At the beginning of the year, I was really thinking about how to get more from my credit cards. I opened up a card or two, worked to get the welcome bonus, and was plotting how best to use credit card bonuses to reduce the cost of our multiple planned trips in the coming year.
I have some large medical bills coming up, the question becomes a little more pressing. If I have to pay out lots on money on my credit card(s), I would like to get the most out of it that I can.
I love the idea of frequent flyer miles. The thought of going somewhere far away for free is just intoxicating, even though I can (and have) paid for trips out of pocket many times.
Now travel doesn’t seem practical for quite some time. I suspect it will be at least a year, if not two, before travel abroad is likely to be possible.
Certainly I can’t go much of anywhere if I have to self-quarantine for 2 weeks on arrival, since I am lucky to get 10 days for vacation. That’s not even taking into account whether or not I am allowed entry into the county, or if I will foul of work rules regarding non-essential travel to potential hot zones of infection.
I also worry about the value of my rewards. Could my points lose all value if the airline goes bankrupt? What if they are devalued, and now I can’t travel far on what used to be a large stash?
Perhaps I should consider pursuing cold hard cash as my rewards, either through cash back systems or figuring out how to turn points into money?
I must confess, though, some of what the points system sells me is the dream of travel. My favorite memories are of free flights to Japan, to Ireland, or even our “free” trip to Greece (a symphony of free flights and hotel rooms).
I decided to go through my portfolio of travel points and funds, to review where I stand with them, and what my best options for using them might be. This ended up a very long post, but a useful project for me; I hope it might be a helpful way to think about points for the non-professional point user.
I have quite a collection to think about: airline miles, hotel points, “free nights” through Hotels.com, rewards points in 2 different systems (Chase Ultimate Rewards and Capitol One miles), and some cash back banked with 2 credit cards. I have also been considering the Costco cash back Visa for some time; it is not yet a household card, but in this exercise, I am trying to see where/if it would have value for us now.
Hotels
Hotels.com
I have written before about using Hotels.com. Through them, you can book–you guessed it– hotel rooms, and with every 10 room-nights (now called “stamps”), you can get 1 free hotel night. The free hotel night is actually a credit worth 1/10th the price you paid for those 10 nights. You must keep your account active at least once each year in order to keep your unused free nights.
I sometimes redeem credit card cash back points for Hotels.com gift cards at a favorable rate, which can help with making a trip even cheaper.
Between doing less travel last year, and being unable to travel this year, my year of activity is expiring soon. Since I have 2 free nights (good for expensive stays), I would like not to lose them.
Checking with the company web site, I see that I will get an extension to use them, though it is not clear for how long. I am hoping I will get another year, at least, as I am not sure when I will be able to use them.
On the other hand, there isn’t much to be done if they are forfeited. I can’t redeem them for anything other than a hotel stay.
Conclusion: Nothing to do be done if the free nights expire. Of course, there is no need to put more money into this system until/unless I start traveling again.
Hilton Honors
As noted above, when we travel, I often book through Hotels.com. However, that hasn’t been practical when booking hotels for large conferences. After several ACP meetings, I have managed to get a little status (Silver) and about 57,000 points with Hilton. That sounds like a lot of points, but I think it’s redeemable for 2 nights at cheap hotels (the kind we use on road trips) or one night at a fancy city hotel.
With travel on hold for the foreseeable future, I was happy to see that my Silver status is extended automatically for one more year, and that my points won’t expire for a while longer.
I hope that travel wil be safe enough before that happens.
If not, it appears that I can use them in other ways: this post on NerdWallet lays out some options, still mostly for travel related costs.
Apparently I can exchange points for credit with Amazon, though this article advises that I not. However, if the option is letting points expire or using them to pay at Amazon, I think the phrase waste not, want not might be applicable.
Conclusion: I can get cash for these points if I absolutely have to. I will probably hold on to the points for now, hoping for a free night or two at a hotel once I start traveling again. No need to work on getting more points right now in this system.
Airlines
American Airlines
I thought we were done with American after our trip to Greece (the flight was paid for by frequent flyer miles, but our flight was significantly delayed and then canceled. We had to do some fancy foot work to get across the ocean to Europe).
