As someone who has almost always earned points from my credit card spending, I’m feeling conflicted. Would I rather earn transferable points, or cash back?
I’m curious to hear what OMAAT readers think. What do you think of the value proposition of earning 2x transferable points vs. earning 2.625% cash back?
I'm with you on this. I got so tired of playing around with points that I switched to this program and couldn't be happier. You don't realize how stressful it is to perseverate about points.
As a corollary, my time off is extremely rigid and I refuse to connect when nonstop is an option, so I don't have the flexibility to mess around with time and miles.
Just give me my 2.625% and leave it at that.
This is my card of choice for all default payments. The 6.125% return on travel is also huge for me when not using AmEx Platinum for flights. There is one more trick to this card which I believe is crucial. Rather than opening a Merrill of Bofa account, move your business account to US Trust. Their service is top notch, they’ll reverse fees if you incur them etc. The only downside to the card is the web interface is terrible.
Forgot that with Travel and Dinning spend, it's normally 2 points. With the Platinum Honors 75% bump, it ends up being 3.5% cash back in those categories.
3.5% cash back in Travel/Dinning
2.625% cash back in everything else
PLUS redeemed monthly with no limits. Makes it a nice card.
If you're Platinum Honors, the Premium Rewards card is a decent 1-card setup (maybe even bump up to the Premium Rewards Elite card where for only a $100 effective annual fee, one can get added Visa Infinite benefits, Priority Passes, and have the ability to redeem cash back towards airfare on the Bank of America Travel Portal at a 25% bonus for 3.3% non-category cash back redemption value and 4.4% cash back redemption value on Dining/Travel purchases).
But if you're Platinum Honors, you're probably going to have 1 or more Customized Cash Rewards card in addition to the Premium Rewards/Premium Rewards Elite/Ultimate Cash Rewards card for that sweet 5.25% cash back on categories like Online Shopping, not to mention Bank of America's definition for each category covers the broadest set of MCC codes in the entire credit card industry.
In addition, I don't think Bank of America has done any significant devaluation of the Preferred Rewards program since its inception in 2014.
BoA’s definition of travel is the broadest around. In addition to the usual airfare, hotels, etc., things like tours, attractions, campgrounds, and wineries all count as travel and earn 3.5% back. Plus, the penalty for mis-categorization is lower since all purchases earn at least 2.625% back.
By a strict accounting of value, your current valuation of C1 at 1.7 cpp means 2*1.7 = 3.4 > 2.625.
That being said, I would imagine someone with eight digit balances in transferrable point program,s who can pay for five star hotel rooms and first/business class tickets *in cash* and who's likely well into end game plays in credit cards, has different needs than someone who's just starting out, or even someone who's well into the game but isn't generating six digit spends effortlessly.
It does mean you can offer more credit card offers though, if you start promoting cashback. Always be hustling. 😉
Ben, you're missing the most important two points here. #1 is the opportunity cost on the cashback and #2 is whether this spend is deductible or not. Re: 1, in today's high interest environment, 2.625 cents per dollar cashback gets to 3.4% of value after 5 years. If you hold points for 5 years before using them (assuming no devaluation), the 2.625% cashback = 3.4% on a return adjusted basis after 5 years of hold @ 5% annual compound interest. Re: 2, cashback is NOT taxable UNLESS you are receiving personal cashback for a business purchase. Put another way, if you spend $100 for your business and your business gets 2.625% cashback, no tax. If YOU personally receive the cashback, that's taxable. On the other side, if YOU personally get 2 miles per dollar spent on business expenses, that is NOT taxable.
> And specifically, we’re talking about Amex, Capital One, or Chase points, since all of those issuers have some cards offering 2x points per dollar spent.
What's the Chase 2x card? Did you mean Citi (with the double cash)?
I think the others are Amex blue biz plus and Capital One Spark Miles and Venture/VentureX.
Life simplification.
Solo adults can wrangle lots of cards if that’s your hobby. Maybe a couple, if your SO likes the game. Add a couple kids, forget it.
So much simpler to have one card to tell all the Doubts to use.
Disagree because those with that kind of money spend more on credit cards so their return would be much higher as a dollar figure and the difference between a couple of percentage could be a lot of money
The cheaper card for $95 is more beneficial than the more expensive card as most of the extra or added benefits of the more expensive card is offered on other cards. If you hold other cards that provide it the cheaper card gives the same return and therefore is sufficient.
And that is a decent return on everyday purchases compared to other cards that offer 1 point per dollar or less than 1%.
Yes, and it is his business to review cards and get the most return and he is paid to promote certain cards.
Not sure if you want to also go for BoFa custom cash back card which gives ~5.2% on selected categories (travel / dining / gas), however $2500 limit every quarter. One could go for multiple ones to maximize.
The points not the best when you have a family to travel with, unless one is raking in tons, booking family travel using not enough points becomes bit of hassle. travel miles going to individual family members account with most airlines not doing any pooling, individual ticketing is pain (coordination of ticket booking, seating, increased security checks).
I think unless one is solo traveller or someone with lot of miles, points n miles may not be best for air travel (hotels might be bit different ball game due to 1 person accumulating the points).
