Most People Are Using The Wrong Credit Card

Filed Under: Business, Citi
In the interest of full disclosure, OMAAT earns a referral bonus for anyone that’s approved through some of the below links. These are the best publicly available offers that we have found for each card. Opinions expressed here are the author's alone, not those of the bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities. Please check out my advertiser policy for further details about our partners, and thanks for your support!

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® CardCiti 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 welcome bonus, though after completing minimum spend there’s no marginal incentive to spend on the card.

Bottom line

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.

Regarding Comments: The comments on this page have not been provided, reviewed, approved or otherwise endorsed by any advertiser, and it is not an advertiser's responsibility to ensure posts and/or questions are answered.
  1. This is something I struggle with when advising friends/family about miles and points. Not all of them aspire to, or are able to, spend the time/money/effort to figure out how to jet off to fab destinations in business or first class. But, they all come to me for advice and I find it hard to give sometimes. I try to look at things from their perspective instead of mine, even when I really want to say “Why yes, you could spend 25,000 UR points/night for a hotel in for your vacation, but the hotel itself only costs $130, so it actually makes more sense to pay cash and save the points for a better redemption.” But, if that trip is your only vacation and you are not planning a trip to the PH in the Maldives, there probably isn’t much I can do to talk you out of using those points. Even if the only reason you have those points is because I told you to open a CSP card 3 years ago and put as much of your bills on it as possible. 🙂

  2. Lucky perhaps you can chime in. Your boy Travis did a post yesterday, implying that the cost of a mile earned from credit card spend is ~ $0.02 since the opportunity cost is 2% (as in the case with the citi double cash back credit card). Given that you are what I consider to be on the aggressive side of credit card applications, I want to know if you, like me, go through every month trying to hit the minimum spend on new credit cards. If yes, wouldn’t you agree that trying to do these bonus categories is kind of a moot point for those who constantly put spend towards bonus min spend requirements?

  3. Hi Lucky,
    When this Flexible credit cards give you for example 2 points for resturant dining ,
    is it ONLY in the USA or every restaurant around the world ?
    Same Question for hotels , cars etc…

    thanks a lot!
    Love your site!

  4. I would appreciate your advice in regard to credit cards. I have an AMEX Business Platinum card. MR points 1,307,000. We charge about $70,000/year to this card. We have a DL Platinum Card ( 630,000 miles) spend $15,000/year on this card, I am a DL MM with 2.9 MM but travel very little today. We have a Marriott Visa card 835,000 points.
    Question I have would I be better off by switching my yearly charges to another card that offers more points than my current cards
    Thank you

  5. I fully agree with the conclusions reached in this article. Most of my personal travel involves visiting my siblings and in-laws in multiple locations across the country and we fly economy or economy plus. That being the case, it makes more sense for me to put my everyday spending on a no annual fee, 2% cashback card. For me, it’s the Fidelity Amex which still allows me to load $1,000 per month online onto Serve resulting in $240 in extra travel spending dollars per year. I can’t get that perk from any other 2% cashback card.

  6. @Burton. I think like any portfolio, it’s good to diversify. Those numbers u have are pretty high. If I was in your shoes, I’d probably try and get a Chase business card that earns Ultimate Rewards or maybe a Citi card to get AA miles. This way if you want an award on say American, you have the points. Also the Chase business card has some categories of spend that earn 5x the points…so your $70k could net u quite a bit more points. And chase points transfer to several partner Amex doesn’t have.

  7. I really just don’t buy the idea that a points redemption is worth only as much as you’d be willing to pay for said redemption with cash. You can say you’d only be willing to pay $3000 for that $30k first class ticket, but they are never going to sell you that ticket for that price (barring a mistake). Plane tickets aren’t negotiable like cars or homes.

  8. “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.”

    That’s not true. Capital One has no foreign transaction fees so if you use Citi Double Cash abroad and incur $60 or more of foreign transaction fees then you come out ahead with Capital One.

  9. I’d disagree, the best no-annual fee card for all spend is the Amex Everyday. Since you yourself value MR at 1.8¢, with the 20% bonus on all spend, the Everyday earns 2.16% and can be redeemed for higher ¢pm. The Citi Double Cash has a floor of 2%, but also a ceiling of 2%.

    I redeem for domestic Y all the time, but primarily only for last-minute flights where MR truly shine because of the astronomical cash prices. Either I fly United by redeeming Aeroplan, or AA/US/AS by redeeming Avios. Both programs have no close-in booking fees, and Avios also have negligible cancellation fees.

  10. Stannis — you would have to consider though that not all merchants accept American Express. Though, in your favor there’s a strong case to be made that the AMEX Offers as well as Small Business Saturday promotions more than make up for the sporadic lack of AMEX acceptance.

  11. Hi Lucky,

    Unfortunately I just ordered Capital One Venture Card (I’m a newbie to this hobby). If I collect the sign-up bonus and then I close the card it will affect my credit ? thanks for your blog.


  12. @Lauren

    I hope if that was the case you told them to book through the chase portal to get 1.25 cents per point or just charge the room at 130 and then use points to pay it off….I know this was only an example but these two options still get them a free room for half of the points.

  13. @ Tizi

    If might hurt your credit since you will have less open credit but not much….wait till the year is over and then ask to be downgraded to the Quicksilver which gets 1.5% back and has no annual fee. Also gets 20% off Uber right now!

