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As airlines and hotels continue to devalue their programs again and again, it becomes more and more obvious that putting your everyday spending on a co-branded card, like a Citi AA card, Chase United card, or Delta AMEX card, is foolish.
Those cards offer nice benefits like free checked baggage and more that make them worth keeping, but other than the signup bonus, they don’t offer a compelling value for spending. You should not lock yourself into any single mileage currency if you can avoid it. Airlines and hotels are not loyal and don’t deserve your loyalty as it won’t be rewarded in kind.
You can earn more points per dollar on everyday spending by using a card with transferable points like Chase Freedom Unlimited (Normally earning 1.5 points per dollar and currently offering 3 points per dollar for up to $20K in spending during the first 12 months on a new card signup), Chase Ink Unlimited ($500 signup bonus in the form of 50,000 points plus 1.5 points per dollar spent), or The Blue Business℠ Plus Credit Card from American Express (Earning 2 points per dollar spent on up to $50K in annual spending per primary card that you have).
- Chase Ink Cash has a 50K signup bonus and earns 5 points per dollar on cable, TV, telecom, cellular, office supply stores, and gift cards from office supply stores, plus 2 points per dollar on dining and gas ($0 annual fee).
- Chase Sapphire Preferred has a 60K signup bonus, earns 2 points per dollar on dining/travel, can transfer all Chase points into miles, and points are worth at least 1.25 cents each for paid travel ($95 annual fee).
- Chase Sapphire Reserve has a 50K signup bonus, earns 3 points per dollar on dining/travel, can transfer all Chase points into miles, and points are worth at least 1.5 cents each for paid travel ($450 annual fee with $300 travel credit).
- Chase Freedom has a 15K signup bonus and earns 5 points per dollar on rotating categories ($0 annual fee).
- Chase Ink Preferred has a 80K signup bonus and earns 3 points per dollar on shipping, advertising, and travel, can transfer all Chase points into miles, and points are worth at least 1.25 cents each for paid travel ($95 annual fee).
But even more critically than earning more points per dollar, those cards offer “hybrid” points that allow you to choose between redeeming your points for cashback, redeeming your points for paid travel, or transferring your points to many different airline and hotel mileage programs.
A co-branded card locks your miles into one airline or hotel. When they devalue their points, your points are worth much less.
But if you have transferable points with cards from banks like AMEX, Capital One, Chase, or Citi you can find another airline or hotel that isn’t actively devaluing their points. Or you can redeem for paid tickets. Or you can cash your points out. That flexibility is valuable.
Having a Business Platinum® Card from American Express allows you to receive a 35% points rebate when redeeming points for paid coach airfare on the airline of your choice and on premium cabin airfare on all airlines, making the 2 points per dollar earned on The Blue Business℠ Plus Credit Card from American Express even more valuable.
If you have a Chase Sapphire Reserve your points are worth a minimum of 1.5 each towards paid travel. If you have a Chase Sapphire Preferred or Chase Ink Preferred your points are worth a minimum of 1.25 each towards paid travel. As you can earn between 1.5-5 points per dollar everywhere that means you earn a minimum of 2.25%-7.5% towards paid travel.
Airline miles and hotel points can be worth even more than 1.5 cents each and with transferable points you can see when the miles are worth more than 1.5 cents each and transfer them when you need them. By optimizing how you use them and transferring on demand, they won’t be devalued without recourse.
It’s true that as airlines and hotels devalue their programs that the upside of transferring bank points into mileage programs will go down. I still think there will be opportunities for outsized mileage values, but that they will become more rare as awards begin to shift towards dynamic pricing rather than published award charts. But that’s OK if you have a card that allows you to redeem for paid travel at a good value or look for value in mileage transfers. You just need to compare the cost of redeeming for paid travel versus the cost of award travel via a mileage transfer to an airline or hotel program.
In other words, if a paid ticket from JFK-LAX is $125 and the mileage cost is 12,500 you can use your Chase points at a value of 1.5 cents each and book the ticket for 8.3K points. Note that your spending earns more than 1.5% back as you also earn between 1.5-5 points per dollar spent.
If a last minute paid ticket from Cleveland to NYC is $500 and the mileage cost is 7,500 BA Avios (for travel on American) or 7,500 Avianca Lifemiles (for travel on United ) you can transfer your AMEX/Chase points into airline miles and realize a value of 6.7 cents per point. As you can earn between 1.5-5 points per dollar everywhere that means you earned between 10.05%-33.5% towards paid travel. One-way travel, last-minute tickets, and premium cabin travel often offer great values for your points.
You can use partner mileage programs, like Air Canada, ANA, Avianca, Singapore, and many more, to book travel on United for fewer miles than United charges. Same goes with Flying Blue or Virgin Atlantic for Delta travel and British Airways or AA travel.
That’s why even in an era of devaluations I’ll still be using mileage cards over cashback cards. At least until all of the transferable airline and hotel programs go full JetBlue/Southwest by directly tying the award cost of a ticket to the paid price, which would kill the ability to earn that outsized value. There’s no doubt that outsized values are becoming harder to obtain, but I don’t see it going that far. Of course only time will tell.
Will devaluations change your spending strategy?