A new transferable currency hierarchy (on Nick’s mind)

Before this week, I think that most points and miles enthusiasts would have easily placed Amex Membership Rewards points and Chase Ultimate Rewards points indisputably at the top of the transferable currency world (we can quibble about which is the king, but I think most of us would agree that these have been the two major players). Citi has long played a distant third, missing a transfer partnership with a major US legacy carrier and missing any hotel transfer partner since they lost the Hilton portfolio. Then Capital One debuted its transfer partner program in 2018. With differing transfer ratios (2:1 or 2:1.5) and a limited set of partners at the outset, I think it was widely accepted that transfer partners were a great addition, but that the Capital One Rewards ecosystem wasn’t the type of program that was going to compete with Amex, Chase, and Citi.

But then Capital One went and really shook things up this week by adding new valuable transfer partners and a 1:1 transfer ratio tier with some of its most useful partners (See: Capital One ups their game, adds Turkish and some 1:1 partners, airport lounges). Plus, Greg actually got approved for a Capital One Venture credit card and then at least a few readers also reported approvals. All of this news has me reconsidering the Capital One program and how it stacks up against competitors. There are reasons below why Capital One is still behind other programs, but in terms of transfer partner relationships, Capital One is no longer sitting at the kiddie table.

Capital One’s key weakness is now lack of bonuses

Update: A few hours after publishing this section arguing that the key weakness of Capital One are a lack of category bonuses and welcome bonuses, reader Kent shared a tip that led us to report that you can convert cash rewards earned on Capital One cards to miles. That creates the potential for some bonus categories and accumulation of points through multiple welcome bonuses. See this post for more and note the positive data points in the comments: Huge if true: Convert Capital One cash rewards to miles by moving rewards.

To me, one of the most fascinating things about Capital One’s ascent is the way they seem to be paying attention to the frequent flyer community (you can’t tell me that they had Turkish Miles & Smiles in mind as a future transfer partner addition when they debuted transfer partners in 2018). The other thing that stands out strongly is the very different approach they are taking to rewards — both for better and worse.

While the one-card strategy doesn’t appeal to me, Capital One has successfully created an all-in-one credit card that could be someone’s only credit card, offering both solid redemption value against travel purchases and the potential for massively outsized value via transfer partners. By contrast, Chase has a program and cards that encourage a customer to open 3 different credit cards from the same issuer in order to maximize rewards in multiple bonus categories and also get reasonable return on everyday spend. Capital One is clearly focused on a different type of customer.

Of course, therein lies the key weakness for Capital One from my perspective: there are no bonus categories to boost your mileage earning. Furthermore, there are 2 personal cards that earn Capital One miles (only one of which has a worthwhile bonus and ongoing return for spend) and on the business side there are 2 cards which are basically clones of the personal cards. There is both a public shopping portal and portal-like offers within the Capital One login, but neither offer the opportunity to earn more Capital One miles (they just offer cash back). There is very, very little ability to juice up your Capital One miles balance via welcome bonus and no chance to do so via bonus categories, so the only practical option for building up points is everyday spend at 2x. That’s a slow slog for the average individual.

Now that Capital One has gotten serious about its transfer partner program, I would love to see them get equally serious about offering a range of cards that suit different customer needs. Obviously another key would be approving applicants for those cards, though Greg’s recent approval and a few reported by readers certainly are encouraging signs.

All of the above is to say that Capital One is clearly behind the competition in terms of opportunities for increased earning rate. But what about in terms of actual transfer partners? Where do they fall in against Amex, Chase, and Citi?

Amex Membership Rewards vs Capital One transfer partners

What Amex has that Capital One doesn’t: ANA, Virgin Atlantic, Delta, Hawaiian, Choice Privileges

What Capital One has that Amex doesn’t: Accor Live Limitless, Wyndham, EVA, TAP, Turkish, Finnair Plus

Quick Thoughts: Capital One offers two great partnerships that Amex is missing in Wyndham Rewards (great for Vacasa vacation rentals) & Turkish Miles & Smiles (great for domestic United flights and other sweet spots). Amex doesn’t have a great answer for vacation rentals despite having a few hotel partnerships, but from an airline perspective ANA offers incredible value for flying Star Alliance internationally (meeting, beating, or nearly tying many of Turkish’s international sweet spots). Virgin Atlantic is declining in usefulness with the recent Delta devaluation and the value of Delta as a transfer partner could be debated, but the fact is that overall I’d still give a slight edge to Amex because of the sweet spots available via ANA and Virgin Atlantic and the potential usefulness of Delta SkyMiles for domestic flights. When you also consider the broad range of Membership Rewards credit cards and the ability to earn 2x on unbonused purchases with the right Amex credit card, the pendulum swings more heavily in Amex’s favor.

