In June The World of Hyatt Credit Card was introduced, which is in my opinion one of the most well thought out hotel credit cards we’ve seen in a long time. Not only does the card offer great perks just for having it, but it can actually make sense to put spend on the card.
I’ve had fun running the numbers on some different scenarios. For example, a few days ago I wrote about how it can make sense to put $15,000 of spend on the card the first year:
- You unlock the card’s entire 50,000 point welcome bonus after spending $6,000 ($3,000 of that needs to be spent within the first three months, and the other $3,000 within the first six months)
- Then you receive an additional Category 1-4 free night certificate when you spend $15,000 on the card in an anniversary year
- In addition to the five elite nights you receive per year just for having the card, you get two additional elite nights for every $5,000 spent, meaning you’d have a total of 11 elite nights from the card per year if you spend $15,000 on it
Reader Boraxo asked the following:
How do you value the 15k points and the free Cat 1-4 night? Is it worth spending on this card vs Amex or Chase points which are worth more than Hyatt points?
This is another interesting scenario to run the numbers on. While I’ve presented the case for how I think it could be worth spending $15,000 on The World of Hyatt Credit Card the first year since you need to spend $6,000 anyway to earn the welcome bonus, how does the math work out in subsequent years?
The basic opportunity cost of credit card spend
The first step in deciding whether or not this is worth it is figuring out the opportunity cost of credit card spend. This will all be based on what your most rewarding cards otherwise are.
For many of us (including me), I think the best return you’ll get on non-bonused everyday spend is having the Chase Sapphire Reserve® Card and Chase Freedom Unlimited®, since the latter offers 1.5x Ultimate Rewards points per dollar spent on base spend (it’s my favorite credit card duo).
I value Ultimate Rewards points at 1.7 cents each, so to me that’s a return of 2.55 cents per dollar, based on my valuation. So the opportunity cost of $15,000 of spend per year is $382.50.
The value of spending $15,000 on Hyatt’s card every year
Personally I value World of Hyatt points at 1.5 cents each, so spending $15,000 on The World of Hyatt Credit Card in non-bonused categories would net you $225 in rewards based on the value of 15,000 points.
But if you spent that amount you’d also earn an incremental Category 1-4 free night certificate, and you’d earn an increment six elite nights towards status (this is in addition to the Category 1-4 free night certificate and five elite nights you get every year just for having the card).
So are the incremental Category 1-4 free night certificate and six elite nights worth $157.50?
Valuing Hyatt Category 1-4 free night certificates
Different people have different ways of going about valuing points and certificates.
Some say that a certificate like this would be worth the retail value of whatever you redeem it for. I redeemed one of these certificates for a stay later this year at a Hyatt property that would have cost $400 including taxes and fees.
But I won’t value the certificate that high, because:
- I could have redeemed 15,000 points, and I value those at 1.5 cents each, so that means I could have gotten the stay for $225 worth of points
- I would have never paid $400 to stay at this hotel
Some might value the certificate based on the equivalent number of points it can be redeemed for. In this case a Category 4 stay would cost 15,000 points, so you could say it’s worth $225.
Personally I’d want to assess some sort of a discount to the value of the certificate, in order to account for the fact that:
- It’s only valid for a year from when it’s issued
- In order to maximize value you need to redeem at exactly a Category 4 hotel
I’d apply a discount of about a third, and I’d say my valuation of a Category 1-4 free night certificate is about $150. There’s no science to that math, since this is so dependent on everyone’s specific scenario.
I think that’s a fair number, and hopefully it also shows why this card is worth having in general. You get a free night certificate every year on your account anniversary just for having the card, and the card’s annual fee is only $95.
Doing the math
Spending $15,000 on The World of Hyatt Credit Card would earn you $225 worth of points, by my valuation. Then you get a Category 1-4 free night certificate that I personally value at around $150, bringing the total to $375, which more or less makes it breakeven.
What this doesn’t factor in is the six incremental elite nights you’d earn. If you’d at all benefit from having those elite nights, then I’d say it’s a no brainer to put $15,000 of spend on the card every year.
Let me of course acknowledge that:
- Not everyone will value Ultimate Rewards and World of Hyatt points the way I do
- Not everyone will value a Category 1-4 free night certificate the way I do
- Not everyone spends $15,000 per year in non-bonused categories, in which case the math works out differently
- The math could work out more favorably towards the Hyatt Card if you can put spend from Hyatt Hotels on the card (where you’re earning 4x points), or spend from gym memberships (where you’re earning 2x points, and that’s a bonus category you don’t see much on other cards)
My intent with these posts is to create a framework for thinking about valuing credit card spend, rather than suggesting that my math is the only right way to think about it.
I’m curious what you guys think — is it worth spending $15,000 per year on The World of Hyatt Credit Card for an incremental Category 1-4 free night certificate and six elite nights?