Don't get the big following around travel rewards on credit cards

46 Replies

Hey all,

I've listened to a lot of podcasters and I always hear people hawking the idea of travel hacking/travel rewards on credit cards. I don't get the attraction of points over pure, hard cash back on the cards. All of the credit cards I have are cash back cards, and I can use that money for anything - credit against the statement (I pay for everything with the card and pay it in full each month), get them to send me a check and save it for vacation, whatever. 

What is the value of getting points versus just getting the cash? 

My thoughts are it is a very personal preference. I personally like the idea of travel points. It makes my trips feel like free where as if I had to pay with cash (with the cashback cash) if does not feel as though I "got it for free". 

Other than that, if someone has an analysis addiction (like many real estate people do), I would think that it would be a moving target requiring evaluation often to fulfill the need to always get the very best deal / to ensure your are getting that last drop of benefit. Time spent vs reward comes to mind.

My two cents :)

This is all speculation on my part since like you, I only hold credit cards that are cash back but maybe it's just a mindset thing.  If you have a credit card that only gives you points towards traveling then you have  to travel in order to redeem those points.  Maybe for some people, they would only travel if they could go for free so this would be their way of saving up since it's "found money."

I know in the past, I have saved up my points and had the full intentions to use the funds strictly for a vacation but then decided later on to use it for something else like business cards or advertising or to take my girlfriend out for a nice dinner and then I never went on the vacation.  Had my card only been a travel card then I wouldn't have been able to do that.

I'm curious to see what other people say..     

@JD Martin

I agree with you, and add to the fact that most of the travel credit cards have annual fees and it just doesn’t seem worth it to me.

Travel credit cards are good for the signup bonuses, for which The return is much higher than regular cashback card.  Cancel before the annual fee is due.   For any spending not going towards a signup bonus use a regular cash back card. 

My Fidelity card gives me 2% cash back. My Chase Saphire Reserve card gives me 3 points for every dollar I spend on travel/dining, which equates to 3% back in value, plus all the ancillary things I get from the card like free airport lounge access, free rental car insurance, auto rental upgrades, TSA precheck.

Most of my spending is on dining/bars, so I use that to get the better return.

I met @Lee Huffman on here a few years ago and he runs a travel hacking website called baldthoughts.com (I have no affiliation)

I learned a ton from him and I haven't paid for travel in about 3 years now. It's certainly a bit of learning process but it's not complicated, just something you have to incorporate as habit.

So my wife and I have been to Vienna, Budapest, Los Angeles and Denver this year. I'm going to Funchal in Portugal in a few weeks. And we're taking 8 people with us to Hawaii for 2 weeks in August. I'm also looking at going to Medellin with some friends in fall. This is all on miles. The reason we use miles over cashback is the airline/transfer partners. I use Chase and AMEX. If I'm smart with who/what I redeem for I get a WAY better deal. Example: Cash Back from Amex ends up valuing points at like 1cent per point. One of my transfer partners gets me 14 cents per point. 

At the end of the day getting to travel excites me a hell of a lot more than a few bucks back. Not to mention the 14x ROI.

it all depends on how you redeem them.  some redemptions you can get .03 or .04 cents worth combined with earning 3-5miles/dollar you are looking at .20/dollar spent vs .02 cash back.  I spent 450,000 points on my honeymoon that would have cost over $23,000, if i used 450,000 cashback points for cashback that would only give me $4,500.  so it all depends on how you earn and redeem.  

Originally posted by @Royce Talbo :

it all depends on how you redeem them.  some redemptions you can get .03 or .04 cents worth combined with earning 3-5miles/dollar you are looking at .20/dollar spent vs .02 cash back.  I spent 450,000 points on my honeymoon that would have cost over $23,000, if i used 450,000 cashback points for cashback that would only give me $4,500.  so it all depends on how you earn and redeem.  

that beats a condo on the redneck riviera...

Mindset and job play a role too.  If you like to travel like @Ryan Dossey it makes sense. Also if you travel a lot in your job it helps. 

Lets face it, flying is not a pleasant experience most of the time. When I used to fly a lot for work having a travel card was a blessing since I got advantages you can't buy.

Boarding early, not having to gate check your bag ect, takes some of the hassle out of flying. 

I often wonder this myself.  I figured with a sign up bonus, I got about $700 a year for using a cash back.

I dont travel a ton, but usually about twice a year.  I should probably compare if it would be better to get a rewards card, but always just liked the cash back concept.  I like simple and it seems simple lol

I guess I could see it if you were really traveling anyway, or were really into traveling. Beyond that it just seems like the cash back is more useful. 

I forgot this....when I use the points towards booking travel, they multiply 1.5, so I get 4.5% of dining/ travel back towards more travel. Or just 3% to use however, like cash back.

