Unbiased credit card rankings: enhancements and airline cards


A little over a week ago, I introduced unbiased credit card rankings, specifically for hotel credit card signup bonuses  Since then, I’ve enhanced the methodology a bit and I’ve added unbiased airline credit card signup bonus rankings as well.  You can find the hotel and airline credit card rankings pages in the Credit Cards menu on this site, under the Best Credit Cards subheading.  Or, find them here:


What the heck should I call the estimate?

In order to create an unbiased ranking of credit card signup bonuses, I had to quantify them.  In the original post I detailed the calculations, but I didn’t spill much e-ink discussing the meaning of the result.  And, I may have made a mistake using the word “value”.

The estimate is currently labeled “First Year Value Estimate”.  The “first year” part is fine.  In order to rank signup bonuses, I think that first year benefits are the most important.  Many people who signup for cards for their signup bonuses evaluate the cards at the end of the first year to see if they want to keep, downgrade, or cancel the cards.  Evaluating whether or not cards are good long term “keepers” is important, but that’s a whole different ball game.

The problem, I think, is the word “Value”.  I believe that when people read the word “Value”, they assume I mean redemption value.  That is, I think that people assume that it is an estimate of how much value you’ll get when you redeem points, or free night certificates, or whatever.  I actually think that would be a fantastic metric, but I also think that its almost impossible to estimate (see: Impossible point valuations and the joy of free).

Instead, I based the estimates on Fair Trading Prices.  Fair Trading Prices are based on the idea that people can choose to earn points or cash back when putting spend on a credit card.  And, since 2% cash back cards are readily available, the choice is between earning some number of points per dollar or 2 cents per dollar.  Therefore, when a person uses a card that earns 1 point per dollar, they are inadvertently buying those points for 2 cents each.  If a card earns 2 points per dollar, then the cost is just 1 cent per point.

There is no doubt that Fair Trading Prices are a tough concept to keep straight.  I think it’s useful to think of the estimates as fair price points for buying points & miles.  If loyalty programs allowed buying and reselling points, I think that Fair Trading Prices would be a good reference for figuring out whether the prices are about right.  Given that, we can also think of the signup bonus “First Year Value Estimate” as a fair price in which to purchase this set of stuff (e.g. points, free night certificates, etc.) if it were available for sale.

So… what should I call the estimate?  First Year Trading Price Estimate?  That’s not very intuitive.  Any suggestions?

Speaking of Fair Trading Prices, SPG messed up everything…

You may remember that Amex increased the annual fee for the SPG card from $65 to $95 in August.  What you probably don’t remember is that in March of this year, I added credit card annual fees to the Fair Trading Price calculations.  And, you may or may not realize how important SPG is to many of the Fair Trading Price calculations.  The increased annual fee caused the already high SPG Fair Trading Price (FTP) to go up from 2.16 to 2.26 cents per point.  And, a number of airline FTPs were based on the assumption of transferring points from SPG to the airline program, so these increased as well.  And, hotel FTPs are calculated a bit differently.  They are indexed against Hilton and SPG.  So, most hotel FTPs increased a bit too.

All of the Fair Trading Price changes caused by the SPG price increase are now in-place within the credit card offer calculations.

Other changes

I made a few other changes to the Top 10+ pages:

Bank Name

All credit card names now include the issuing bank name.

Devalued statement credits

I decreased the estimated first year value (or whatever we call this thing) of statement credits that are dependent upon hotel stays or airline purchases and have strict time limits.  Many of these have 3 month time limits.  Since it is likely that many people miss out on these credits, I reduced their value to 25% of face value.  For example, Delta Platinum credit cards offer a $100 statement credit after a Delta purchase is made within 3 months.  I counted this as being worth only $25.  In general, I prefer to be conservative and underestimate rather than overestimate the signup bonuses.

Fixed cost of spend estimate

In order to account for the “cost” of large minimum spend requirements, I previously calculated this cost as: the amount one would have earned with the same amount of spend on a 2% cash back card minus the Fair Trading Price value of points earned from that same spend.  This formula led to a few strange results.  For example, the SPG business card with its $5K spend requirement came out ahead of the SPG personal card with its $3K spend requirement.  Since both cards offer the same signup bonus, I really think the SPG personal card should come out ahead.

Note: I do think that the signup bonus for the SPG personal card is better than the signup bonus for the SPG business card, but the SPG business card has benefits that make it better to have and to hold than the personal card.  Please see: Amex business cards increasingly trump personal cards.

The problem with the calculation was due to the fact that the Fair Trading Price of SPG points is higher than 2%.  So, bigger spend requirements resulted in higher overall estimated value.  That wasn’t good.

To fix this problem, I changed the benchmark from 2% to 3%.  The Discover It Miles card currently offers a total of 3% cash back for all spend in the first year (1.5% is doubled at the end of the year), so it offers a convenient alternative.

Comments enabled

Earlier, the Top 10+ Hotel Credit Card Offers page didn’t allow comments. That was an accidental and unfortunate oversight.  Feel free to comment away!

Next up

The next Top 10+ list I create will likely be for transferable points programs.  I would include all cards that earn Ultimate Rewards, Membership Rewards, ThankYou Rewards, and Starwood Preferred Guest points.  I think that would complete the lists that can be calculated with Fair Trading Prices.

After that, I would turn to cash back and fixed value points.  In those cases, redemption value can be calculated easily.

I don’t think it would ever make sense to mix the lists calculated with Fair Trading Prices and the lists calculated from the actual cash value of the offers.  However, I would consider mixing cards of similar types if people think that would be useful.  For example, maybe I would publish “Top 10+ points and miles credit card offers” and “Top 10+ cashback and fixed value credit card offers”.  Let me know what you think!


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