Points are all the rage. Why wouldn’t they be? I’ve booked nearly $50,000 in free flights in the last two years using points. A good friend text me late last night asking if the Capital One Venture Card was the real deal. The commercial he was watching claimed that it offered double points on all purchases and it sounded like a seriously good deal, which it is in fact NOT. I have noted the difference between points and miles, but there is a further difference between points, miles and transferrable points.
Earning “double” may in fact mean earning less than half. With points being all the rage, everyone wants to offer them to remain competitive in the credit card market. There is nothing outright wrong about non transferrable points, such as those from Capital One, Discover and others, but they will never land you an incredible value. Points from these cards offer a fixed rate of return between one and three cents per dollar spent and that return must be booked through their own site. In this instance, Capital One was advertising 40,000 bonus points and two points on all future purchases. Since those points cannot be transferred, they are worth exactly one cent per point, allowing you to redeem them for up to $400 worth of travel.
Transferring points allows you to unshackle the “fixed” value of your points and instead find clever uses, allowing you to unlock significantly higher value per dollar. Transferring credit card points can only happen via Amex, Chase or Citi issued cards which participate in the Membership Rewards, Ultimate Rewards or Thank You program. I just transferred some American Express Membership Rewards and Chase Ultimate Rewards points to book a Cathay Pacific Flight in Business Class. To book, I transferred my points to British Airways, a partner of Cathay Pacific. The flight from New York to Hong Kong round trip in Business Class on Cathay required 140,000 British Airways points. After a quick search on Kayak and Google Flights, I found that this seat would have cost me roughly $7,800 out of pocket. In this instance, by taking advantage of a sweet spot in a transfer partner, I was able to secure a return of over five cents per point. The 50,000 bonus points I received from each of the two cards, plus the limited time Amex to BA transfer bonus got me to 140,000 in no time.
If I had somehow managed to store up 140,000 “Capital One Points” which could not be transferred to an airline, they would have given me a maximum value of $1,400 towards that ticket. Nowhere near the value. As you can hopefully see from this example, transferable points such as my Amex and Chase points allowed me to unlock five times the potential value of the Capital One “Double Points” card. If you are interested in a cash back card, this is a totally different story and in that instance I would recommend the Chase Freedom which earns up to 5% cash back.
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