DOES IT MAKE SENSE TO GET A CREDIT CARD WITH A TRAVEL BONUS?

Today we published an article: DOES IT MAKE SENSE TO GET A CREDIT CARD WITH A TRAVEL BONUS?

Starting this topic to get the conversation going about whether it makes sense to get a credit card with a travel bonus. More so, the value and uses of the credit card currencies such as Ultimate Rewards Points or ThankYou Points. 

If you are unsure and want to at least plunge into the world of travel points, a few things to consider:

- Look for a low annual fee card with a decent bonus (Premium cards with annual fees in the hundreds take a "bit" more thought and consideration. They can make sense, but best to start out without having to worry about and analyze all those details.)

- Look for a sign-up bonus >50k points. If you can find an annual fee for less than $100 and a bonus of 60k points (or more), the card easily pays for itself and you don't have to ponder things too much.

- While not the first step, you will have to think about how you will effectively use the points and also how you might modify your daily flow to charge on these cards to earn more points. Unfortunately, it's often necessary to have multiple cards which are better for different purchases. But, no need to worry to much if you are just getting started or just want to take advantage of a bonus offer. 

Two of my favourites:

The Preferred Card 60k Bonus Currently! (I happen to love Ultimate Rewards as a points currency, it's perhaps my favourite points currency.) 

The Premier Card 60k Bonus Currently! (Mentioned in today's article, ThankYou points are also pretty great, and they have been running bonus transfer to FlyingBlue. I really like this and using FlyingBlue for flights to/from Europe.)

So, what are your favourites? Do you value these point currencies? Are you considering getting one of these cards and learning to use these points to maximum advantage? 

I have the delta card with the free companion ticket. I also have the amex hilton, with multiple bonus opportunities. Finally I have the Marriott visa with a free annual.room. 

Have you had success with the Delta Companion Ticket? I know a lot of people tend to complain about it. I was Delta Diamond for a few years, and love Delta as an airline. SkyMiles can be tough to use, but there have been a number of SkyMiles promotions this year that have been great for using miles to Europe (and also some in the USA). 

For reference, some of our preferred and best value airline credit cards from our partner YBCC. 

Most cards with annual fees aren't worth keeping beyond the first year where you get the signup bonus.   Some people report they are able to waive the fee by calling up the card company and threatening to cancel unless the fee is removed in the following years.    I would not dare speculate as to the success rate of that.

The nice thing about the SOuthwest Card is the annual fee is actually transferred to an equal amount of credits for airline miles.   So you really aren't paying a fee  - you're just putting a down payment on a future flight.      

That's one of the reasons why I like the under $100 annual fee cards. As long as they have point category bonuses and a >50k point sign-up bonus. And yes, they (card issuers) will consider retention bonuses if you actuallly do spend on the card. I know AMEX can often do retention bonuses on "expensive" cards like the Platinum Card. But, you'll probably have difficulty getting a retention bonus if you don't use the card "significantly." 

That's an interesting angle on the Southwest Credit Card. I had not heard that before. 

As I mentioned in the article, I actually got the Premier card. 60,000 points was just too good to pass up.

Mike

Michael, 

It's important to know what a point is worth when you sign up for a travel credit card. Million Mile Secrets website has a valuation article that shows what they believe points are worth. Your personal situation will make those values different for you, but it is a good starting point. It used to be 20,000 miles on everybody's FF program got you a round trip ticket in the US ( 20 years ago). Then it went to 25,000. Now a lot of programs are based on cost of the flight vs distance, so the mileage value changes. And devaluation of points is a pretty common event. 

Do some research before you commit to frequent flyer program. The value of points inside each program is different and also depends on your location, travel destinations and flight class. 

@JimmyJazz,

You bring up some good points. Everyone values miles/points differently, but I usually post what I think is the minimum value. But there are several ways of looking at it, and you do have to take into account devaluation. I spend way too much time thinking about this stuff, but here is some of what I look at. Your mileage may vary, as they say.

1) Given a choice between an airline mile and a "proprietary point," such as Citi TY or Amex MR, Ill choose the latter almost every time. There's value in optionality.

2) I rarely use miles for short-haul or domestic coach flights. The value per mile simply doesn't get me juiced. Rather, I save them for premium aspirational flights that I wouldn't want to pay for out of pocket. 60,000 TY points can get me BOS-LHR one-way in business on Flying Blue (Air France, KLM, etc; It's a massively underrated program when it comes to transferring miles in and deserves a post of its own.). If that ticket is, say, $1,500 in cash, I'm getting 2.5 cents per point in value. 

3) Of course, I can take that thought to the next level, as well: Would I have actually paid $1,500 out of pocket to fly across the Atlantic in business? For some people that answer is yes, but no for must of us. So the point value of a Thank You Point could also be viewed as the opportunity cost. In other words, what would you have paid out in cash, and what am I giving up by not using a different credit card? If I would have only paid $1,200 maximum out of pocket for the ticket above, you could argue that the Citi point is worth two cents, rather than 2.5. And if I use my Citibank card instead of a credit card that pays me 2% for every dollar that I spend, that means that I value the Citi point at a minimum of two cents.

This is one of the most interesting topics to talk about, since there is no right answer, and the more you think about it, the farther down the rabbit hole you can go.

Some days I take the red pill, other days the blue...

Mike