The big news this week, of course, is the increased sign-up bonus for the Chase Ink cards.  The following bonuses are available June 16-22 for National Small Business Week:

• Extra 5K points for Ink Cash® and Ink® Classic signups (bringing the total signup bonus for these cards to 25K each)
• Extra 10K points for Ink Plus® and Ink Bold® signups (bringing the total signup bonus for these cards to 60K each)

I’ve updated my Best Credit Card Offers page with the appropriate sign-up links.

The Chase Ink cards aren’t the only limited time offers, though.  There is also the 50K offer for the Lufthansa card.  That offer will apparently end by June 30th.  Then there are the 4 Southwest Rapid Rewards cards all with 50K signup offers.  Those offers seem to come and go every few months so I’d be surprised if we don’t see that pattern happen again.

Don’t jump

When you read about exciting offers like these, and how great they are, and how valuable the points are, it’s hard not to get carried away and jump in.  Don’t do it.  If you’re not ready to sign up for new cards or for these particular cards, then don’t feel bad about saying no and missing the opportunity.  If history is any guide, there will be many more great opportunities in the future.  Bide your time until you are ready, and the opportunities will come.

Here are my thoughts about each of the offers…

Chase Ink cards

I’ve said many times that the Chase Ink cards are flat-out my favorite rewards cards.  No other cards have that perfect mix of high sign-up bonuses, high earnings for spend (5X for office supplies, phone, internet, and cable!), and valuable rewards (Ultimate Rewards!).  If you’re ready to sign up for one of these cards, then of course you should jump on it this week while the signup bonus is higher (see How to sign up for the Ink Bold (or Ink Plus)).  If you’re not ready, then wait.  The regular every day sign-up bonuses for these cards are still awesome. 

Lufthansa card

Lufthansa miles are, ironically, the best currency for flying domestic first class on United Airlines (see “Best options for domestic First Class“).  51,000 Lufthansa miles are enough for 3 one-way domestic first class (or business class) domestic flights on United.  That’s really great if you’ll use the miles that way.  Will you?  Or, will they sit in your account unused for years – perhaps until Lufthansa devalues their program?  Just some thoughts to consider before jumping in.

Southwest cards

The Southwest 50K offers are terrific.  As I learned recently, Southwest points are generally worth about 1.9 cents each towards Wanna Getaway fares (see “More value from Southwest points“).  That means that 50K points are worth about $950 in travel.  Sweet.  The best use of these sign-up offers, though, is to go for the Southwest Companion Pass.  If you rack up 110,000 Southwest points in a calendar year on Southwest (by flying or from credit card spend or from partners), you’ll earn a companion pass that is valid for an unlimited number of flights for the rest of that year and all of the next year!  The easiest way to qualify for this is to signup for two 50K offers at once (there are 4 different Southwest cards, after all) and make up the difference towards 110K through credit card spend or other means.  That’s an amazing deal, but for most people this is the wrong time of year to go for it.  The best time to go for 110K points is at the beginning of a calendar year.  That way, you can qualify for the companion pass early in the year and have almost two full years to use it.  Personally, I’d wait to see if a similar deal appears in December.  Sign up for two cards then, but don’t put any spend on them until January so that all of your points post as early in the new year as possible.  Of course, if you have lots of opportunity for Southwest Airlines travel (with a companion) towards the end of this year, it could still be worth it to go for it now.  Just keep in mind that it can take time for points to post so expect to go a couple of months, at least, before getting the companion pass.

Bottom Line

Overall, each of the limited time offers discussed above really are terrific offers.  On the other hand, none of the offers are so radically different from the norm that you should drop everything and sign up.  If the cards are right for you, great, you’ll find the offers here.  If not, don’t sweat it.

UPDATE: The improved offers are now live.  You can find links to each offer on my Best Signup Offers page.

Reader / Tweeter Mark Palmer sent me a link to this Susan Solovic post.  In the post, the author says that we can expect the following Chase Ink deals to come this week (June 16 – 22):

• Extra 5K points for Ink Cash® and Ink® Classic signups (bringing the total signup bonus for these cards to 25K each)
• Extra 10K points for Ink Plus® and Ink Bold® signups (bringing the total signup bonus for these cards to 60K each)

We already knew that something was up, thanks to this Chase website advertising National Small Business Week offers:

If you weren’t planning to signup for a new Ink card now, I wouldn’t recommend doing so just for an additional 5K or 10K points, but if you were waiting for the right time, then this coming week is it.  As soon as the new offers appear, I’ll update my Best Credit Card Offers page with the appropriate sign-up links.

