Should YOU abandon Capital One?

Following my experience with Capital One shutting down my new Venture card without warning and cashing out my points for only a half cent each, people keep asking if they should use up their Capital One “Miles” and cancel their cards.  Understandably, no one wants to get the same “no points for you!” treatment that I got.

In recent years, Capital One’s “Mile” cards (Venture and Spark Miles) have drastically improved for points and miles enthusiasts.  First, they added airline and hotel transfer partners.  Initially, all transfers were at ratios less than 1 to 1 (1,000 to 750 or 1,000 to 500).  Then, recently, they added additional transfer partners and changed some transfer ratios to 1 to 1 (see: Capital One Transfer Partners for an up-to-date list).  And I announced that Capital One “Miles” no longer make me mad (because you now really can earn 2 airline miles per dollar).  We also learned that Capital One cash back can be moved to a “Mile” card and then transferred to airlines and hotels.  This opens earning opportunities well beyond 2x.

While Capital One’s transferable points program has gotten better and better, my shutdown experience has people worried.  I almost always advocate keeping transferrable points as transferrable points until you need them.  That way, you can truly maximize value and avoid most of the pain of mileage program devaluations.  But if there’s a real risk of getting shut down, then keeping your points means risking getting the same abysmal value I got: a half cent per “Mile” (as an aside, I am contesting this situation, but that’s where things stand right now).

Low Risk for Most

I believe that most people have very little risk of getting shut down by Capital One.  If shutdowns like mine were common, I think I would have heard about this from many readers and would have read about it in many blogs.  Neither is the case.

From my limited experience, I do think that some people have significant risk of shutdown:

1. Previous Capital One Shutdown: If you’ve ever had an account shut down by Capital One in the past, it seems that their systems eventually figure that out and shut down your new account.  This is what seems to have happened to me (my Capital One 360 account was shut down years ago, due to an innocent mistake).  And a couple of readers have reported the same treatment.  Also, Miles Per Day commenter, girlmeetsworld, reported a similar experience in January 2018: “Just had a second shut down from Cap One this week. Prior shut down was just over a year ago. They let you back in, though I didn’t MS on new card, just spent enough to get sign-up bonus.”
2. Heavy manufactured spending: Manufactured spending (MS) is the process of increasing credit card spend in order to earn rewards while getting most of your money back to pay the credit card bill.  This is often done by buying debit gift cards that can be used to buy money orders or to pay bills.  I haven’t seen many examples of people being shut down by Capital One for this, but Miles Per Day offered up an example here: Reader – Capital One shut down my account for MS.  For more about manufactured spending, see our Manufactured Spending Guide.
3. Suspicious activity:  I don’t have any real data regarding this, but I’ve previously warned against the following types of activity in order to avoid Chase shutdowns (see: Why Chase shutdowns have increased and how to avoid them):
   • Avoid using your card to purchase convenience checks or to get cash advances.
   • Avoid multiple payments to your credit card within one billing period from different accounts and different sources.
   • Avoid a sudden flurry of large repeated purchases.
4. Account Inactivity:  Some readers have reported that they hadn’t used their card in a long time and Capital One had then cancelled their card without notice.  This is easy to prevent by making sure you charge something to your credit card at least once every 6 months.

If you don’t fit any of the above risk profiles, then my bet is that you are safe to keep your Capital One “Miles” intact and to use them at your convenience.

Ditching “Miles”

If you decide that keeping your “Miles” around for when they’re needed is too risky, then an alternative is to spend down your “Miles” quickly.  The easiest way to do this is to offset travel purchases for 1 penny per “Mile”.  If you don’t have enough travel spend for this purpose, the next best option is to transfer “Miles” to airline or hotel partners.  If you decide to go this route, here are the best options (in my opinion):

Avianca LifeMiles (transfer 1 to 1)

LifeMiles is Avianca’s loyalty program.  As a Star Alliance airline, LifeMiles miles can be used to book awards on any Star Alliance carrier such as United Airlines, Air Canada, ANA, Lufthansa, Turkish, and many more (as long as partner award space is available).

Pros:

• LifeMiles doesn’t pass along carrier imposed fuel surcharges on award tickets
• LifeMiles offers great award pricing on some routes and especially with mixed cabin awards.  See this post for details: Avianca LifeMiles Sweet Spots.
• Most awards can be booked online.

Cons:

• LifeMiles charges a small booking fee for partner awards.
• LifeMiles imposes hefty change and cancellation fees.
• Anecdotally, LifeMiles support can be difficult to work with, especially over the phone.
• Miles expire after only 12 months of inactivity, but it is easy to keep miles alive since any new inbound miles will reset the clock including buying miles, transferring in miles, earning miles from their shopping portal, etc.

Cathay Pacific Asia Miles (transfer 1 to 1)

Cathay Pacific is a OneWorld airline and so Asia Miles can be used to book awards on any OneWorld carrier such as American Airlines, Alaska Airlines, British Airways, Japan Airlines, Qantas, Qatar, and more (as long as partner award space is available).

