Question about relative value of travel rewards versus cashback

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Question about relative value of travel rewards versus cashback

Postby jeffysdad » Sat Oct 02, 2010 5:00 am

I use cashback cards because I travel very little and like the transparency of cashback rewards, i.e., it's easy to figure out what percentage rebate you're earning.

Have any moderate to heavy users of travel reward cards figured out the average percentage rebate they earn on their purchases with travel rewards? My point is that ticket prices vary so widely that it must be hard to figure out the dollar value of what you're getting as a perk.
American Express: Blue Cash Preferred (groceries, 6%; gas, department store, 3%); Gold Delta SkyMiles (Delta Air Lines, 2 miles/dollar, free checked bag).
US Bank: Cash+ (utilities, phone, internet, restaurant, 5%; drugstores, 2%).
FIA Card Services: Fidelity Amex (everything, 2%); Fidelity Visa (everything, 1.5%).
Chase: Freedom (rotating, 5%); Amazon (, 3%); PriorityClub (IHG hotels, 5 points/dollar); Sapphire (not in use).

*All cards are registered with PriorityClub IDine program for 8 points/dollar at participating restaurants.

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Postby ccrebate » Sun Oct 03, 2010 5:35 pm

I think the more important decision to be made with travel rewards is not so much which one has the higher rebate, but which one will serve you best. For instance, if you live near Atlanta, GA, then a Delta Amex may serve you best. If you live near Newark, NJ then an AA or Continental card may serve you best. A starwood amex can transfer 1:1.25 with many frequent flier programs so it may also be a good choice, especially so if you frequent cities where starwood has hotels. If you do not travel to places where starwood is available but Hilton hotels are, then the Hilton card may be the best. So when it comes to travel rewards, I guess the answer is to each his own.

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Postby Mogul of Pineapples » Tue Oct 05, 2010 5:11 pm

I would say more often than not, travel credit cards are not the way to go. Often they carry an annual fee and the level of rewards only equals around 1% on spending, with the exception of purchases at the affiliated airline, hotel, etc. which may be 2% or 3%. As mentioned the ticket prices vary so greatly it's not always transparent how much value you are getting. What I would recommend is pricing out the number of miles/points needed for a common flight route you might take. Let's say it was 37,500 miles needed for a roundtrip. If the card is only earning 1 mile per dollar and the price of that ticket is around $375 if you bought it instead with cash, then the card doesn't make sense. Back when 25,000 miles could get you good round trip tickets I think airline cards were more lucrative but as of lately from my experience it has been hard to find a basic domestic roundtrip flight I would use for 25k miles.

But like ccrebate pointed out, there are situations where a travel card may be the best bet for its other benefits. The Delta card was a good example because saving the checked baggage fees in and of itself is quite substantial. Airport lounge access and other perks on the high end cards also may be worthwhile for frequent travelers. But generally I think the average person is better off with a no annual fee high cash back credit card than they are with a travel card.
Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed and linked to. Regardless, anything I say is my honest opinion.

Current Cards:
American Express: Blue Cash, Simply Cash Bank of America: WorldPoints Platinum Plus Chase: Amazon, British Airways, Cash Plus Rewards, Freedom, Ink Cash Citi: Thank You Premier, Dividend Platinum Select Discover: More
Primary Everyday Card: American Express Blue Cash
Primary Travel Card: Chase Sapphire Preferred

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Postby Cucumber » Thu Oct 07, 2010 2:45 am

What I dont get is how to all the airline cards get away with annual fees when the miles you get are only worth like 1% :confused:
Stop talking crap about him!

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