Sure, I was hoping for even bigger offers, but truthfully, the standard Ink offers are just about the best out there at their usual rates, so this just makes the offers that much sweeter.

Recently, Personal Finance Digest posted a summary of American Express’ no-fee business cards (see “Amex’s no-fee business cards have some good deals for consumers“).  He posted the following table that does indeed show good returns on spend from these cards:

The first thing I did after seeing this post was update my page showing “Best rewards for everyday spend.”  I previously had no idea that the Amex Blue for Business card earned a 30% bonus on points each year.  That makes the card a solid, middle of the pack, everyday spend card.  Then, I double checked my “Best Category Bonuses” page and found that I had missed a couple of entries for the SimplyCash card, so I added those.

Next, I wondered how these cards compared to those from other banks.  I searched each major bank’s website for no-fee business rewards cards that offered more than 1% returns.  Many cards offer no fee the first year, but this list is limited to those cards that never have an annual fee:

• Chase Ink Cash
• Chase Ink Classic
• Citibank CitiBusiness ThankYou
• US Bank Business Cash Rewards
• Capital One Spark Select
• Capital One Spark Miles Select

Comparing cards

There are three things I look at when comparing credit cards:

• Signup bonus
• Earnings on spend
• Perks

Let’s dive into each…

Signup bonus

Free cards often have no signup bonus at all.  Of the cards we’re looking at, though, here are the ones with public signup bonuses as of June 2013:

• Amex Blue for Business: 10K Membership Rewards points
• Chase Ink Cash: 20K Ultimate Rewards points
• Chase Ink Classic: 20K Ultimate Rewards points
• Citibank CitiBusiness ThankYou: 15K ThankYou points

Clearly the Chase Ink cards have the best signup bonuses of the lot.  Note that you may receive better signup bonuses through targeted mailings or by visiting a branch office.

Earnings on spend

Let’s look at the point earnings from each card:

Note that I didn’t list 2% earnings for travel with the Amex Blue for Business card because that requires booking through the Amex travel service.  You can get similar rewards from any card by going through cash back portals to book travel.

Ignoring variations in point values for a moment, we can see that different cards are best for different types of spend:

• Gas: Amex TrueEarnings 4%; Amex SimplyCash 3%
• Restaurant: Amex Lowe’s 3X; Amex TrueEarnings 2%; Chase Ink Cash 2X
• Office Supply: Amex SimplyCash 5%, Chase Ink Cash 5X, Chase Ink Classic 5X
• Cell Phone: Amex SimplyCash 5%, Chase Ink Cash 5X, Chase Ink Classic 5X
• Misc: Chase Ink Cash 5X landline & cable; Chase Ink Classic 5X landline & cable & 2X Hotels; CitiBusiness rotating categories 3%; Amex TrueEarnings 2% travel;
• All other spend: Capital One Spark Select 1.5%; Capital One Spark Miles 1.5X; Amex Blue for Business 1.3X

Best for category spend:

The Chase Ink cards have more bonus categories than any other card on the chart and earn 5X in several important categories.  Even when they do not have the top earnings within a category, between them they offer at least 2X in all represented categories. Additionally, the Ink cards include landline and cable charges within their 5X categories.  The Ink cards earn Ultimate Rewards points worth 1 cent per point.  However, it is possible to transfer those points to a premium Ultimate Rewards card (Sapphire Preferred, Ink Plus, Ink Bold) and then transfer those points to airline and hotel programs for the chance to get much more value from those points.

If your business spends heavily on gas, though, you might do better with the Amex TrueEarnings Costco card that offers 4% cash back for gas.

Best for non-category spend:

The Capital One Spark cards offer 1.5% earnings on all spend.  If cash back is your objective, then these cards are best (of the no-fee business cards).  If you prefer points that can be transferred to airline programs, though, consider the Amex Blue for Business card that earns 1.3X Membership Rewards points.  By itself, you wouldn’t be able to transfer points to airlines, but if you add a premium Membership Rewards card to your account (personal or business), your points will be upgraded to those that can be transferred.

