Capital One adds PayPal redemptions, but not great value

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Yesterday, Capital One announced a new redemption option coming soon for some cardholders: card members can redeem Capital One Rewards miles or cash back when they check out using PayPal, without needing to log in to a rewards portal.

The Deal

  • Capital One Venture, Quicksilver, Savor, and Spark Business cardholders will soon be able to redeem their rewards while checking out via PayPal (without needing to log in to a rewards portal)

Quick Thoughts

This should be rolling out to accounts beginning today. Capital One tells us that to take advantage of this option, you’ll need to link an eligible Capital One credit card to your PayPal wallet and enroll in this program when doing so.

If you already have a qualifying Capital One credit card in your PayPal wallet, you will begin to get enrolled in the Pay with Rewards program over the coming week — but if you add a new qualifying card to your PayPal wallet starting today, I believe you’ll be prompted to enroll in this new program.

Unfortunately, redemptions here are a poor value. If you have a cash back card, you’ll be able to redeem $1 in cash rewards for $1 in value toward your purchase with PayPal. That’s not necessarily bad, though I’d personally rather use the credit card to pay for the purchase and earn rewards and then take a check from Capital One for cash back (and pay off the bill with it perhaps).

In other words, if you have $100 in cash back rewards on your Savor card, you could redeem it for $100 toward a purchase when checking out via PayPal. Alternatively, use your Savor card to pay for that purchase and earn at least 1% cash back ($1) and then redeem your $100 in cash back for a check and use that money to pay your $100 credit card bill. You’d come out a buck ahead. A dollar may not seem like much, but coming out 1% ahead over the long term certainly adds up (and if you have a different credit card that would earn at least 2% back on that purchase, you could be $2 ahead of the game, etc). Again, redeeming your rewards dollars for the purchase isn’t a terrible deal, but neither is it great.

When using miles cards at checkout, 125 miles are worth $1 in redemption value when checking out with PayPal, which stinks in my opinion. That means each point is worth eight tenths of a cent and is a poor value to accept for Capital One miles given that they are worth 1 full cent each when redeemed against travel purchases (or potentially more if leveraging transfer partners). When you stack the above explanation as to what you’re losing on top of the already-poor-value for miles, I just wouldn’t be interested in using miles for this type of redemption. The only scenario where it might make sense is if you’re trying to use up a small balance of points leftover after redeeming the bulk of your rewards.

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