Recently some fantastic changes were announced to Capital One’s mileage transfer program. Several readers asked if this impacts my valuation of Capital One miles, so I wanted to share my take on that.
I used to value Capital One miles at 1.1 cents each
Up until this change I valued Capital One miles at 1.1 cents. I should note that valuing any points currency isn’t a science, though I do try to use a pretty consistent methodology to go about valuing points.
- They could be redeemed for one cent each towards the cost of a travel purchase
- They could be converted into airline miles or hotel points at a ratio of up to 2:1.5
Keep in mind that the above two cards offer 2x Venture or Spark miles per dollar spent, so in reality with each dollar spent you were getting either two cents towards travel, or up to 1.5 airline miles.
How did I arrive at the valuation of 1.1 cents per Capital One mile?
- This valuation accounted for the fairly high floor value of Capital One miles, given that they can be used at the rate of one cent each towards virtually any travel purchase
- Then I applied some premium for the flexibility you get thanks to the airline transfer partners
- I value other transferable points currencies at 1.7 cents each, but they have a 1:1 transfer ratio, while Capital One has a transfer ratio of up to 2:1.5; the lower valuation was intended to reflect the different transfer ratio and fewer lucrative transfer partners at a good ratio
Capital One miles can be redeemed towards virtually any travel purchase
I now value Capital One miles at 1.3 cents each
With the recent announcement, two positive changes are being made to the value of Capital One miles:
- Capital One is adding four mileage transfer partners — British Airways Executive Club, Choice Privileges, TAP Air Portugal Miles&Go, and Turkish Airlines Miles&Smiles
- Capital One is introducing 1:1 mileage transfers to nine partners (while others will have a 2:1 or 2:1.5 ratio); the 1:1 partners include Aeromexico Club Premier, Avianca LifeMiles, Cathay Pacific Asia Miles, Choice Privileges, Etihad Guest, Finnair Plus, Qantas Frequent Flyer, TAP Air Portugal Miles&Go, Wyndham Rewards
Some people have asked if I now value Capital One miles at 1.7 cents each, since that’s what I value other transferable points currencies at.
While my valuation of Capital One miles absolutely has increased, I’m not valuing them at 1.7 cents each. Rather my new valuation of Capital One miles is 1.3 cents each. Why the increased valuation, but not to the level of other points currencies?
Well, because only limited partners allow 1:1 transfers, and they’re not necessarily the most useful programs:
- Even at a 1:1 ratio, there are very few circumstances where transfers to Aeromexico Club Premier, Choice Privileges, Finnair Plus, Qantas Frequent Flyer, TAP Air Portugal Miles&Go, and Wyndham Rewards, make sense
- At a 1:1 ratio there’s potentially value to be had with transfers to Avianca LifeMiles, Cathay Pacific Asia Miles, and Etihad Guest
So yes, 1:1 transfers are great and increase the value of Capital One miles. However, the variety of programs you can transfer miles to at that ratio is limited, and can’t yet compete with Amex Membership Rewards, Chase Ultimate Rewards, and Citi ThankYou.
There’s definitely room for my valuation of Capital One miles to grow, as more 1:1 transfer partners are added. However, for the time being I think 1.3 cents per Venture or Spark mile is a fair valuation. And ultimately that makes both the Capital One Venture Rewards and Capital One Spark Miles for Business good cards for everyday spending, since they offer 2x miles per dollar spent, which I value at a 2.6% return (based on my new valuation).
You can now transfer Capital One miles 1:1 to Cathay Pacific
Some fantastic changes have been made to Capital One mileage transfers, including four more partners being added, and transfers to nine partners now being at a 1:1 ratio. My initial instinct is that this increases my valuation of Capital One miles from 1.1 cents to 1.3 cents each.
The reason I don’t value Capital One miles at 1.7 cents each (like other transferable points currencies), is because of the limited number of useful 1:1 transfer partners.
With these recent changes, what do you value each Capital One mile at?