Credit card perks

As far as I can tell, all of the evaluated cards offer various degrees of the basics:

• Extended warranty
• Fraud protection
• Travel insurance
• Car rental insurance

Here are some areas where they differ:

• The Chase Ink cards offer primary rental collision insurance, and they offer additional savings and perks through the Ink Insider’s program.
• The Amex cards offer American Express OPEN Savings (see Business card benefits).  The OPEN Savings program offers automatic cash rebates when you use your Amex business card at various merchants (As long as you meet the criteria of each one. Check the fine print).
• The CitiBusiness ThankYou card offers a “personal business assistant” (concierge service).
• All MasterCards offer MasterCard Easy Savings (see Business card benefits).  The Chase Ink cards are MasterCards.  The CitiBusiness card gives you the choice of MasterCard or Visa.  The Easy Savings program provides automatic cash rebates at various merchants including 1% cash back at all Fuelman network gas stations.  These savings are in addition to points and cash back earned automatically with your credit card.

Overall, it appears that the Chase Ink cards offer the most in the way of extra perks.

Conclusion

Among the no-fee business cards, the Chase Ink cards (Ink Cash and Ink Classic) offer the best combination of sign-up bonus, category spend bonuses, and perks.  If you don’t spend much within the listed categories, consider either the Capital One Spark cards that offer 1.5% everywhere, or the Amex Blue for Business which earns 1.3X everywhere plus offers decent perks and a small signup bonus.

This report focused solely on no-fee business cards.  It’s important to note that there may be no-fee personal cards that offer more (such as the no-fee Fidelity Investment Rewards Amex which earns 2% cash back on all spend).  Also, don’t dismiss business cards that charge a fee.  Capital One, for example, offers a version of their Spark Business Card with 2% cash back for all purchases.  This card comes with a $59 annual fee.  If you were considering the no-fee 1.5% cash back Spark card, you would do better with the $59 card simply by spending $12,000 or more each year.

How much are United miles worth?  Delta miles?  American Airlines?  How much are Ultimate Rewards points worth?  What about Club Carlson points?  Starwood points?  Hilton?  Marriott?

For all of the above and many more, it is impossible to say. The answer to how much a point or mile is worth is “it depends.”

It depends on how many you have

Let’s say you have only a thousand United MileagePlus miles.  In a way, they’re worth almost nothing because you can’t get anything for 1000 miles (except maybe a magazine subscription…).  If you hope to use the miles for a flight, then your 1000 miles are just a piece of the puzzle where the pieces are worthless until they are all in place.

But what if you are just about to earn the last few miles needed for the trip of a lifetime?  Then, those last few miles are nearly priceless.  Those last few miles make all the difference in the world.

At the other end of the spectrum, points & miles become less valuable when you acquire too many.  Once you have enough miles to cover all of the trips you plan to take, the extra miles become increasingly less valuable.  You may or may not ever use them.  Or, maybe you will use those miles, but not before the airline devalues its program.  There is also an issue of relative value.  If you already have a bazillion United miles, for example, you may value acquisition of other mile currencies more highly so as to give you more choice in which airlines or alliances you fly.

It depends on how you use them and how you expect to use them

This is probably the most obvious point, but it needs to be said.  Let’s take Chase’s Ultimate Rewards points for example.  Many people happily redeem Ultimate Rewards points for cash at a value of 1 cent per point.  Others use the points to book travel at a value of 1.25 cents per point.  Others transfer points to airline and hotel programs whereupon they might get value ranging from less than a penny per point (with Marriott or Priority Club, for example) to more than 10 cents per point (with strategic use of United miles, for example).  Clearly, how you use your points determines the value you get from them.

Before you use your points, though, their value is almost impossible to measure.  You may use the points in a way that delivers great value to you, but you may not.  Maybe your points will never be used.  For that reason, I’d argue that the value of points yet to be used is substantially less than the value you expect to get by redeeming them.

