Take a Vacation

[Pelado]

OK, how much are you getting?

In re-reading your post, though, I don't think I answered the question you were asking. My credit card strategy includes both travel reward cards and cash back cards. The cash back cards I use (and what I use them for) are as follows:

Chase Amazon Prime - Anything on Amazon and at pharmacies (5% cash back)
Citibank Costco - Fuel (4%), anything at Costco (2%)

The reward cards I use are as follows:

Chase Ink Business Preferred - Travel, social media advertising, postage and shipping (3%)
Chase Ink Business Cash - Office supply stores, internet, cable, and phone services (5%), restaurants (2%)
Chase Ink Business Unlimited - Everything else (1.5%)

Both the Cash and Unlimited cards are marketed - at least in part - as cash back cards. But they are Ultimate Rewards cards and I can transfer the points they earn to my Preferred card balance, which gives me the best bang for the buck in the Chase travel portal (1.25 cents for each point) in case I can't get the flights or hotels I want through transfer partners.

So I use cash back cards for categories where the bonuses are better than on my travel cards.

The websites out there that are dedicated to credit card rewards and travel and stuff generally value the Chase Ulimate Rewards points (and American Express Membership Rewards points) at 2 cents per point (even though the points can only be redeemed for 1 cent per point in cash.

If we agree with that valuation, then there's an argument that I shouldn't be using my Costco card for anything. My Chase Cash card gets me 2% back on fuel purchases. At a 2 cent per point valuation, that puts it on par with the 4% cash back I'm getting from Citibank. And for other Costco purchases, the Chase Unlimited card would get me 1.5% back which, at a 2 cent per point valuation, would yield a value of 3 cents per point - 50% better than the 2% I'm getting from Citibank.

The primary reason I got the Costco card in the first place (back when it was issued through American Express) is that I didn't want to have to fumble through multiple cards at the Costco fuel pump. So I'm not switching that just to get on par with what I get through Citibank. Maybe I should switch my other Costco purchases, though.

[Clark Addison]

As a lot of you know, I've worked in credit card for many years. The way customers look at points is interesting. If I were to break it down, I would say that it is something like this. These percentages are guesses, but educated guesses from looking at a lot of spend data and listening to a lot of customer focus groups (some of the most boring days of my life).

1% of customers are continually opening and closing cards and gaming the sign-up bonuses. This is probably the "best" way to maximize your earn on credit cards, but it is far too big of a pain for most people (including me). These customers cost us money so we don't really like them, and all banks are putting limits on how many cards you can open in given time periods to reduce this behavior. Having said that, we don't spend a ton of time thinking about them. It's a small number of customers, and while we lose money, we are losing like $1K to $2K. It's not great, but we care a lot more about the sophisticated fraudster who has figured out how to spend 3 times his limit and gets us for $100K.

5%-10% are doing what Pelado does, holding multiple cards and carefully planning their spend to maximize their return. I work with a woman who keeps a sticky in her wallet to help her choose which of her 5 cards to use. She needs this because two of them are rotating ones (so this quarter you get 5% on gas, next quarter it may be grocery stores).

50%-60% want to maximize their rewards, but really don't want to put time and effort into it. So they do some research and pick a card, and then use this card exclusively, or possibly with an alternate that they use in limited cases. A lot of issuers moved over the last 5 years or so from leading with cards that had different tiers to instead going with a card with a flat 1.5% cash back partly because this segment is so big.

The rest, 40% or so, don't really pay that much attention to the rewards, and/or have no clue. I mentioned focus groups above. We always have fun at these as we listen to our customers completely misrepresent the product they use. A few years back, while I was at Bank of America, we did a big series. And when we did a panel of our own customers, we would always ask "What do you like about your Bank of America card?" At the time, we didn't have a card with a flat reward amount over 1%, and we would ALWAYS get customers would would say "I love my BAC card because I don't need to worry about what card to use. I know I am getting 2% cash back on everything" (as an aside, if you have ever done a focus group, they will usually say something like "You will notice the mirrors on this wall, behind that are just a few of my colleagues who are making sure we get everything you say" They imply that there is no one from the actual company there. That is a lie. We are there, eating junk food, and laughing (quietly) at the stupid things people say).

[Pelado]

As a lot of you know, I've worked in credit card for many years. The way customers look at points is interesting. If I were to break it down, I would say that it is something like this. These percentages are guesses, but educated guesses from looking at a lot of spend data and listening to a lot of customer focus groups (some of the most boring days of my life).

