Comments on: Is it time to rethink the cash back credit card?

By: JCK

JCK — Fri, 14 Aug 2009 13:31:54 +0000

I’d pick neither….use a card that accumulates its own internal points, and use the points to redeem for air ticket. then the rewards from the card itself spawn more rewards in terms of airline mileage accrual.

Say you spend $150,000 which leads to 150,000 points (not counting any schemes that give you more than 1 pt per dollar), which can buy $1,500 worth of air tickets. A domestic transcon RT in USA is about $300. That buys 5 transcons, which leads to another domestic reward ticket worth $300.

In essence, those points system is a hidden 20% bonus. A card (which shall remain un-named) gives you 5 pts per dollar on restaurants… that’s 6% rewards folks!

By: MechTeach

MechTeach — Fri, 14 Aug 2009 11:01:35 +0000

Excellent points have been made above about the value of a mile/point. I agree about the somewhat flexible nature of that value, and I will generally continue to use my MP and *wood CCs, but I have still applied for this CC. Why? Psychologically, I don’t like the thought that I am paying more for a mile than I should when I use my CC abroad, and so I generally just use ATMs/cash. There are some places where that is very awkward, so being able to use a no foreign fee card that also provides an additional benefit in % cash back is highly appealing. Thanks for the heads up on this!

By: Reward Cards: Cash Versus Points

Reward Cards: Cash Versus Points — Fri, 14 Aug 2009 11:01:18 +0000

[...] I was reading the One Mile At A Time blog, and after having won their photo contest, came across this post entitled “Is it time to rethink the cash back credit card?”. The title perplexed me, as I love cash back cards. As I read the post, I got to contemplating the [...]

By: lucky

lucky — Fri, 14 Aug 2009 05:13:36 +0000

All excellent points, and of course I agree with most of you at the end of the day, since I *do* use (and will continue to use) mileage earning credit cards. I do have a few more thoughts, though:

– I have to disagree with those of you that use the “face value” of premium tickets in setting a “value” to a premium award. For me the sticker price really doesn’t matter. It’s all about how much I’m willing to pay, and frankly when flying to Asia it wouldn’t be more than $3,000 or so roundtrip for first class. I’d rather sit in coach and think of the $100/hour I’m saving by sitting in the back (but of course this leads to an entirely different argument regarding premium redemptions vs. coach redemptions).

– To further complicate the game, it’s worth factoring in the value of the miles, status, and upgrades you would earn if you bought a revenue ticket using the cash you earned from your cash back credit card. There’s no reason I couldn’t book United coach to Asia, upgrade with SWU’s, help requalify for 1K, and earn 40,000 miles in the process. If you don’t want to factor that in when doing your math, you’d have to add 40,000 miles to the cost of your award ticket, which changes the CPM. Rather cyclical, isn’t it?

– Gary summed everything up brilliantly when he said “We simultaneously value our miles at far less and far more than 2 cents.” Simply brilliant.

By: whakojacko

whakojacko — Fri, 14 Aug 2009 03:09:50 +0000

@Blake: 120k*0.02=2.4k for a transpac C ticket that doesnt give eqm/rdm. It all depends on how much you value that..But even on NH/SQ, I would hesitate before paying that. On UA, no way in hell

HunterSFO makes a good point as well

By: Guaranteed Credit Cards Now » Blog Archive » Reward Cards: Cash Versus Points

Fri, 14 Aug 2009 02:36:47 +0000

[...] was reading the One Mile At A Time blog, and after having won their photo contest, came across this post entitled “Is it time to rethink the cash back credit card?”. The title perplexed me, as I love cash back cards. As I read the post, I got to [...]

By: chitownflyer

chitownflyer — Thu, 13 Aug 2009 22:12:46 +0000

Getting a Business or First class international award mileage ticket is one of the best values for using your credit cards, so the cash back credit card option is of diminished worth realtive to the cost of a $20K F or $10 K Biz ticket.

By: HunterSFO

HunterSFO — Thu, 13 Aug 2009 16:55:44 +0000

I also have to add that you really *can’t* ignore the sign-up bonuses. Mileage cards give you 15-30,000 miles for signing up. I have yet to see a 2% cash back card that gives you $600.00 for signing up…

By: unavaca

unavaca — Thu, 13 Aug 2009 16:19:33 +0000

It depends on what class you fly in. If you’re OK with flying economy everywhere (and I am , the cash back cards made a LOT more sense this year (2009) than mileage cards. To me, 1 mile = 1 cent (full stop), so a 25k saver award was worth a $250 ticket. I was buying UA L fare tcons for <$220 AI and earned mileage on them. To me, using a 2% cashback card was a no-brainer.

By: Ron

Ron — Thu, 13 Aug 2009 14:13:31 +0000

The American Express Blue Cash gives 5% back (5 cents on the dollar) for groceries, gas and drugstore purchases after you’ve reached $6500 spending in a year, and 1.25% back on everything else (for the first $6500, the rebates are 1% and 0.5%). If half your purchases are groceries, gas and at drugstores, it starts beating your 2% card at around $14,000 annual spending.