Maximize cash including cashback on actual travel tickets (compared to redeeming points/miles which won’t get any)
AS a Preferred Rewards member this is my everyday usage card while working in the middle east. I've used the yearly $100 airline incidental fees often, very simple to use and receive credit.
I'm with you on this. I got so tired of playing around with points that I switched to this program and couldn't be happier. You don't realize how stressful it is to perseverate about points.
As a corollary, my time off is extremely rigid and I refuse to connect when nonstop is an option, so I don't have the flexibility to mess around with time and miles.
Just give me my 2.625% and leave it at that.
And that is a decent return on everyday purchases compared to other cards that offer 1 point per dollar or less than 1%.
This is my card of choice for all default payments. The 6.125% return on travel is also huge for me when not using AmEx Platinum for flights. There is one more trick to this card which I believe is crucial. Rather than opening a Merrill of Bofa account, move your business account to US Trust. Their service is top notch, they’ll reverse fees if you incur them etc. The only downside to the card is the web interface is terrible.
Forgot that with Travel and Dinning spend, it's normally 2 points. With the Platinum Honors 75% bump, it ends up being 3.5% cash back in those categories.
3.5% cash back in Travel/Dinning
2.625% cash back in everything else
PLUS redeemed monthly with no limits. Makes it a nice card.
If you're Platinum Honors, the Premium Rewards card is a decent 1-card setup (maybe even bump up to the Premium Rewards Elite card where for only a $100 effective annual fee, one can get added Visa Infinite benefits, Priority Passes, and have the ability to redeem cash back towards airfare on the Bank of America Travel Portal at a 25% bonus for 3.3% non-category cash back redemption value and 4.4% cash back redemption value on Dining/Travel purchases).
But if you're Platinum Honors, you're probably going to have 1 or more Customized Cash Rewards card in addition to the Premium Rewards/Premium Rewards Elite/Ultimate Cash Rewards card for that sweet 5.25% cash back on categories like Online Shopping, not to mention Bank of America's definition for each category covers the broadest set of MCC codes in the entire credit card industry.
In addition, I don't think Bank of America has done any significant devaluation of the Preferred Rewards program since its inception in 2014.
The cheaper card for $95 is more beneficial than the more expensive card as most of the extra or added benefits of the more expensive card is offered on other cards. If you hold other cards that provide it the cheaper card gives the same return and therefore is sufficient.
BoA’s definition of travel is the broadest around. In addition to the usual airfare, hotels, etc., things like tours, attractions, campgrounds, and wineries all count as travel and earn 3.5% back. Plus, the penalty for mis-categorization is lower since all purchases earn at least 2.625% back.
By a strict accounting of value, your current valuation of C1 at 1.7 cpp means 2*1.7 = 3.4 > 2.625.
That being said, I would imagine someone with eight digit balances in transferrable point program,s who can pay for five star hotel rooms and first/business class tickets *in cash* and who's likely well into end game plays in credit cards, has different needs than someone who's just starting out, or even someone who's well into the game but isn't generating six digit spends effortlessly.
It does mean you can offer more credit card offers though, if you start promoting cashback. Always be hustling. 😉
Disagree because those with that kind of money spend more on credit cards so their return would be much higher as a dollar figure and the difference between a couple of percentage could be a lot of money
Ben, you're missing the most important two points here. #1 is the opportunity cost on the cashback and #2 is whether this spend is deductible or not. Re: 1, in today's high interest environment, 2.625 cents per dollar cashback gets to 3.4% of value after 5 years. If you hold points for 5 years before using them (assuming no devaluation), the 2.625% cashback = 3.4% on a return adjusted basis after 5 years of hold @ 5% annual compound interest. Re: 2, cashback is NOT taxable UNLESS you are receiving personal cashback for a business purchase. Put another way, if you spend $100 for your business and your business gets 2.625% cashback, no tax. If YOU personally receive the cashback, that's taxable. On the other side, if YOU personally get 2 miles per dollar spent on business expenses, that is NOT taxable.
> And specifically, we’re talking about Amex, Capital One, or Chase points, since all of those issuers have some cards offering 2x points per dollar spent.
What's the Chase 2x card? Did you mean Citi (with the double cash)?
I think the others are Amex blue biz plus and Capital One Spark Miles and Venture/VentureX.
Life simplification.
Solo adults can wrangle lots of cards if that’s your hobby. Maybe a couple, if your SO likes the game. Add a couple kids, forget it.
So much simpler to have one card to tell all the Doubts to use.
Yes, and it is his business to review cards and get the most return and he is paid to promote certain cards.
Not sure if you want to also go for BoFa custom cash back card which gives ~5.2% on selected categories (travel / dining / gas), however $2500 limit every quarter. One could go for multiple ones to maximize.
The points not the best when you have a family to travel with, unless one is raking in tons, booking family travel using not enough points becomes bit of hassle. travel miles going to individual family members account with most airlines not doing any pooling, individual ticketing is pain (coordination of ticket booking, seating, increased security checks).
I think unless one is solo traveller or someone with lot of miles, points n miles may not be best for air travel (hotels might be bit different ball game due to 1 person accumulating the points).
Maximize cash including cashback on actual travel tickets (compared to redeeming points/miles which won’t get any)
AS a Preferred Rewards member this is my everyday usage card while working in the middle east. I've used the yearly $100 airline incidental fees often, very simple to use and receive credit.