It depends on many subjective factors

Points can have more or less value, to you, for a variety of reasons.  Here are some factors that can add or diminish value of points:

• Hassle factor: Finding flights bookable with miles can be very difficult.  When redeeming miles, you may find yourself choosing inferior flights, worse departure times, or more inconvenient connections than if you had paid cash.
• Free or cheap changes: Airlines have wildly varying policies about award changes and cancellations, but in most cases the policies are much more lenient than with non-refundable paid tickets.  Airline status matters here too.  For example, as a Platinum elite Delta member, I can change or cancel any award travel for free up to 72 hours prior to departure.  Since I often change my travel plans, this benefit is quite valuable and, to me, it makes my SkyMiles more valuable.
• Elite status: If you’re chasing elite status with an airline, then there is an added cost when you redeem miles for flights: you lose the ability to earn elite qualifying miles for those flights.  So, in a way, this makes your miles less valuable to you.
• Local airport / airlines: Most experts agree that United miles are among the most valuable of airline miles.  But what if your local airport is not serviced by United or any United partner or Star Alliance member?  Or, more likely, what if there are just a few flights out of your local airport are redeemable with United miles?  In that case, United miles are probably worth less to you than to others because they would be more difficult to use.
• Travel habits: If you plan to often take international business class or first class flights, you’ll most likely find your airline miles to be much more valuable than if you plan to fly mostly domestically.  Similarly, if you plan to regularly stay in top hotels in expensive cities, you’ll get great value from hotel points.  Conversely, maybe the places you tend to travel don’t offer good value for hotel points.  Or, maybe you prefer other options: B&Bs, hostels, house rentals, time shares, etc.  One way or another, your travel habits and preferences have a big impact on the value of your points.
• The joy of free: When you book travel using miles & points, it may feel like your trip is free (or nearly free), regardless of how many miles and points you spend.  If so, the pleasure you get from spending points and miles may greatly outweigh the pleasure you’d get from paying for the same trip with cash.  In this case, miles & points are arguably (and ironically) worth more to you because you do not value them like cash.

An alternative to “value”

All of the above is a long winded way of saying that the value of your points and miles depends.  Quite a while ago, I developed an alternative.  I argued that most people earn most of their miles through credit card spend rather than from flying.  When a person uses a mile-earning credit card instead of a cash back credit card, they are essentially making a choice: they prefer miles over cash.  They are inadvertently buying miles by forgoing cash back. That gave me a framework: while I can’t easily estimate the value a person will get from their points and miles, I can estimate how much people pay for those points and miles by forgoing cash back.  I call these estimates “Fair Trading Prices.” 

Fair Trading Prices estimate the price people pay to acquire miles through credit card spend.  They do not attempt to measure “value”.  In fact, the best points and miles are arguably those that can be acquired the most easily (and thus have a low Fair Trading Price), but can be redeemed for the most value.  I believe that Ultimate Rewards points meet those criteria better than any other miles or points.

You can find the table of Fair Trading Prices here: Fair Trading Prices.  A link is also available in the Resources menu of every Frequent Miler page. 

Please see these related posts

• Buying points, unwittingly
• The Cost of Credit Card Points
• Fair Trading Prices for Points and Miles
• Fair trading prices explained
• Fairer hotel trading prices
• Related posts from One Mile at a Time:
  • What Miles & Points are Worth: Credit Card Points
  • What Miles & Points are Worth: Airline Miles
  • What Miles & Points are Worth: Hotel Points

At first blush, this deal looks pretty sweet.  $10 back from a $50 gift card purchase seems like a nice 20% rebate that should also be stackable with other offers.  Let’s look closer…

This is not a 20% discount

When you get a gift card as a bonus for buying stuff, the math gets a little confusing.  It’s not really correct to say that the $10 gift card bonus on a $50 purchase is a 20% discount.  Remember that the gift card isn’t worth anything until you use it.  So, its more accurate to say that you get a total of $60 worth of Staples purchases for $50.  That’s a 16.7% discount.  In reality, though, you probably won’t buy exactly $60 worth of stuff.  For example, let’s say you actually buy $70 worth of stuff and use the $60 of credit to pay for all but $10.  In that case, overall, you will have realized a combined 14.3% discount.

The ePromo Card is not a normal gift card

Unlike normal gift cards that never expire, this card is valid only until July 7th 2013.  So, if you don’t use the card right away, you won’t get any value from it.

Neither card works online

Even though Staples sells and promotes eGift cards like these, Staples.com does not allow you to use gift cards for online purchases!  Seriously.  Print out the gift cards and bring to the store or bring up the email on your smart phone when you shop in-store.

