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Are All Miles Cards Now Obsolete?

Discussion in 'questions. answers. conversations.' started by Bill DAB, Jun 7, 2019.

  1. Bill DAB

    Bill DAB Reader

    Bank of America now offers a 3% cash back on travel. No limit and no annual fee. I don't remember any airline or hotel points being worth even 2 cents so isn't this a game changer? What am I missing?
     
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  2. rickyw

    rickyw Well-Known Member

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    It all depends what your goals are. Yes, 3% cash back on travel is very attractive. But, that’s just straight cash back. On the other hand, you could earn up to 5X points for some transferable cards.

    Take for example, you want to redeem your points for First Class to Europe, which would cost around 90,000 Amex Points depending on which program you choose. Assuming you are starting from zero balance, that means you would need to spend $18,000 on your card to earn enough points for that flight.

    On the other hand, you have the Bank of America card with 3% back. Let’s say that First Class flight would cost $9,000 in cash. You would need to spend $300,000 on your card to get $9k in cash back to cover that flight.

    It’s Friday evening so my math may be off, but hopefully that makes sense. The Bank of America card is excellent if you value cash back more than points. It all depends on how you want to use your credit card benefits!
     
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  3. MidSouth Skier

    MidSouth Skier Well-Known Member

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    Your statement says it earns 3% back "on travel". But what does it earn in other categories? I don't know about you but the vast majority of my purchases are not in the travel category but are on everyday items like groceries and dining.

    I have a Amex Blue card (no longer available) that earns 5% cash back at groceries (after first $6000 in purchases) and my Amex Gold earns 4x Membership Rewards points for dining. Ben values those MRs at 1.7 cents each so that's like 6.8 cents for every dollar I spend eating out (something I do a lot).

    And then if the MR points can be parlayed for more than 1.7 cents on a plane ticket I come out even further ahead. Of course to do that I'm limited by award availability.

    But there is absolutely a place for cash back cards in a well-rounded card portfolio.
     
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  4. Gia

    Gia Well-Known Member

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    My credit union offers 3% on travel, 2% on everything else, redeemable for travel purchases. Like @MidSouth Skier said, for most of us, myself included, most spending is not on travel. Even with high business travel of over $40 thousand I still spend a lot more on non-travel expenditures. I’m holding eight credit cards and they all work for me. Fortunately, my total annual fees are down to under $350. Every person’s particular situation requires a tailored approach to card acquisition and spending strategy for optimal results.
     
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  5. Gaurav

    Gaurav Well-Known Member

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    @Gia is that net or gross for your AF totals?
     
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  6. Gia

    Gia Well-Known Member

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    @Gaurav - It’s gross for all business travel - air, rail, ground transportation, and hotel. The air was just under $25 thousand last year.
     
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  7. Gaurav

    Gaurav Well-Known Member

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    Oh, I meant your annual fees. Is that the total you pay or do you count credits that offset the fees? I struggle in this area, dithering too much about which cards to close sometimes.
     
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  8. Gia

    Gia Well-Known Member

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    @Gaurav - I thought you meant air fare. My annual fees are net. In the last year I’ve spent all my hotel points and have cancelled hotel cards, preferring to go free agent. I still use AA for business travel but I only use their card now for flight purchases. My RDM is very high and those miles are used for award flights on partner airlines for vacation travel. The rest of my points and miles are spent on hotel redemptions. In the last year, I’ve closed four and opened two and barring any crazy too-good-to-pass-up offers, I’m set for a while, at least as I write!
     
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