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Pick a flight, any flight…

Credit cards are the winning play when it comes to quickly accruing enough points for “free” flights, but the question on everyone’s collective mind, is always: which credit card? Depending on where you fly, how you like to fly or when you like to fly, the advice can differ from person to person, but there’s an undeniable airfare trend thats changing the way savvy travelers *should* approach their credit card strategy…

a large tower with a fountain and Eiffel Tower in the backgroundOnce Upon A Time

Not long ago, a time existed when economy tickets between the US and Europe hardly ever, if ever crossed under the $800 threshold. The same could be said for Asia flights, and many other destinations, regardless where you’re started from. Now, you’d be hard pressed to pay over $550 for most long haul flights if you use the best flight deal tips, and you can quite often find $400 round trip on top airlines. At the exact same time that airfares began to dive in our favor, airlines became greedy less generous with their charts for using points, raising rates across the board.

It’s All About Inflated Points Redemptions

What we’re saying is, once upon a time, using 40,000 points for round trip economy gave you two cents worth of value or better, when it covered a ticket that typically cost $800 and up. But now that tickets cost $400, and the charts require a minimum of 40,000 points, and often more like 60,000 round trip, the value is quite often terrible, and on top of that – you don’t earn anything when you cash in airline miles for a free ticket. That’s right, when you use airline miles, you don’t earn airline miles. However, when you redeem credit card points for travel via the credit card website, you almost always do.

a row of seats in an airplaneAspirational VS Practical

Many people collect points to turn travel they can afford into free travel they don’t want to pay for, or alternatively, to cover travel they couldn’t possibly afford, like long haul business or first class tickets. If the latter is your bag, it’s a great strategy, but obviously with the caveats of only being able to travel on dates when airlines release seats using points, and being beholden to how many seats they choose to release. For travelers focused on these difficult, but aspirational ways to use points, taking advantage of clever ways to use points, nothing is really changing. If you’re a practical traveler, who just wants to go somewhere for free or cheap, and doesn’t care about flat beds and just wants a free or cheap trip, when you want it, it’s all changing though.

Cash Back Earning Rates

Many of the best cash back cards offer no annual fee, or annual fees under $100, such as Capital One Venture, Amex Everyday, Chase Freedom and Citi Double Cash. With easy potential to earn a straight up 2% cash back on everything, and up to 10x on certain categories, these cards are very compelling when it comes to your rebate on spend. Similarly, premium cards such as Citi Prestige and Chase Sapphire Reserve allow you to cash in points for travel purchases at better than 1 cent per point of value, and offer up to 3x points on certain spending categories. Conversely, most airline cards only reward 1 point per dollar spent on every day purchases.

a group of people walking with luggageCash Back Points Heaven

Using points for cash back toward travel isn’t ever going to give you a cents per mile value that you can blog about on The Points Guy. It will however allow you to book any flight that’s available for purchase with cash, and you can cover, some or all of the ticket. Credit cards such as Chase Sapphire Reserve give you 1.5 cents per point of value when you cash them in for travel on the Chase Ultimate Rewards website, so 100,000 points would cover up to $1500 in tickets. Unlike cashing in airline miles, when you cash in credit card points toward the cash value of a ticket, you still earn elite status, frequent flyer miles and all that good stuff.

A Great Example

If you earn points via an airline credit card, like the Delta Skymiles American Express, you earn 1 point per dollar for most purchases. If you use Capital One Venture, you earn at least 2x points for all spending. If a ticket to Europe is on sale for $400 round trip, you could book any date whatsoever using your Capital One Venture, or any other cash back points towards travel. You’ll pay 40,000 points, but you’ll have only needed half the spending to achieve the 40,000 points, AND you’ll earn miles and elite status points for the flight, since it counts as actually buying it. If however you cashed in Delta Skymiles for the free flight, you may or may not be able to fly when you want, because many dates will require a lot more points, or wont be available using points at all. And if you do find the dates you want, using points, you won’t earn any status or miles back when you fly.

Bottom Line

If airfares continue to stay low, which we hope they do, a majority of travelers will get a lot better and more flexible value out of their cards by using cards that offer the flexibility of transferring points to airlines, or redeeming points for cash back toward any travel purchase. If you flip flop between aspirational and practical, the Chase Sapphire series of credit cards are easily one of the best choices, as are the Citi Thank You family of cards. If you’re always on the practical side, and prefer easy redemption and great earning rates, cards like Capital One Venture, Bank Of America Premium Rewards, Amex Everyday and Citi DoubleCash are really compelling as well. Long story short, unless you have niche uses, airlines are cannibalizing their credit cards with these low airfare deals, and it’s hard to justify using them. We’ll keep the deals though…

Has your credit card strategy shifted with these new airfare trends?

Gilbert Ott

Gilbert Ott is an ever curious traveler and one of the world's leading travel experts. His adventures take him all over the globe, often spanning over 200,000 miles a year and his travel exploits are regularly...

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  1. Citibank ThankYou and AMEX Membership Rewards points have redemption values less than one cent per point for cash back redemptions. Chase Ultimate Rewards are worth one cent for cash back which establishes a point value lower limit that does not yield a low net return and is the singular primary reason I carry a Chase Sapphire Reserve card. AMEX Blue Cash 5% or Preferred, Citibank Double Cash, and Citibank Costco credit cards are providing compelling returns after any annual fees that are very compelling compared to point based credit cards. Do the math folks.

  2. I came across this article and reread it again. Thank you for a well written article and I also totally agree.

  3. I am reconsidering my non-bonus category/sign up bonus spend. I can move a 100k IRA to Bank of America. This will enable me to earn 2.62% on any purchase.

    If I want to fly business I can periodically purchase miles when they are on sale from Alaska, United or another airline. In fact, if you are willing to be flexible on airline, you can find cash prices for business fares that are competitive with using airline miles.

    PS The Bank of America travel card and the Premium Rewards card do not have a foreign transaction fee.

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