You can’t buy gift cards with gift cards (Yes you can. Maybe)

The terms & conditions are clear on this point:

eGift Cards cannot be used for credit card payments or to purchase other gift cards (including Staples gift cards) or wireless cards.

…

ePromotional Cards cannot be used for credit card payments or to purchase other gift cards (including Staples gift cards) or wireless cards

In practice, though, in my experience I have been able to buy gift cards at Staples using printed out gift cards as payment.  I’m not sure the same would be true for the promotional gift cards, but maybe.

You won’t earn portal points or cash back

These days when shopping at Staples.com I usually start at uPromise in order to earn an extra 5% cash back on all of my purchases.  And, when buying 3rd party gift cards (physical or egift cards), I’ve always had success getting cash back (or points from other portals).  With these Staples eGift cards, though, I don’t think any portals will track the purchase.  The reason is that when you checkout you are taken to a different website: staples.cashstar.com.  In all past experiments, when a website behaves this way, I’ve found that points or cash back are not awarded.

You might not earn 5X

One of the reasons I always love deals from Staples, OfficeMax, and Office Depot is that I know that I can pay with a Chase Ink card and earn 5 points per dollar for my purchase.  This is in addition to any special offers going on and in addition to points or cash back from a portal.  In this case, though, the payment is processed by CashStar, not by Staples.  A reader tweeted that his transaction was coded like this: CST*STAPLES CSTR GFTCD.  CSTR apparently stands for CoinStar.  It’s still possible that the purchase will be coded as an office supply purchase, but it might not.

Bottom Line

Despite all of my misgivings, I still think that this deal is a very good deal in certain situations:

If you know that you will make purchases at Staples in the next few weeks and you don’t mind not getting automatic warranty from your credit card, then you might as well take advantage of this discount.

Or:

You are willing to take the chance that before the promo gift card expires, you’ll be able to cash it out by buying free after rebate items.  Alternatively, you can watch for promotional items that offer 100% back in Staples Rewards.  This way, you will extend the time you have for using the credit.

Offer valid 6/9/13 thru 6/15/13 only.

I visited two nearby OfficeMax stores yesterday to checkout this OfficeMax deal.  By buying $200 worth of Visa or MasterCard gift cards at OfficeMax you’ll get $10 off.  Is that a good deal?  Is it worth it?

First let’s look at the terms & conditions.  I’ve pulled out the important parts:

• Limit 1 offer per transaction
• Customers may purchase multiple Visa gift cards and/or MasterCard gift cards in denominations that cumulatively amount to $200 or more to meet the minimum purchase requirement
• MaxPerks® Rewards are not redeemable for this offer.

Here is what the first and third parts of the T&C mean to me:

• Limit 1 offer per transaction = No limit.  Since it doesn’t say limit 1 per customer, this means to me that if you want to buy more than $200 worth, you could simply ask the cashier to ring up each $200 bundle separately.
• MaxPerks® Rewards are not redeemable for this offer = OfficeMax gift cards are redeemable for this offer.  It doesn’t say that you can’t use OfficeMax gift cards to buy these gift cards, so it appears to be OK.

My Experience

I still had a few OfficeMax gift cards laying around from previous deals, so I brought the gift cards and my Ink Plus card along on my shopping trip.  At the first stop, I reconfirmed what I had learned before: my local OfficeMax store no longer carries $200 Visa gift cards.  Rats, that would have been a good deal.  The best alternative was to buy two $100 cards, each with a $5.95 fee.  I chose Visa gift cards over MasterCards because the Visa card PINs tend to work better.  I brought four $100 cards to the register and asked to pay in two transactions.  No problem.

After the first two cards were rung up, I saw that the total came to $211.90.  That was wrong.  Where was my $10 off?  I showed the weekly ad to the cashier.  She got out her big black binder full of scan-able coupons, found this deal, and scanned it in.  Success!  The new price came to $201.90

I gave the cashier my OfficeMax gift cards which she took and processed without comment.  I then paid the small remaining balance with my Ink Plus (so as to earn 5 points per dollar).  Done.

At the next OfficeMax store, I again couldn’t find anything better than $100 cards with $5.95 fees.  I bought two.  This time the cashier had much more trouble finding the scan-able coupon (it hadn’t been put into the binder yet), but eventually everything rang up correctly.  I was out of OfficeMax gift cards so I paid for the whole thing with my Ink card.

Is it worth it?

