Don’t fall for 4x hype when you can earn more


A new offer recently debuted on the IHG Rewards Club Premier credit card. See this post for full details on that offer, but in a nutshell what makes this offer stand out is its eye-popping bonuses for first year spend: get 25x on IHG spend plus 4x “everywhere else” for the first year. With the current Simon Mall $1K Visa Gift Card promo now extended to October 31st, a couple of readers have asked whether they should consider this card to earn 4x on those purchases for the first year. The answer is absolutely not.

Bora Bora United San Francisco to Tahiti

The Offer

As a reminder, here’s the offer and card  information:

Card Offer and Details
140K Points ⓘ Affiliate
140K points after $3K spend in 3 months
$99 Annual Fee
This card is subject to Chase's 5/24 rule (click here for details).
Recent better offer: 175K after $3K in spend (expired 4/6/23)
Earning rate: 10X IHG ✦ 5X travel, dining, and gas stations ✦ 3X on all other purchases
Base: 3X (1.89%)
Travel: 5X (3.15%)
Dine: 5X (3.15%)
Gas: 5X (3.15%)
Brand: 10X (6.3%)
Card Info: Mastercard World Elite issued by Chase. This card has no foreign transaction fees.
Big spend bonus: 10K bonus points + $100 statement credit after you spend $20K in a calendar year + make one additional purchase ✦ Diamond status after $40K in purchases + one additional purchase in a calendar year
Noteworthy perks: Anniversary free night e-certificate good at IHG properties up to 40K points per night ✦ Ability to add an unlimited number of points to a free night certificate to book a higher-level hotel ✦ Fourth night free on award stays ✦ 20% discount on points purchases ✦ Platinum elite status ✦ Up to $50 in United TravelBank cash per year (must register your card with your United account) ✦ $10 monthly GoPuff credit (through 12/31/23)

Does this card make sense for anyone?

This card definitely can make sense for some folks. A few groups who likely find this card appealing include:

  • Those who spend a lot at IHG hotels
  • Those with a use for the welcome points
  • Those who can make good use of 4th night free on award bookings
  • Those who have the old card and can therefore stack 10% back on award stays with the 4th night free for an even better deal

There are probably a few other groups I’m missing. The group that’s notably absent: people who want to earn 4x IHG points per dollar.

4x everywhere in IHG points is not special

In the loyalty point game, it’s easy to fool ourselves into overestimating our return on spend. For example, let’s say that you’re planning an epic honeymoon, anniversary trip, etc. Imagine you intend to use your IHG points at the Intercontinental Thalasso Resort & Spa in Bora Bora, French Polynesia. That property ordinarily charges 70,000 points per night when you can actually find availability.

Compared against the room rate of close to $1400 all-in, one might think of it as getting 2 cents per point in value. If you aim for redemptions like that, the ability to earn 4x everywhere could look pretty appealing. Even if you only redeem at 1c per point in value, earning 4x everywhere — like on Simon gift cards — looks great, right?

The problem here is in valuing your points based on redemptions. Don’t get me wrong — I like getting eighty-three bajillion cents per dollar on my redemptions as much as anybody: but as Greg has previously noted when revamping our Reasonable Redemption Values, the way you redeem your points isn’t necessarily a good way to measure the value on the earn side.

In reality, IHG frequently sells points for half a cent each. Sometimes you can do even better with a cash and points booking (we recently highlighted the since-expired ability to buy points for about 0.384c per point). While IHG does cap you in terms of the number of points you can buy per year directly from them, there is no cap on the points & money trick to my knowledge — meaning that you can essentially buy as many IHG points as you want for about half a cent per point or less. The chance to buy IHG points for half a cent each is so commonplace that we don’t always publish a quick deal when it comes around (but you can search this site for “Buy IHG” to see some recent opportunities).

To put this into clear perspective for those who are new to the game, let’s imagine MSing a night at the Intercontinental above. You would need to spend $17,500 at 4x to earn 70,000 points. To keep the math simple, let’s suppose you buy eighteen $1K Visa Gift Cards at Simon.

18 x $1,000 VGC + $3.95 activation fee = $18,071.10
Points earned at 4x = 72,284

Your cost thus far is $71.10. Supposing a further cost of $1 per thousand to liquidate, your total cost is around $90. That truly sounds amazing compared to the nightly cash rate approaching $1400 per night at the Intercontinental Thalasso.

However, it isn’t really special.

A common point of comparison that’s worth making is what you could alternatively earn with a 2% cash back credit card. There are several cards on the market that earn 2% cash back with no annual fee (the Citi Double Cash earns 1% when you buy and 1% when you pay for an effective 2% or the Fidelity Visa earns 2% back). Let’s say you used one of those cards to purchase $18,071.10 in Visa Gift Cards.

$18,071.10 * 2% = $361.42.

Cost is the same — around ninety bucks, But now cash gives you the ultimate flexibility. If you want to buy points, great — you can buy enough points for the IC Bora Bora:

$361.42 / 0.005 = 72,284

As you can see, that’s exactly the same number of points with a no-annual-fee cash back card. Those cards earn 2% cash back all the time — not just in the first year. And with cash back, you have added flexibility. Did you just see some crazy $200 per night rate at the Conrad Bora Bora? If you’re earning cash back, book it. If you’re earning 4x IHG points, too bad — no Conrad Bora Bora for you.

And that’s not considering other limited-time offers that are more comparable to the IHG 4x everywhere-for-a-year offer. The Discover IT Miles card earns an effective 3% back everywhere for a year since the cash back earned (normally about 1.5%) is doubled at the end of the first year. The Alliant cash back Visa earns 3% in the first year. If you instead used one of those cards, these would be your totals:

$18,071.10 x 3% = $542.13.
$542.31 / 0.005 = 108,426

In other words, using a cash back card could yield you north of 100,000 IHG points or you could even consider buying just the 70K points you need for a night at the Intercontinental Thalasso Bora Bora for $350 and have $172 left over in your pocket.

Another way to look at it is that if you can regularly buy IHG points for half a cent each, getting 2% cash back is giving you the equivalent of 4 IHG points back per dollar (since you can use that $0.02 to buy 4 IHG points). Two percent cards don’t only offer that return for year 1; that’s just the ordinary earning structure of the card. Those cards which earn 2.5% or 3% back are essentially earning 5 or 6 IHG points everywhere. In other instances, you might be able to earn a good category bonus when MSing at office supply stores or US supermarkets and then find a way to turn points into cash, turning an even better deal. Again, keep in mind that with cash back, you’re not locked into using it at IHG if you find some better use of the cash (like the Air Tahiti plane transfer to get to Bora Bora!). In other words, that “4x everywhere” is not a special return and can be matched or exceeded with cash back alternatives.

Bottom line

The ability to earn “4x everywhere” sounds exciting. And with Simon Malls having recently extended their sale of $1,000 Visa Gift Cards until 10/31, you might be tempted by the new IHG Rewards Premier card offer for the chance to load up on easy points at Simon Malls. But don’t fall for that: the rate of return is not special and can be easily met or exceeded with cash back cards. It’s important to note that I don’t think the IHG Rewards Club Premier is a bad choice: it has a great welcome offer, decent ongoing benefits in the annual free night certificate, 4th night free on award stays, etc. There are reasons to consider applying for the card, 4x everywhere just shouldn’t be one of them.

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