The main reason I love miles & points is because I can redeem them for rewards which are disproportionately valuable. For example, when I can redeem 135,000 American AAdvantage miles for a roundtrip ticket in Cathay Pacific first class which would retail for ~$30,000, that’s a heck of a value.
Of course it’s important to understand that I don’t actually value those experiences at face value, since I’d never otherwise pay $30,000 for an airline ticket.
While it can be tough to establish an exact value, the concept is simple — at a minimum your miles are worth the cost you spent to acquire them, and at most they’re worth what you value your redemptions at. So in the above example of Cathay Pacific first class, I might say that I value that roundtrip first class ticket at ~$3,000 (it’s what I’d probably otherwise be willing to pay for it), and therefore I’m getting a bit over two cents per mile of value on that redemption.
While that’s all fine and dandy, let’s address one important reality — most people aren’t looking to redeem points for international first class… or for international travel… or for premium cabin travel. A vast majority of people are redeeming their miles for domestic economy flights.
Beyond that, a vast majority of people really aren’t maximizing their return on everyday credit card spend. As a general rule of thumb I think you really can’t go wrong with having a flexible card like the Chase Sapphire Preferred® Card, Citi Premier℠ Card, or Amex EveryDay® Preferred Credit Card. They offer great purchase protection, bonus categories, flexible redemptions, no foreign transaction fees, etc.
But there’s still some effort required to redeeming those points as efficiently as possible. Because if you’re at an information disadvantage you won’t be able to utilize those points as efficiently as someone who knows what they’re doing.
Which brings me to the point of this post. What everyone should be asking themselves is “do I get a return of more than two cents for every dollar I spend on a credit card?” And that question should take into account any annual fees you’re paying.
I’d speculate that for a vast majority of the population the answer is no.
So then my follow up question would be “why aren’t you putting all your spend on the Citi® Double Cash Card?”
The Citi® Double Cash Card has no annual fee, offers 1% cash back on every purchase, and then an additional 1% cash back when you pay for those purchases. There are no limits to the amount of cash back you can earn.
So once you pay your bill that’s a return of two cents on every dollar you spend. Now, if you’re savvy and have been involved in the miles & points hobby for years, you may very well earn a return of more than 2% on your credit card spend. But that requires maximizing your points both in terms of using the right cards for purchases, as well as redeeming them as efficiently as possible.
And for the average person I’d speculate that’s not the case. For example, when I talk to non-miles/points people about which credit cards they use, I seem to hear they’re using the Capital One Venture Card more than any other. “That’s a good card, right? I get double miles!”
With the Capital One Venture Card, each “mile” can be redeemed for one cent towards the cost of an airline ticket. That being said:
- The card has a $59 annual fee (waived the first year)
- To get the one cent per mile value, you have to redeem in specific increments
- Your redemption costs are worse if you redeem for non-travel purchases
Point being, even if we don’t factor in the fact that the Citi® Double Cash Card has no annual fee, there are still no circumstances under which you’d come out ahead with a Capital One Venture Card. The only exception is the sign-up bonus, though after completing minimum spend there’s no marginal incentive to spend on the card.
Having a card like the Citi® Double Cash Card, which offers you a return of two cents on the dollar with no annual fee and basically “no strings attached,” is really tough to beat.
Can you achieve a better return on another card if you’re invested in the hobby and like to redeem for disproportionately valuable redemptions? Absolutely. And that’s why I don’t use the Citi® Double Cash Card personally. But we also don’t really reflect the earning and redemption patterns of the average consumer, and it’s perfect for someone like my brother who just wants a solid return on his spend.
So for a vast majority of people I would argue something like the Citi® Double Cash Card is virtually impossible to beat.
Non-Affiliate Product Disclaimer: The information for the AmEx Everyday Preferred has been collected independently by One Mile At A Time. The card details on this page have not been reviewed or provided by the card issuer.