If you buy two $100 Visa or MasterCard gift cards and get the discount applied, the total comes to $201.90.  The fee is very close to 1%.  That’s not bad, but you can do just as well by buying $500 Vanilla Visa gift cards for $504.95 at various stores (drug stores, gas stations, etc.).  And, dealing with a single $500 gift card is much easier than dealing with a bunch of $100s.

The benefit of the deal comes in if you want to liquidate OfficeMax gift cards (as I did) or if you can earn bonus points on your credit card at OfficeMax.  The best credit card options are the Chase Ink cards that earn 5 points per dollar, and the Amex SimplyCash card that earns 5% cash back at office supply stores (see Best Category Bonuses).  Either way, you will earn approximately 4% profit by buying gift cards, or more if you value Ultimate Rewards points higher than 1 cent each (and you should!).

If you decide to use OfficeMax gift cards to pay, keep in mind that some OfficeMax stores do not allow buying gift cards with gift cards.  Your mileage may vary.

So, the answer to the question is yes, under certain circumstances, this is a good deal.  I don’t plan to buy any more of these gift cards though because I find dealing with $100 cards to be a hassle.  Even loading the cards onto my Bluebird card (see Gift card PINs) is a bit more of a hassle than I want to deal with.

How about you?  Is this deal worth it to you?  More importantly, does your local OfficeMax store carry $200 Visa gift cards anymore?

As you’ve probably heard, the Daily Getaways start tomorrow with the best deal of the week: Marriott gift cards are 20% off if you pay with an American Express card.  Mommy Points has the scoop here.

I still have gift card credit from prior deals, so I plan to sit this one out, but if you do pickup some, here are some pointers for using Marriott gift cards effectively…

When using Marriott gift cards, you can stack promotions as follows…

• Make sure to sign up for the latest Marriott promotions.  Marriott regularly runs MegaBonus promotions.  For most people, this means that for every two Marriott stays, you’ll receive a free night certificate for a category 1 through 4 hotel.  Some people are offered certificates for a category 1 through 5 hotel.  Either way, make sure to sign up!
• If you plan to stay at several Marriott properties within a few months of each other, consider going for their Gold or Platinum challenge.  See “Pursuing Platinum @ Marriott.”  This way you’ll be treated better as an elite and you’ll earn more points with each stay!
• When booking your stay, make sure to start in a point earning or cash back portal.  I use CashBackHolic to find the best option since it consistently delivers the most accurate results (see “Portal finder fight! Round 2“).
• When comparing rates, make sure to look at AAA and other rates you may qualify for.  In my experience, stays booked with AAA discounts do still earn portal points / cash, but stays booked on a government rate do not.  Your mileage may vary. 
• If you have some time on your hands, use Kayak or other aggregators to search for a site that offers a better rate than Marriott does directly.  If you find a price discrepancy, you can take advantage of Marriott’s “Look No Further Room Rate Guarantee” to save 25% off the lower rate.  Loyalty Traveler offers details here.
• When you check-out of your hotel, don’t forget to pay with your Marriott gift card!  Alternatively, ask to pay in advance with the gift card when you check in so that you don’t risk it.

For a long time I’ve told people that Southwest points are worth 1.67 cents per point towards “Wanna Get Away” fares.  I was wrong.  Southwest points are actually worth more than 1.67 cents each.

Before I explain, let’s look at why I thought the points were worth a fixed value of 1.67 cents each towards Wanna Get Away fares.  This chart is on Southwest’s website:

In Southwest’s example, they show that you can use 6000 points to pay for a $100 fare.  Now, if we calculate the dollars per point, we get: $100 / 6000 = 1.67 cents per point.  Since Southwest charges a fixed rate of 60 points per dollar, the ratio will always be the same regardless of the fare and so points should have a value of 1.67 cents per point for all fares.  Simple.

There’s more to the story

A few days ago, I learned about my error from this blog comment dialog:

JL100: Southwest worth 1.8 cents/dollar on wanna get away fares

Frequent Miler:  Southwest points are worth 1.67 cents on wanna getaway fares.

JL100: I just checked a sample of three Southwest fares and the points were worth 1.8, 1.88 and 1.9 cents compared to fare amounts. Perhaps 1.67 is a minimum?

Frequent Miler: You’re right! I just did a search and found 1.95 cents value. That’s very weird because Southwest supposedly has a fixed value for their points. I’ll have to investigate more!