My Chase Sapphire reserve is 3% cash back but you get more for travel credits. But I mostly find that I can get better prices on tickets on my own so the difference isnt really there. So I just take the cash back. Plus I get tons of miles anyway from actual plane flights so often I just use those for personal travel. I do travel a lot for work so that helps the miles plus the cash back since I use the Chase for all business expenses as well.

I travelled for my work, and for a few years we lived in Malaysia, and we made a conscious decision to stockpile our miles.  After we came home, we started our real estate investing.  We made the decision to get the AA miles cards and use those for all of our expenses.  We love to travel and these miles will allow us to travel for free, or nearly so for years.  I pay all the insurance premiums, property taxes, materials, repairs, anything at all used for the business.  So far we have over a million AA miles and racking up more every month.

I’m generally a fan of cash back cards.  I recently listened to the travel hacking podcast (I believe it’s episode 9) from the Choose FI podcast (they were recent podcast guests on BP Money Podcast) and am debating whether or not this is a strategy I will employ.   I’m not a fan of opening up a bunch of credit cards just for sign up bonuses, but they have some compelling points (no pun intended).  In any case, very interesting.  

There are also airline that provide discounts on miles that get you to some crazy places. 

My trip to Funchal is only going to cost me 50,000 miles or what Amex says is $500. Yet... That same ticket would have cost me over $1,400.00

I think these work best if you fly a lot..  so use the airline and the corresponding airline card and you would be amazed at how your miles stack up and same with using same hotel.

I get a little nervous when i have less than 1 million miles in my account for airline miles and bounce around 2 million hilton points.

so i have not paid for vacations in at least 2 decades  and i always fly business or first for free.. just go price international business and first class.. thats an eye opener if I wanted to go coach its dirt cheap on miles.

but if your just using a card and no real flying then seems to me a cash back is best.. use your cash back card at Costco get cash back from both companies i think ???

but if you only charge a couple grand a month on a card not going to really get you very far with the airline miles unless as stated you marry  it with that airlines card and FF account.. 

I am with @Russell Brazil   I am used to all the perks i can get..  dedicated phone numbers.. first class check in TSA private clubs.. the Amex Centurian clubs at Vegas etc.. have full on meals if you use those like I do not only do you get the miles but you get good food for free.. and you know how expensive and usually poor food is in most airports.

It's definitely a personal decision.  If you don't have the time to travel, then cash back cards are probably the best.  Especially since the airlines / hotels are known to devalue their awards charts.  However, if you love or even like travel, the points cards are a no-brainer: Free travel, food, lounges, booze, concierge service, companion passes, car / trip insurance, etc.  It's an awesome system if you get smart on manipulating your benefits to get the best redemptions.  thepointsguy.com and flyertalk.com are excellent resources. 

Originally posted by @JD Martin :

I guess I could see it if you were really traveling anyway, or were really into traveling. Beyond that it just seems like the cash back is more useful. 

Especially for someone like me who isn't that interested in travel. I used to love airline travel  (25 years ago) but the way the airlines operate now I don't fly unless there just isn't any other feasible way to go.

For all you Chase lovers out there, don't forget that all the points pool.  So if you have a Freedom card and earn 5% back on the quarterly categories and then pool it with your Sapphire Reserve card, you're get a travel redemption worth 7.5%, which is pretty awesome.  And you can find the "right" categories with each card and take advantage.  But it's too much work for some people - you gotta know yourself.

I used to have the same mindset as  @JD Martin until a family member flew him and 4 others half way around the world for like $300 in fees by accumulating points through the sign up bonuses.  That's where the real advantage is.

I know some people end up traveling the world for free, which is cool. I'm just not organized enough to keep all the cards and spending in order.

Opening and closing new credit cards all the time can't be good for your credit score either...

I took my family to Hawaii for $190. Both my husband and I signed up for a British Airways card, with a $3000 spend to get  100,000 BA miles. $95 annual fee, NOT waived for the first year. We were in the middle of a massive remodel, so the $3000 spend was one trip to Home Depot and the Lumber Yard.

American Airlines flies to Hawaii for as low as 35,000 miles round trip. Times 4 people and we flew to Hawaii for no cost except the incidentals like TSA tax or whatever. 

BUT

You have to pay your credit card bill off every month or it most likely isn't worth it. 

@JD Martin I have done the math on this many times. Cash back always wins in value over points. The cash is worth more than the points, so I just use the cash to buy plane tickets or whatever I want. The only benefit with the travel cards is the sign up bonus, which is a one time deal. You end up opening a credit card with every airline, or maybe two if you put one under your business. You can close the accounts, then need to wait two years or more before reapplying. Managing your credit card deals can become almost a part time job. I am just too busy to play the games anymore.

I optimize cash back. I get 5% on gas and 3% on restaurants. I am at 1% on everything else. I have only three credit cards. Costco Visa, Discover and Target Red. At one point I had over ten credit cards, but I closed them all. It was part of an effort to declutter my financial life.

Now let's hear what @Steve Vaughan has to say about credit cards. 

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