Chase Ultimate Rewards vs Capital One transfer partners

*Note that Chase partners shown with ratios different than 1-to1 are indirect partners accessible via third party programs. See the Chase transfer partners page for more detail on indirect transfer partners.

What Chase has that Capital One doesn’t: Hyatt, Southwest, United, Virgin Atlantic, Marriott, IHG

What Capital One has that Chase doesn’t: Air Canada Aeroplan, Wyndham, Avianca, Cathay, Etihad, EVA, Qantas, Turkish, Aeromexico, Alitalia,  Finnair, TAP Air Portugal, Finnair

Hyatt is the darling of loyalty programs. Between a reasonable award chart and the best top-tier elite status, there is a lot to love about Hyatt and I would argue that Hyatt alone has kept Chase Ultimate Rewards transfer partners relevant. However, Capital One has an answer in Vacasa vacation rentals booked via Wyndham. While a vacation rental won’t provide you will free breakfast, housekeeping, and a club lounge, it will give you an entire house for 15K points in some cases. Beyond the Hyatt-vs-Vacasa discussion, the other partners Chase offers over Capital One are Southwest and United (both potentially good for domestic flights), Virgin Atlantic (discussed above in the Amex section), and inferior hotel partners that rarely make for a good transfer from Ultimate Rewards (note that on the other side Capital One has Accor and will soon have Choice).

While Chase offers partnerships that could be handy for domestic flights in Southwest and United, Capital One has some equally good (or in many cases better) domestic flight options in Turkish, Avianca, Qantas, and Etihad. Capital One also offers better options for international premium cabins, particularly on Star Alliance through Turkish or Avianca, but also on American Airlines via Etihad and oneworld via Cathay Pacific Asia Miles). If you remove Hyatt, in my opinion Capital One clearly has superior transfer partners — and I think the overall strengths there compensate for the loss of Hyatt. From a credit card portfolio and bonus category perspective, Chase has Capital One stomped, but if I’m putting a dollar of unbonused spend on a credit card I would use my Venture over the Freedom Unlimited. This one is a tight race that Capital One would win with a few more credit cards in its portfolio.

Citi ThankYou points vs Capital One transfer partners

What Citi has that Capital One doesn’t: Virgin Atlantic, Qatar, Jet Airways, Malaysia, Thai

What Capital One has that Citi doesn’t: Air Canada Aeroplan, Avios, Wyndham, Acccor, TAP Air Portugal, Finnair

The only really useful partnership that Citi has that Capital One doesn’t is Virgin Atlantic — and as noted above, the usefulness there is declining with the recent Delta devaluation. The ability to book ANA first class one-way via Virgin Atlantic is nice, but overall I think that access to Aeroplan, Avios and Wyndham via Capital One (in addition to all of Capital One’s other partnerships) clearly gives Capital One the edge here.

Some will argue for Citi being superior because of the Double Cash’s ability to earn 2x with all partners and the 10% rebate with the Rewards+ card, but I’d argue that the value of Capital One’s hotel partnerships and additional airline programs outweighs those things overall (and that Capital One earns the same effective 2x in most of the best partners that they share). If you know you are going to transfer miles to a specific program that is 1:1 via Citi and 2:1.5 via Capital One, then it certainly makes sense to use a Double Cash card, but if we’re comparing overall strength Capital One is clearly superior here in my opinion.

What does it all mean?

In head-to-head comparison, I think Capital One clearly has better partnerships than Citi. I think Amex has better partnerships than Capital One. I know that many enthusiasts will want to fight me for the mere suggestion that Capital One can compete with Chase, but I think from an unbonused spend perspective Capital One is stronger. However, I can’t ignore my Ink Cash card’s 5x at office supplies and the entire range of Ultimate Rewards welcome bonuses to gather, so in my opinion, here’s the new transfer partner hierarchy overall:

Amex Membership Rewards > Chase Ultimate Rewards > Capital One > Citi ThankYou

Look no farther than the comments for folks who will disagree with me putting Membership Rewards at the top, but I’ve written before about its strengths over Ultimate Rewards.

More interestingly, I think Capital One has clearly moved up a notch this week and has positioned themselves to rise further if they ever add bonus categories and a few more cards to their portfolio. Indeed, if there were a couple of Freedom-like or Ink-like cards in the Capital One portfolio, they could begin jockeying for a higher position on my list. As it is, the Venture card is at the top of my wallet this morning collecting me Wyndham points — I booked my first Vacasa rental yesterday and I’m eyeing several more for later this year.

Of course, Capital One also has to approve people for its cards. It has long been difficult for people who have opened many cards to get approved for a Capital One card. Here’s hoping that will change because I think there is reason to question the conventional transfer partner hierarchy already — with a few tweaks, Capital One could be a contender.

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