1% of customers are continually opening and closing cards and gaming the sign-up bonuses. This is probably the "best" way to maximize your earn on credit cards, but it is far too big of a pain for most people (including me). These customers cost us money so we don't really like them, and all banks are putting limits on how many cards you can open in given time periods to reduce this behavior. Having said that, we don't spend a ton of time thinking about them. It's a small number of customers, and while we lose money, we are losing like $1K to $2K. It's not great, but we care a lot more about the sophisticated fraudster who has figured out how to spend 3 times his limit and gets us for $100K.

5%-10% are doing what Pelado does, holding multiple cards and carefully planning their spend to maximize their return. I work with a woman who keeps a sticky in her wallet to help her choose which of her 5 cards to use. She needs this because two of them are rotating ones (so this quarter you get 5% on gas, next quarter it may be grocery stores).

50%-60% want to maximize their rewards, but really don't want to put time and effort into it. So they do some research and pick a card, and then use this card exclusively, or possibly with an alternate that they use in limited cases. A lot of issuers moved over the last 5 years or so from leading with cards that had different tiers to instead going with a card with a flat 1.5% cash back partly because this segment is so big.

The rest, 40% or so, don't really pay that much attention to the rewards, and/or have no clue. I mentioned focus groups above. We always have fun at these as we listen to our customers completely misrepresent the product they use. A few years back, while I was at Bank of America, we did a big series. And when we did a panel of our own customers, we would always ask "What do you like about your Bank of America card?" At the time, we didn't have a card with a flat reward amount over 1%, and we would ALWAYS get customers would would say "I love my BAC card because I don't need to worry about what card to use. I know I am getting 2% cash back on everything" (as an aside, if you have ever done a focus group, they will usually say something like "You will notice the mirrors on this wall, behind that are just a few of my colleagues who are making sure we get everything you say" They imply that there is no one from the actual company there. That is a lie. We are there, eating junk food, and laughing (quietly) at the stupid things people say).

I actually have one of those cards, too - it's a Chase Freedom card, and I've had it longer than any of the other cards I listed above. It gets 5% rewards for the bonus category, so one might think that it's a lot better than the other reward cards, but it has certain limitations that make it not worth the hassle to me.

First and perhaps most obvious, the bonus category rotates each quarter. So It can be a bit difficult to keep track of.

Next, the 5% only applies to the first $1,500 of spending on that category in the quarter. The amount that I would otherwise earn for any particular category would be between 1.5-3%, depending on the category. So the greatest benefit I could get would be to spend exactly $1,500 in the quarter for a category that would otherwise be 1.5%. So the most I could be missing out on is 5,250 points per quarter [$1,500 x (5 - 1.5)]. If I were to redeem that for cash, it would result in $52.50 - or $17.50 per month. And that's the most it can possibly be, which is not likely to be the case very often.

However, if I don't track it well enough and spend over $1,500 in that category for the quarter, then - for that additional spending - I'm only getting 1% back and losing out as compared to any of my other cards.

Next, the category selected for a particular month could easily result in very little spend. For example, this month the bonus category is grocery stores, along with Target and fitness clubs. You'd think it would be easy to accumulate $1,500 in spending there, right? Unfortunately, it excludes most of the places we shop - Costco, Walmart, etc. Another grocery store we frequent - Winco - doesn't accept credit cards. Target isn't very convenient for us. Fitness clubs and other subscriptions are great for bonus categories from the bank's perspective, because people are unlikely to switch the card being used for those subscriptions once the quarter has ended.

To me, the rotating bonus category juice isn't worth the squeeze.

[Bo Diddley]

The value of the redeemed award travel outstrips what I could have purchased with cash back rewards. If you don't have interest in redeeming the points for travel, then cash back probably makes a lot more sense.

My recent booking isn't a completely fair comparison because my goals in booking what I did revolved in large part around getting the best value for my points. That said, a comparison can still be instructive.

Combining my United and Southwest itineraries, I used under 284k reward points for the trip. If I had cashed out 284k Ultimate Rewards points, I would have had $2,840 to work with for a cash fare. Out of curiosity, before I booked the award flights, I looked up what the cash fare would be for the exact itinerary I had selected. It would have cost over $17,000. So, for that itinerary, using points was over $14,000 better than paying cash.

I just did a quick Expedia search and selected the least expensive flight for each leg of the journey. It came back at $11,591, so using the points was only about $8,751 less expensive. It does have the benefit of being more direct - fewer stops, shorter travel time - but I don't mind a couple extra stops or a little more time in the air if it saves me over $8k.

If I had been looking for the best value on a cash fare, it's unlikely that I would have selected that exact itinerary, but it is an example of how much better points can be than paying cash.

When I flew to the motherland after the Queen died, I found that booking with points was significantly cheaper than paying cash. I love the direct flights from SLC to LHR. It cost me 142,000 points, but would have been around $1900 or more if I paid cash. Points seem to lose value over time, but perhaps it's advantageous to have some in the bank for spontaneous travel.

