Questions and Answers

[I]Hi Lucky. We own a small business in Canada and have enjoyed many trips overseas in business and first. Our main supplier has offered us a proposal: go off credit card and in exchange offer us a 4 per cent rebate. This money can be used for travel of our choice. With rbc visa there has been in the past a 50 per cent transfer bonus but with devaluation and a smaller transfer bonus I am starting to look at their offer. Would appreciate some feedback. Before any bonus we typically put through 500000 a year in charges.[/I]

What do you mean by go off credit card in exchange for a 4 cent rebate? Switch to a cash back card?

Sounds like just a 4% cash discount for paying in cash. I don’t know any points that would be worth 4c, even in Canadian $ though valuing points depends on your personal preference after a certain point. However they can often be leveraged into situations where you might pay 15c or more if you had to pay cash so it’s a tough call. If traveling business or first is very important to you I might still consider collecting points but if your routes offer some of the discounted pricing for premium cabins we’ve been seeing recently I might reconsider.

Thank you for your feedback. Yes to clarify our food supplier will rebate 4 per cent off of our bill into travel dollars. The premium cabins seem to do go on sale more as of late from the west coast. We usually book trips to Europe or Israel if this information helps. A quick question Gaurav: How would you determine the cost upwards to be 15c for points? Very astute comments on this board so thanks for helping.

It’s the usual debate on how to value points. Some people insist on valuing points based on the basis of the actual cost you would pay to buy a ticket vs others who say you should value them based on what you would be willing to pay for a ticket which makes things much more subjective (the values on most blogs are based on the latter methodology). So if you bought a first class ticket with a face value of 20,000 for, say, 120,000 points you’d be getting a value of 16.67cpm. What is indisputable though is that if you wanted to buy the same ticket for cash you’d have to have that many travel dollars handy. So you’d really have to look at pricing on the routes you usually fly to see what kind of ticket opportunities exist and maybe add a little bit of a premium to the cash back option for the miles you’d be earning.

Can the 4% only be used for travel or can you just request a cash out?

[QUOTE=”Gaurav, post: 17689, member: 79″]It’s the usual debate on how to value points. Some people insist on valuing points based on the basis of the actual cost you would pay to buy a ticket vs others who say you should value them based on what you would be willing to pay for a ticket which makes things much more subjective (the values on most blogs are based on the latter methodology). So if you bought a first class ticket with a face value of 20,000 for, say, 120,000 points you’d be getting a value of 16.67cpm. What is indisputable though is that if you wanted to buy the same ticket for cash you’d have to have that many travel dollars handy. So you’d really have to look at pricing on the routes you usually fly to see what kind of ticket opportunities exist and maybe add a little bit of a premium to the cash back option for the miles you’d be earning.

Can the 4% only be used for travel or can you just request a cash out?[/QUOTE]
Yes I can request a cash out. The other aspect is that I would receive miles for the cash purchase and possibly if we can hit the right ticket lounge status for future travel. Thank you for clearing up the point calculation.