So, I investigated…

What I found

Just like commenter JL100, I ran a number of flight searches on Southwest’s website and I found that I was getting more than 1.67 cents value from every single flight.  After some digging, I figured out why:

• Southwest calculates required points by adding the Base Fare and Excise Tax and then multiplying the result by 60. 
• The above formula does not account for Government Segment Fees, Passenger Facility Charges, or Security Fees.  Security Fees are charged to those who pay with points, but Segment Fees and Passenger Facility Charges are not.

In other words, when you pay with points, Southwest pays some of the taxes for you even though they are not included in the calculation for the number of points needed.  As a result, the value you get per point will always be higher than 1.67 cents as long as the combination of Segment Fees and Facility Charges are more than the Security Fee.  Since these taxes are based on the number of segments you fly, you will get more value (when calculated as cents per point) on low cost trips with multiple segments.

An Example

I priced a flight from Detroit to Baltimore.  The cash price came to $168.80 and the fare breakdown looked like this:

When I priced the same flight for points, the total came to 8,820 points and $5 for the Security Fee.  The fare breakdown looked like this:

By using points, I would save $163.80 ($168.80 – $5).  So, the value of the points would be: $163.80 / 8,820 = 1.86 cents per point.

Other calculations

You can argue that one wouldn’t really get 1.86 cents per point value in the example above because when you pay with points you do not earn points for the flight.  That’s true, but it doesn’t change the fact that whatever formula you use for valuing point redemptions, you will find a higher value than one would otherwise assume.

Companion pass

Southwest has the most generous companion pass benefit in the industry.  In any calendar year in which you accumulate 110,000 Southwest points from Southwest and from partners, you’ll get a companion pass that can be used as many times as you want for the rest of that year and all the next year.  Whether you reach that milestone by flying, or by shopping through the Rapid Rewards portal, or by signing up for lots of credit cards, the good news here is that the points you accumulate along the way are worth even more than you thought!

As an aside…  some people say that once they have a companion pass, their points become worth twice as much.  That’s both right and wrong at once.  Yes, the points will get you twice as much travel as they would before, but so will cash!  So, I think it is better to think of the Companion Pass as a way to make travel cheaper (with cash or with points) rather than to think of your points as being worth more.

Bottom Line

Southwest points are worth more than 1.67 cents per point towards Wanna Get Away fares.  And, incidentally, it means that using points for Anytime fares is not as bad of a deal as it appeared (since you’ll get slightly more than 1 cent per point value).  Business Select fares will still be a bad deal, though, as they’ll still calculate to less than 1 cent per point value.

We’re not talking about big numbers here, but its great to see a case where we can get more value from points than we previously thought!

Well, that was a fun, but short ride.  Readers today alerted me that Google Wallet has begun to charge its 2.9% fee for credit card payments.  I logged on and verified that they were right.  Google Wallet is still free for sending money from bank accounts, so it may still be handy for transferring money to others, but it’s no longer a point-earning goldmine for those using rewards credit cards.

In case you’re wondering what I’m talking about, please see my prior post “Google challenges PayPal, Amazon Payments, and others with innovative new version of Google Wallet.”

If you are a business owner, its worth looking at the many perks offered by small-business credit cards.  If you are not a business owner, some of these perks might just be tempting enough to get you started!

Sign up bonuses

Some of the best credit card signup bonuses are offered only for business cards.  For example, the Chase Ink Plus, Chase Ink Bold, and Amex Business Gold Rewards cards currently offer 50,000 points after $5K spend.  Further, American Express often offers businesses even better offers through direct mailings. 

In some cases, banks offer business cards that are virtually identical to their non-business counterparts.  A good example is the American Express Starwood card which comes in both a personal and business flavors.  Even though the signup bonuses don’t tend to be higher for business cards in this situation, you can apply for both the business and personal cards in order to get both signup bonuses.

Automatic rebates

All American Express small business cards are part of the OPEN Savings program in which you can automatically earn cash back (as statement credits) at various specific merchants.  Be sure to read the fine print about what qualifies.  Details can be found here: OPEN Savings.

Similar to the American Express OPEN Savings program, MasterCard has a program for MasterCard small business cards.  Unlike American Express’ program, you do need to register your MasterCard to qualify.  Details can be found here: MasterCard Easy Savings. 