  14. Speaking of getting the most value, would I be better off using my Citi Premier or Chase Sapphire Preferred to book a 7 night stay at the Hyatt Regency Tsim Sha Tsui in Hong Kong? Citi would give me more points with the 3x bonus vs 2x on CSP, but Chase has better transfer partners.

    As of right now I don’t have a specific travel goal, so I’m trying to build up a balance of flexible points. FWIW, I have already hit min. spend on both cards and have ~60k points on each.

  15. I prefer the Fidelity Amex because of the opportunities for greater redemptions through the “premium awards” mechanism, while guaranteeing you a floor of 2%. The cafeteria at work doesn’t take Amex so I use my Citi Premier for that spend (2X) unless one of my other cards is offering a restaurant bonus elsewhere.

  16. Just when I thought I had it all figured out, you lay this series of articles on me about the true cost of miles…..

    I relatively new to the hobby, its been about a year that I have taken a vested interest in my miles. I have never used miles to go to Europe, as I have 5 people in my family and I dont travel for work. We usually just buy the cheapest tickets we can get to cross the pond. I cringe while remembering booking 6 tickets 18 months ago from PHX to TLS and MAD to PHX through AMEX Travel website, and just applying my 300k points to the balance,at a redemption of 1c per mile. I still had to pay another $3200 to get the tickets

    Most of my/our travel is to visit my family in OAK and our second home in PDX…our home base in PHX. Sometimes I will buy a ticket on SW or USAir, but mainly I transfer my AMEX points to AVIOS and book through there on either Alaska or American/ USAIR. Every few years we go to NYC and New England to visit relatives too, but its not much. I only travel by plane about 10-15 RT flights a year

    i have a barclays arrival, 3 business AMEX Gold(I own 3 businesses) and 1 AMEX PRG. This article makes me think about chucking it all, and just getting the cash back card. But then I think about the last minute redemptions …..

  17. “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.”

    The “exception” in this case is pretty big, the $400 sign-up bonus would cover ~7 years of annual fees AND that is assuming you actually have to pay the annual fee. I have had the Venture since the first 100k promotion and have gotten them to waive the fee each subsequent year. Moreover, the Citi card is actually 1.99% if you redeem it as a statement credit as opposed to manually request a check/deposit which introduces some delay as compared to venture. In short, provided Cap1 continues to be willing to credit the annual fee, I see no reason for someone to opt for the Citi card in the first instance.

  18. @Burton

    Stop using your Plat Amex for your business expenses. Get a chase ink or switch to the AMEX PRG for those purchases…both cards have good bonus categories and you will have much higher earn rates than 1pt per dollar.

  19. The other thing about the CapOne Venture is that, near Christmas, they’ve offered redemptions for gift card purchases with a 20% increase. That’s made it close to a 2.4% cashback card for us, since they’ve been at places we shop regularly. (I say ‘close to’ because it’s something like (2.4% – something like $75 annual fee – (some opportunity cost since you have to wait for the end of the year)).

  20. I got a Citi AA Premiere card with 50K bonus miles in Dec (and my husband got his own, too, so there’s 100K miles). In March I got a Cap One Venture with I think a 40K bonus. Now have enough on Cap One for RT to Europe and the Citi added easily to all of my AA miles. From my work I have almost 40K AmEx Platinum points. Just got a BA Avios card and will easily get their bonus miles in the current promotion.
    Does it make sense to trip around from card to card sucking up their bonus points and merging them all? United has 50K for $2000. Don’t fly United but if their going to give that to me, why not?

  21. Yes and no. I agree that this is the baseline card you should beat for everyday spend and I have recommended it to friends before, but you are not going to get free first class trips on this card and even a domestic ticket is probably a solid year out for average people unless you are doing significant manufactured spending or have work expenses that will be reimbursed. A standard domestic saver costs 25k miles. To get that much you would need to spend $12,500 on the card. That of course only unlocks a $250 ticket though — that will barely get me from SF to LA and back most weeks. Let’s say you want a “free” $400 ticket you would need to spend $20,000 in charges on this card. I just don’t think the average person is clearing that amount. The real points in this game come from sign-up bonuses.

  22. Great points. I think People should also make lifestyle choices based on cost benefit ratio. Girl friends are cheaper than wives, kids are expensive to have. Looking at our bloggers, I am beginning to think being gay is more profitable than being straight.

  23. Most people glaze over about 15 minutes into the how to manual for first class tickets on Cathay Pacific or Singapore Airlines. Most people book two tickets to New Orleans via the 150,000 banked Southwest miles.

  24. I have to spend a couple of words however in defense of Capital One Venture:
    1) 2X miles per dollar on every purchase
    2) Travel paid for with points from fixed value cards is eligible to accrue mileage and earn status
    3) No foreign transaction fees
    4) No blackout dates
    5) One-time bonus of 40,000 miles once you spend $3,000 on purchases within the first 3 months
    6) Miles don’t expire and there’s no cap limit
    7) When you redeem Capital One Venture No Hassle Miles on flights or rooms, you still earn airline miles and credit towards elite status.
    8) No limit to how many tickets you can buy on any given flight.

Leave a Reply

Your email address will not be published. Required fields are marked *