wrong?

 

[Lsbcal]

...
Am I missing something? Is my math wrong?

The simple answer is that we are all going to pay at least 97% of the purchase and we are celebrating getting a few percent back. There are better things to concentrate on in life.

That said, I'm going to mention my recent forays into the bargain basement. I got the Chase Sapphire Reserve for just myself (adding DW adds a fee) and the deal is pretty good for our type spending and card usage. But for others they might get a few tenths better by going another way. There is a claw back on that Sapphire card i.e. $450 fee but you get $300 for travel. So that net $150 fee has to be balanced by high enough purchases at the 3% return rate (plus Ultimate Rewards usage bonus). Then there are a few features like travel insurance to consider. Gets a bit complicated and I would not blame anyone for just passing on this.

DW uses the Bank of America card for groceries at 2% back. And yes, we have the Amazon card linked to our Chase account for autopay. There are a few more cards and features but I've probably already bored the majority of people reading this.

P.S. That article Chuckanut linked to recommends pairing the Chase Sapphire with the Chase Freedom. I'll probably do that so thanks Chuckanut for the link!

 

[ExFlyBoy5]

The simple answer is that we are all going to pay at least 97% of the purchase and we are celebrating getting a few percent back. There are better things to concentrate on in life.

That said, I'm going to mention my recent forays into the bargain basement. I got the Chase Sapphire Reserve for just myself (adding DW adds a fee) and the deal is pretty good for our type spending and card usage. But for others they might get a few tenths better by going another way. There is a claw back on that Sapphire card i.e. $450 fee but you get $300 for travel. So that net $150 fee has to be balanced by high enough purchases at the 3% return rate (plus Ultimate Rewards usage bonus). Then there are a few features like travel insurance to consider. Gets a bit complicated and I would not blame anyone for just passing on this.

DW uses the Bank of America card for groceries at 2% back. And yes, we have the Amazon card linked to our Chase account for autopay. There are a few more cards and features but I've probably already bored the majority of people reading this.

P.S. That article Chuckanut linked to recommends pairing the Chase Sapphire with the Chase Freedom. I'll probably do that so thanks Chuckanut for the link!

And, if you work it right, you can get $600 of travel credits in a single annual period. BUT...in order to do that this year, you would need to get it done pretty quick.

 

[brett]

We use our airline/travel credit card points carefully. Always on trips that permit stopovers or on routes where competition is low and prices are high.

We just redeemed some air reward points for a flight to South America with a stopover in Panama. Best per ticket price we could find was $2K. Airline reward plan cost us 60K points each plus $247. in fees each.

 

[Lsbcal]

Regarding that article: These 5 Best Credit Cards Are The Only Ones You Need - Travel Codex

The author seems to think that the Sapphire Reserve card is not needed in one's wallet but rather just stick with the Freedom card:

And you don’t even need to carry the Sapphire Reserve with you. Use it to qualify for the bonus and burn the $300 travel credit, then throw it in your sock drawer to be pulled out only for the occasional car rental (to get the primary collision insurance). The Freedom Unlimited is the one that goes in your wallet.

I don't understand this. Yes, the Freedom card gives 1.5x points on purchases and for regular purchases the Sapphire card only does 1.0x points. But for travel and dining the Sapphire card gives 3x points. So why does he say you don't need to carry the Sapphire card? Also the Sapphire "travel/dining" category is interpreted very loosely to include coffee shops and Uber (as I understand it).

 

[jonat]

I have three cards:
- Sapphire Reserve - use for travel and restaurants
- Freedom Unlimited - use for shopping (1.5 points)
- Costco Visa - use for gas (4%) and at Costco, obviously (2%)

 

[Sunset]

We use our airline/travel credit card points carefully. Always on trips that permit stopovers or on routes where competition is low and prices are high.

We just redeemed some air reward points for a flight to South America with a stopover in Panama. Best per ticket price we could find was $2K. Airline reward plan cost us 60K points each plus $247. in fees each.

Excellent value you used there.
Can you explain the stop over part, is it that you stop over for days to see Panama and then continue on the flight to the final destination ?

 

[athena53]

I used to pay much more attention to these programs when I was traveling for business and racking up airline and hotel points from business travel. Now I'm mostly using the Fidelity Visa. I still have a Marriott Visa because we've had it for years, which is good for the credit rating, and the Chase Ultimate Rewards Visa. A couple of weeks ago I drove off from a gas station and left the Fidelity Visa on the back of the car, so it's good to carry more than one. (No fraudulent charges, already have the replacement card.)

At this point we're much better off with the flexibility of cash back as long as I'm careful to keep miles from expiring. I can add to the Hilton and American Airlines accounts with e-Rewards points, which helps.

 

[brett]

Our Aeroplan reward travel allows for one stopover, or an open jaw,on a return flight. The other challenge is to avoid AC and fly on United, a Star Alliance partner. Why? The Aeroplan admin fees on AC metal would have been $550 Cad each vs the $247 Cad each that we paid for our United metal. We try do the same for Europe reward flights.

We are actually starting our trip with land travel in Argentina and Uruguay, then a cruise to Chile, land travel in Chile, followed by three weeks in Panama/Costa Rica, then home to Calgary.

If we book reward tickets from home to Buenos Aires and back from Santiago we would not be allowed a stopover. It would be considered open jaw.

Instead, we booked reward tickets to Santiago return, with a stopover in Panama on the way back. This met the rules. Then we booked an inexpensive flight from Santiago to Montevideo (Uruguay)for $115. CAD each. So we will fly to Santiago, then transfer to Montevideo the following day. Montevideo is across the bay from Buenos Aires. Our cruise will take us around the horn and we disembark in Chile.

We have done this sort of thing in Europe. It works well for us since we seldom fly in and out of the same city and there are many low cost carriers within Europe.

We use our air reward points for travel on routes where the fares are high, ie not competitive or in high season. We typically use our hotel points in cities where hotels are expensive.

Sounds a little odd but it works for us.

 

[Safari Lover]

Flyertalk is a great website for info on rewards for CC.

in the old days, late 90's to about 2010, the AE Delta card was wonderful. We used it for reg and business expenses. Both of us could fly to Europe business class on skymiles network for 180,000 points round trip. We did this twice a year for about 12 years. They had all kinds of ways to get bonus miles in those days.
NOW I have used as many as 375,000 points for business class round trip to Cape town. For just me. Still have the card, have few miles left on it.

Other cards we use. Visa - I use the points as cash to pay for my massages, facials etc.

Costco visa card. I was told the bonus was paid once a year in the form of a costco check. which I got one opportunity (shopping) to use it at costco. With my cash back from other cards per year, I'd be getting a check for about $1800.00 To use on one costco shopping trip?! Not good for me.

 

[cathy63]

Costco visa card. I was told the bonus was paid once a year in the form of a costco check. which I got one opportunity (shopping) to use it at costco. With my cash back from other cards per year, I'd be getting a check for about $1800.00 To use on one costco shopping trip?! Not good for me.

The bonus is paid once per year in February, and you can cash the entire check at Costco and walk out with real money, no shopping necessary. Or you can shop, use the check to pay, and get the change in cash.

 

[audreyh1]

I always take the Costco bonus in cash. Because I would rather use the rewards card when I shop there. I can use the cash for the other occasional things where I don't use a credit card.

I'd be happier if there was an easy way to pay for my annual membership with the cash reward, but I haven't been able to figure out a way to do that because it's automatically charged to the Costco Rewards card. I don't think the card gives you rewards on the paid membership dues.