Pros:

• Great award prices on very long itineraries when mixing cabin classes.  See: Cathay Pacific Asia Miles mixed cabin award pricing. First class for less.
• Can be used to book some of the best premium products including Cathay Pacific first class, Japan Airlines first class, and Qatar business class.

Cons:

• The OneWorld alliance is much smaller than the Star Alliance and so award space may be harder to find.
• On some routes, British Airways offers the most award space but they pass along ridiculously high surcharges on award tickets.
• Miles expire after 18 months of inactivity, but it is easy to keep miles alive since any activity should reset the clock (including transfers from Amex, Brex, Citi, Chase, or Capital One).

Wyndham Rewards (transfer 1 to 1)

Wyndham points can be used for Wyndham hotels for either 7.5K, 15K, or 30K points per night.  Even better, you can use 15K points per night per bedroom for Vacasa Vacation Rentals where there are some amazing opportunities to get great value.  You can also convert up to 30K points per year to Caesars Rewards to use points for 1 cent each at Caesars properties.

Pros:

• Vacasa Vacation Rentals (and some other Wyndham redemptions) can offer incredible value for your points.
• Capital One is the only major transferable points program that offers transfers to Wyndham.

Cons:

• There are few Vacasa Vacation Rentals opportunities outside the U.S.
• On average, Wyndham points are worth less than a penny each at Wyndham properties.  See: What are Wyndham points worth?
• Wyndham points are very difficult to keep alive for more than 4 years.  See: How I saved my Wyndham points from expiry.

Accor Live Limitless hotel points (transfer 2 to 1)

Accor is a rewards program for a number of hotel brands including Fairmont, Raffles, Sofitel, pullman, swissotel, ibis, and more.  Points are each worth 2 cents Euro towards hotel stays (approximately 2.4 cents USD).  By transferring 2 to 1, this gives you approximately USD 1.2 cents per point value from your Capital One Miles.

Pros:

• Get better value than 1 cent per “Mile” towards Accor hotel stays.
• Optionally transfer Accor points to airline partners.  Most offer bad value, but some are 1 to 1: Finnair, Iberia, Qantas, and Virgin Australia.
• Capital One is the only major transferable points program in the U.S. that offers transfers to Accor.

Cons:

• Few Accor hotels in the U.S.
• Points expire 365 days from accrual, but any new points added to your account should extend the expiry.  Unfortunately, for the purpose of this post, the easiest way to add points to your account is by transferring from Capital One.
• No way to get outsized value for your points except through poor transfer ratios to airline miles.  Even with Accor’s 1 to 1 transfer partners (Finnair, Iberia, Qantas, and Virgin Australia), you would be exchanging Capital One “Miles” 2 to 1 to these airlines (because of the 2 to 1 transfer ratio from Capital One to Accor).

Turkish Airlines Miles & Smiles (transfer 1,000 to 750)

Turkish offers incredibly low award prices for certain Star Alliance awards, but they can be very difficult to work with.  I would recommend this option only for those who have successfully booked awards through Turkish in the past and are confident that they’ll have good uses for Turkish miles going forward.

Pros:

• Cheap domestic award prices (7.5K one-way economy or 12.5K one-way business class)
• Turkish considers Hawaii and Alaska to be part of the domestic U.S. and so prices flights to Hawaii on United Airlines for only 7.5K one way!  Since the transfer from Capital One to Turkish is worse than 1 to 1, this means 10K Capital One “Miles” one-way (which is still a steal)
• Turkish offers many other great award values.  See: Turkish Miles & Smiles Complete Guide.

Cons:

• Booking Star Alliance flights with Turkish Miles can be a nightmare.  The Miles & Smiles website is awful for booking Star Alliance awards.  If you’re lucky, you’ll find what you need and will be able to book it, but that’s very rare.  Other alternatives include calling and emailing.  See details here: How to book United flights with Turkish Miles & Smiles.
• Cancelling or changing flights booked with Turkish Miles can be very difficult (but can sometimes be very easy too).
• Miles expire on December 31st of the 3rd year after they are earned (or transferred in).
• Capital One doesn’t offer 1 to 1 transfers to Turkish.

Bottom Line

I believe that most readers should be able to continue to use their Capital One cards without fear of shutdown.  If that’s you, then I don’t recommend trying to spend down all of your “Miles”.  Instead, use your “Miles” when the opportunity presents itself to get good value.  For those who read the section titled “low risk for most,” and concluded that they are at risk, I’ve listed my recommendations for best transfer options, roughly from best to worst (to be clear: I didn’t list all options, just the ones that I think are pretty good).  Unfortunately, each option has significant downsides which I’ve also listed above.

If I was in a position to transfer out my points, I’d probably go with Wyndham since I can’t get the same points from Amex, Chase, or Citi and I’m pretty sure that I’ll find good uses for Wyndham points within the next few years.  If I had no idea at all how I’d use the points or when, I’d probably instead go with Avianca LifeMiles as the best program for a wide range of flight awards, especially since their miles are easy to keep alive indefinitely simply by either buying a few points every 12 months or transferring some points in from other transfer partners.

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