Then they gave us a bunch of miles in apology, and soon after my husband got a credit card with a large sign up bonus. He charges everything except his Costco runs on that card, so he has a good stash of points already. We think he has enough for a round trip ticket to Europe, and also a one way trip (for me). Since I have enough for a one way trip in my own account, we are all ready to go to Europe. Or we could take 2 trips in North America.
Recently, he also received a $125 voucher, as he spent a ton of money in the past year–a benefit of concentrating all your spending on just 1 or 2 cards.
Since we both have affiliated credit cards, as long as we use them periodically, we should not have to worry about losing our frequent flier miles due to inactivity.
However, I think there is a very real concern that if American doesn’t do well financially, our points could either go away, or be worth much less once we are ready to fly. That voucher has an expiration date as well.
Looking at alternative uses for these miles, it looks like I can also use them to upgrade my flights with American, buy a vacation package through them, or rent a car through them. I think if I am going to be doing that sort of stuff, a free plane ticket will be where I get the most enjoyment out of those points.
Also, I think it might be time for me to consider canceling my American Airlines branded card. I have to pay a yearly fee, and I am not really using the card or the rewards much. The best feature–the waived fee for luggage–also comes with my husband’s card, and we don’t often fly separately.
Conclusion: I probably should cancel my card before the next yearly fee comes due. As for my husband, if we don’t have a better card, we will get a lot of frequent flyer miles and maybe another voucher next year. Not the best place to put purchases, but possibly not the worst, as long as we are willing to use up points and vouchers with AA as soon as it is safe/feasible to fly.
Southwest Airlines
I don’t have a lot of points left in the Southwest program (Rapid Rewards). I used most of them for a one-way ticket last year when my dad was sick. My husband has some, I think enough for an inexpensive round-trip if we want.
The bigger issue is our tickets for a trip in March that we canceled. We may lose about $50 in travel funds from switching our tickets before the coronavirus became a big problem, but we have nearly $600 (each) in travel funds, i.e. credits for our canceled trip. We have until the fall of 2022 to use them to book a new flight.
I hope that we can use these funds before they expire. This depends on being able to travel safely (i.e. the travel is safe, we can go to our destination without a quarantine, and I can return to work after the trip without another quarantine), and also on Southwest Airlines remaining in business.
Conclusion: As soon as travel is feasible, we should also book a trip or two with Southwest. I am not feeling super excited to try to earn more Rapid Rewards through credit card activity right now.
Travel Points
Chase Ultimate Rewards
I started with the Sapphire Reserve card almost 2 years ago. It has a hefty annual fee ($450 when I started, now $550), but offers a number of benefits: reimbursement for $300 each year in travel charges, 1 free Global Entry free (which I need to work on!), and a yearly Priority Pass (discovering airport lounges made a huge difference to how my husband and I view the airport). I can also earn Ultimate Rewards based on my spending, earning more for travel-related purchases.
The Sapphire card pairs nicely with the Chase Freedom card, which earns more points on ordinary purchases; you can then redeem those Ultimate Rewards points at a higher rate with the Sapphire card.
You can redeem the points as cash, to pay off your monthly balance. Or you can go through the Chase portal to use points to purchase flights. Or you can transfer the points to airline frequent flyer programs to get free flights.
So far, I haven’t done any of this, as I didn’t have enough to earn any free flights anywhere.
Recently, Chase has added grocery benefits to the travel rewards. Since people aren’t traveling, you can have $300 of grocery bills erased instead of $300 of travel bills each year. And through the end of September, you can use Ultimate Rewards to pay off groceries billed to the card at a rate of 1.5 cents per point (just like for international travel, only less exciting).
Conclusion: Given the flexibility of the Ultimate Rewards system, I am going to use this card more often–probably with the hopes of eventually traveling again, but knowing I have the option to cash out if I need the moolah.
Capital One Miles
I got a Venture card late last year, trying to play the travel points game. I had some expensive travel planned, and figured that was a good way to earn a sign on bonus. That travel had to be canceled, so I will see if I get to keep the rewards points, or if they go away.
If I get to keep the points, I read an interesting article at The Simple Dollar on best uses. It sounds like using the points as a “purchase eraser” to take care of $500 on travel is the best move. However, if travel is truly out of the question, I think I can use this towards gift cards or Amazon purchases for a little less.