[Pelado]

When I flew to the motherland after the Queen died, I found that booking with points was significantly cheaper than paying cash. I love the direct flights from SLC to LHR. It cost me 142,000 points, but would have been around $1900 or more if I paid cash. Points seem to lose value over time, but perhaps it's advantageous to have some in the bank for spontaneous travel.

Coincidence that your flight ended up costing pretty much the same per person as ours? Was that for business class?

Which reminds me, after talking over the itinerary with my wife, I actually modified the trip. It will start about a week later than we'd originally scheduled. The flight to London will get us there about 10 hours quicker than the prior itinerary. We're now flying into Venice from Paris instead of Florence (though I'm still planning plenty of time in Florence and Tuscany). The flight to Venice will have a shorter layover than what was scheduled for Florence. The flight back from Rome routes through Zurich instead of Brussels. We'll also have two more days total in the trip. So between getting to London faster, getting to Venice faster, and two more full days, we should be able to fit in more than the original schedule (or get more rest between the activities).

We were scheduled to have a 12-hour layover in Brussels. I was thinking it could be good to leave the airport, see a few sights, and then check back in at the airport a couple of hours or so before departure. Then I realized that the layover started at 11 pm local time. The idea of leaving the airport to explore the city didn't seem as exciting when I realized that. It would be too late to go and do anything, and there weren't a lot of good inexpensive hotel options near enough to the airport that it would be worth leaving. Our business class flight would grant us access to the Loft (BRU's business-class lounge) which has nap rooms, but the lounge would be closed until 5 a.m.

So now the return flights route through Zurich but for even longer - 15 hours. It arrives a bit earlier and doesn't depart until after 1 pm. So we're going to get a hotel in Zurich and hopefully check out the city a bit that morning before returning to the airport. We'll be in the air for less time than the flights going through Brussels.

One downside to the new itinerary is that instead of being in United Polaris on the flight back to Chicago, we'll be in Swiss Airlines business class. It should be relatively comparable, but flying business class on an alliance airline doesn't allow us access to the Polaris lounge when we arrive in Chicago, like we would have gotten had we flown Polaris. Oh well.

The other downside is that the change did cost me an additional 20,000 miles through United, which was partially mitigated by saving over 4,000 miles with the corresponding changes to our Southwest flights.

[Bo Diddley]

Coincidence that your flight ended up costing pretty much the same per person as ours? Was that for business class?

Economy. I had a couple of empty seats next to me, so I was able to stretch out a bit.

[Pelado]

Economy. I had a couple of empty seats next to me, so I was able to stretch out a bit.

Noice. I'm surprised it wasn't more full. My wife was adamant that we not be anywhere near England on May 6 - the date of the coronation for King Charles III - because she didn't want to deal with the crowds. Pretty much the only current events she's ever aware of.

[Bo Diddley]

Noice. I'm surprised it wasn't more full. My wife was adamant that we not be anywhere near England on May 6 - the date of the coronation for King Charles III - because she didn't want to deal with the crowds. Pretty much the only current events she's ever aware of.

One thing to pay attention to is the strikes that are ongoing in the UK. I'm also reading about some in France. There's a tug-o-war going on right now with the recent inflation and economic problems.

[Jeff Lebowski]

One thing to pay attention to is the strikes that are ongoing in the UK. I'm also reading about some in France.

Ha. There is always some kind of strike going on in France.

[Bo Diddley]

Ha. There is always some kind of strike going on in France.

And the UK lately. The tube line next to our hotel was closed one day on our trip last summer. We were able to use buses to get around it.

[Moliere]

Ha. There is always some kind of strike going on in France.

On our most recent Italy trip there was a strike tans we were lucky to make one leg of the trip. We paid through the nose for train tickets and had to separate everyone in the group. The nice thing about European strikes is they always make sure some base level of transportation is running.

[Commando]

First time in Maui- it was awesome. Was there a week, did all the things, and decided there is a 10-day minimum for Maui vacations.

[falafel]

First time in Maui- it was awesome. Was there a week, did all the things, and decided there is a 10-day minimum for Maui vacations.

Sounds fun. I did Maui a few years ago. I'm not sure what else I was missing that I didn't do in my 6.5 days.

[Pelado]

Sounds fun. I did Maui a few years ago. I'm not sure what else I was missing that I didn't do in my 6.5 days.

It's probably best that way. If you'd known what you were missing...something despair something something.

[falafel]

It's probably best that way. If you'd known what you were missing...something despair something something.

Go ahead, live your life in the dark. I refuse.