When NOT to Use a Miles/Points Card
Aug. 26th, 2024 08:23 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
canyonwalkerThe other day I wrote about the 2% cash-back credit cards I own. Cash-back cards like these are great options for people who want to get into the game of cards that pay dividends but don't want the complexities of redeeming points with airlines and hotels. As I've explained before, airline/hotel affinity cards are only worth it if you travel regularly.
"Wait," you might wonder, "You travel a lot, why do you use a plain, 2% cash-back card so much instead of your travel cards?"
First, I do use my travel cards a lot. My most used card last year was an airline card I hit with $40k of charges. The situation is that I use cash-back cards also.
Second, the reason that I use plain cash-back cards also is that one of the complexities of travel cards is that for many categories of charges, travel cards are not worth it. 😧 Generally the points earning structure on these cards is something like, "Earn 3x points per dollar on purchases with the airline, 2x on select partners, and 1x on all other spending." The 1x on everything else isn't worth it as the points are worth way less than 2%, sometimes less even than 1%.
There are other benefits, though, besides the straight points value with airline/hotel cards. But then most also charge annual fees. These have to be factored into the equation. I use points-and-miles cards when the benefits I earn are worth more than 2%, I use 2% cash-back cards otherwise, and I'm thorough about knowing the difference. That's why I share these analyses under the tag, What's in YOUR wallet?.
"Wait," you might wonder, "You travel a lot, why do you use a plain, 2% cash-back card so much instead of your travel cards?"
First, I do use my travel cards a lot. My most used card last year was an airline card I hit with $40k of charges. The situation is that I use cash-back cards also.
Second, the reason that I use plain cash-back cards also is that one of the complexities of travel cards is that for many categories of charges, travel cards are not worth it. 😧 Generally the points earning structure on these cards is something like, "Earn 3x points per dollar on purchases with the airline, 2x on select partners, and 1x on all other spending." The 1x on everything else isn't worth it as the points are worth way less than 2%, sometimes less even than 1%.
There are other benefits, though, besides the straight points value with airline/hotel cards. But then most also charge annual fees. These have to be factored into the equation. I use points-and-miles cards when the benefits I earn are worth more than 2%, I use 2% cash-back cards otherwise, and I'm thorough about knowing the difference. That's why I share these analyses under the tag, What's in YOUR wallet?.