Conclusion: I don’t know how much I really need this card; I’d like, eventually, to have Global Entry for two of us, but it may not be worth paying the yearly fee when it comes due. I might keep it one more year, to see if we can travel again and if the benefits are worthwhile. But I suspect I will be using it on a regular bill and paying the balance off with the miles.
Cash Back Points
Discover card
I decided to get a Discover card years ago because of their cash back rewards. Back then, this was a new concept. I was very excited that you could get a $25 gift card to Borders Books and Music (yes, I am dating myself) for just $20 of cash back bonus. Considering how much I spent at the store, this was a real inducement.
Borders is long gone, but my Discover card stays in my wallet. I still earn about 1% on purchases (I get less back on the first $1000 I spend per year, and can get up to 5% back on rotating categories that I seldom use).
I can redeem for straight up cash, or use the money to pay for Amazon purchases (no discounts here). I can still get gift cards at a discount, usually $25 cards for $20 of rewards, which seems like the better redemption if I am going to shop anyway.
Reviewing the extensive list of options, I can buy gift cards for restaurants (unlikely to use), online clothing companies (useful), and for Hotels.com (feeding the travel dream!).
Conclusion: I like the flexibility of having options, and will probably hold onto these rewards until I can either travel or until I need clothes.
USAA
I have a card through USAA that I share with my husband. It sees a lot of use at Costco, since they only take Visa.
I had used to be excited about their rewards system, earning 1 point per dollar (or 1%) with the idea that you could use these points to book travel through their site.
Unfortunately, whenever I look at their travel site, flights and hotels cost much more in points + cash compared with prices I can arrange on my own.
They offer the opportunity to purchase gift cards, like Discover; unlike Discover, the terms are not as good as their cash redemption. I can redeem 3500 points as $35 off my credit card bill, or buy a $25 gift card.
Conclusion: The best use of these reward points will be to apply them to the credit card bill. If I want to feel better, maybe I will put an equivalent amount of money in the travel savings account.
Costco
So far, we don’t have a credit card with Costco, but I have been thinking about it. We buy a lot of groceries there. A lot.
With the executive membership, we get 2% back on our purchases instead of 1%. The extra 1% more than makes up for the extra cost of the executive membership.
I am tempted because with the Costco card, we can get an extra 2% back on most of our purchases there. This compares to 1% in points or cash back from our current cards. We can get higher cash back rewards if we use it for other categories (travel, restaurants, gas).
We don’t have too many choices about what to do with the rebate: it comes as a check, which can be cashed at Costco, or we can apply it to our purchases that day.
Conclusion: This might be a place to earn a little more cash back in the future, compared to using the USAA card. Not a ton, but enough for a dinner out (whenever that sounds appealing). There is no welcome bonus, so we can choose to get it at any time, without timing it to match a large purchase.
My conclusions
After a lot of writing, I can see a few themes emerging, as far as my personal best use of rewards points:
One. I still have an emotional attachment to the idea of free travel. That is to say, even though money is fungible, and $287.93 saved on groceries can be put into our travel account, I don’t find it as emotionally satisfying as thinking that I stayed for free for 2 nights in a hotel. The more logical readers will point out this is a trap that leads many people to waste money, and their rewards, by holding out for “free” instead of taking the money and running.
Two. Some rewards systems are set up such that you can only redeem their rewards for travel related costs. I am thinking of airline points, and Hotels.com. There is no need to chase new cards with new bonuses while the future of travel is so uncertain for me.
Three. Flexibility will be most helpful going forward. Cashback is probably the way to go, and it is probably best to use up the cash on certain cards (USAA) soon. It will make me feel better if I save the equivalent amount in our travel funds. For Discovercard, I can get more value by redeeming points for gift cards, so I will hold off on redeeming those points for now. Chase Ultimate Rewards points are probably my first choice for now, as I can use them to get groceries, or save them for the dream of travel in the future.
Four. I don’t really have the time and energy to look after more credit cards right now, plus many of them give restricted awards (airline cards, for example) so there is no need to be chasing sign up bonuses even if there are big purchases coming up. I will be fine concentrating on a few cards (Discovercard, Chase), and making sure to take advantage of points as they roll in.
If you have read this far, I will ask: do you have any favorite credit cards? Do you think I am missing something in my analysis?