Terrific point earnings

The Chase Ink cards, in particular, have terrific earning rates for your business expenditures.  In particular, they offer:

• 5X for purchases made at office supply stores
• 5X for phone (landline & cellular), internet, and cable charges
• 2X for gas
• 2X for hotels (Ink Bold, Ink Plus, and Ink Classic)
• 2X for restaurants (Ink Cash only)

American Express also has some goodies.  The Business Gold Rewards card, for example, offers:

• 3X for airfare
• 2X for gas
• 2X for advertising in select media
• 2X for shipping

Another good choice is the Capital One Spark business card that offers 2% cash back for all purchases.

Other perks

Business cards often (but not always) come with the same perks often found in consumer cards such as extended warranties, return protection, etc.  I’ve heard especially good things about American Express’ extended warranties.  It’s worth reading the fine print to get to know what your cards offer.  Here are a few perks of the Chase Ink Bold and Ink Plus cards that you may not be aware of:

• Primary auto rental collision damage waivers: This includes reimbursement for damage due to collision or theft, loss-of-use charges, and towing charges.  (note: no benefit is provided for vehicles rented in Israel, Jamaica, or Ireland)
• Lounge Club: Airport lounge access (2 free visits per year).
• Travel Insurance: Including travel accident insurance, trip cancellation / interruption insurance, trip delay reimbursement, lost luggage reimbursement, and baggage delay reimbursement.
• Ink Insiders Program: Chase has a special program for Ink cardholders in which you can qualify for all of the following benefits: $150 in Adwords Express credit; Avis faster rewards & up to 30% off; Expedia business rewards; and more.  Details here.

Qualifying for business cards

To qualify for a business credit card, you do need to own a business.  Examples of valid businesses include (but are not limited to): lawn/gardening services, housekeeping, sales (online or in-person), blogging, etc.  If you are just starting out with your business you might not have a business tax ID, and that’s OK.  You can describe your business as a sole proprietorship and use your social security number as the tax ID.  Also, you might not yet have much (or any) business revenue.  That’s OK too.  Be honest on your application.  If your business has earned nothing, then report $0 in revenue/sales.  You can report income from all sources (not just your new business) in the field for “Gross annual income”.

Summary

Whether you have a long established business or are just starting out, business credit cards offer many ways to earn points and save money.  For example, suppose you need to travel for business, here is an example of how you can use your business cards for maximal savings and point earnings:

• Airfare 3X: Pay with the Amex Business Gold Rewards card.
• Car rental 5% back: At Avis or Budget, you’ll get 5% cash back if you pay with your business MasterCard (such as a Chase Ink card) once it is registered with the Easy Savings program.  Further, with Chase’s Ink Insiders program you’ll earn Avis rewards twice as fast and save up to 30% off rentals!  At Hertz, if you pay with your Amex business card you’ll earn 5% cash back for each dollar spent above $500 per calendar year, and 10% cash back for each dollar spent above $2500.  Clearly the latter is only good if you spend a lot at Hertz!
• Gas 2X: Both the Amex Business Gold Rewards card and the Chase Ink cards offer 2 points per dollar at gas stations.  At certain gas stations in the Fuelman network you’ll also get 1% cash back when using your MasterCard registered with the Easy Savings program.
• Hotels 5% back and/or 2X: At Hyatt (in the US) and select Marriott hotels, pay with your Amex business card for 5% cash back.  At Wyndham hotels, pay with your MasterCard registered to the Easy Savings program for 5% back.  At any hotel, if you pay with your Ink Bold, Ink Plus, or Ink Classic you’ll earn 2 points per dollar.
• Dining 2X and/or 5%: Use the Chase Ink Cash MasterCard to get 2 points per dollar at any restaurant.  If your card is registered to the MasterCard Easy Savings program you can also get 5% cash back at Maggiano’s restaurants.

Note that there are some cases where you can do better with personal cards.  Please see “Best Category Bonuses” for details.  Also, with either business or personal cards, you can increase point earning or cash back by booking your travel through online point earning or cash back portals.  And, signup your credit cards with your favorite Rewards Network program in order to automatically get more points at certain restaurants.

Related Resources

• Best credit card offers
• Best category bonuses
• How to sign up for the Ink Bold (or Ink Plus)