Perhaps the single most impressively marketed travel rewards credit card is the Capital One Venture Card.
We’ve all seen the ads, which have some big name stars in them. Like Alec Baldwin:
Which brings me to a question that reader Stav9678 asked in the “Ask Lucky” forum:
I read all of your recommendations about the credit cards for travel and the everyday credit cards. I read about the CapitalOne Venture card that you get 2 miles for every dollar you spend on purchases not just on certain categories, rewards never expire, you can redeem your miles for travel, shopping, etc. but what really stands out to me is that you can redeem them for cash and purchase whatever you want. You get a welcome bonus after spending $3,000 on purchases in the first 3 months, no foreign transaction fees, etc. I would like to get your thoughts on this card please.
It’s a great question, because Stav9678 isn’t the only one who thinks this card sounds compelling. On one hand it amazes me how many people have the card, though I guess it’s not surprising given how brilliantly they market it. Not only does Capital One have big stars in the commercials, but more importantly they market two things which consumers respond really well to:
- No blackout dates
- Double miles
Who wouldn’t want double miles and no blackout dates?!?
Well, if it means earning double miles and no blackout dates through the Capital One Venture Card, previously you could have counted me out. Because as usual, when something sounds too good to be true, it usually is.
But this has all changed with the introduction of Capital One’s new mileage transfer benefit:
Basics of the Capital One Venture Card
I won’t get into the minutiae of the card, though let’s talk about the basics:
- Welcome bonus: 50,000 miles after spending $3,000 within three months (recently increased from 40,000)
- Annual fee: $0 intro for first year; $95 after that
- Rewards structure: double miles on all purchases
A 50,000 mile welcome bonus, $95 annual fee (waived the first year), and double miles on all purchases sounds great in theory.
The catch historically is that each mile could be redeemed at most for one cent towards the cost of a travel purchase:
- To get the one cent per mile value, you can only redeem for travel purchases, and you have to do so in minimum increments of 2,500 miles
- If you redeem miles for anything other than travel, you’ll get a lower redemption value than one cent per mile
But now you can transfer to those miles to over a dozen airline partners, and there are some great ways to get outsized value for your miles!
How could you turn down 2x miles?!?
This is the thing I get asked about most often regarding the Capital One Venture Card — “this card offers double miles while others offer only one mile per dollar… how can I turn down double miles?!?”
First of all, not all miles are created equal. 55,000 American miles is enough for a one-way Cathay Pacific business class ticket between the US and Asia. 55,000 Capital One miles is enough for up to $550 in travel if used through the Purchase Eraser option, or you could transfer them to airline partners at up to a 1:1.5x ratio.
Even among “traditional” miles, their values vary considerably.
So saying you earn 2x miles per dollar spent is sort of useless without context. They could also make each mile worth 0.1 cents each, and then claim the card offers 20x miles per dollar spent.
Rather than viewing the Capital One Venture Card as a card which accrues double miles, I’d suggest thinking about it slightly differently. If you’re using Purchase Eraser, it’s essentially a 2% cash back card, with the catch that you can only redeem the cash back towards travel at that rate. If you’re planning on transferring to partners, you’re basically getting 1.5x airline miles per dollar spent. And that’s actually a great return for everyday, un-bonused spend! But it’s important to note the distinction.
If it’s cash back you’re after…
If it’s cash back you’re after, you’re much better off with something like the Citi® Double Cash Card. It has no annual fee and offers 1% cash back on every purchase, and then an additional 1% cash back when you pay for those purchases. That’s a return of 2%, all things considered.
Except unlike the Capital One Venture Card, the rewards earned on the Citi® Double Cash Card can be spent on anything, and not just travel. And that’s for a no annual fee card!
Now the thing worth noting is that the Citi® Double Cash Card doesn’t have a sign-up bonus, while the Capital One Venture Card offers a nice bonus upon completing minimum spend.
Don’t get me wrong, the Capital One Venture Card isn’t horrible. It’s a solid enough card, and with a certain type of spend profile and the new mileage transfer option, it is actually a very well-rounded card for many people. That being said:
- If it’s truly cash back you’re after, you’re better off with something like the Citi® Double Cash Card, which offers a flat 2% cash back with no annual fee — no need to redeem specifically for travel, pay an annual fee, etc.
- If you want to use miles in the “traditional” sense, keep in mind that you’re earning up to 1.5x airline miles on all spend with the Venture — for some categories it may make sense to look at a card that earns 3x, 4x, or even 5x instead
But kudos to the folks at Capital One for their marketing!
Does anyone have a different take than I do on the Capital One Venture Card?