When are points better than cash & vice versa? | Coffee Break Ep39 | 12-31-24 | Podcast

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The Smartly Credit Card (with opportunity for up to 4% cash back everywhere) has us wondering…when should you value cash back over other points and miles or transferable currency rewards?

Watch the full episode below, or listen on your favorite podcast platform. You can click the timestamps below to navigate directly to a specific part of the episode within YouTube. For a transcript of this episode, click “Watch on Youtube” on the video below, then click the “…more” link in the video description. This will expand full video details. Scrolling down past the timestamps and chapters, you’ll see a “Show Transcript” button. If you’re an Apple Podcast listener, you can touch and hold a podcast episode to reveal an option to view a transcript.

Coffee Break: When are points better than cash & vice versa?

(00:00) – Smartly Credit Card: Up to 4% cash back

Learn more about the Smartly card here.

(00:55) – Using 2x everywhere points card is like buying points for 2 cents each

(04:46) – So, is cash the final answer? No!

(08:41) – So what’s the ideal strategy?

(13:10) – Learn more about the Hyatt milestone spending here.

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Music Credit – Beach Walk by Unicorn Heads

Heads up! Because I solicit team feedback when answering questions on posts like these, it may take some time for me to get to your questions. Thanks in advance for your patience!
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Matt

Thanks so much for this! When we’re not meeting SUBs, we get 6% on groceries with the Amex blue preferred, and 5% on Amazon and Whole Foods. These are the majority of our personal spending.
It is SUBs that have let us do our great trips since we got into this game.
Happy New Year to you all, except the racists.

LarryInNYC

Taking a holistic view of points earning it’s hard to see how this card would fit into most peoples’ plans.

Assuming a family with $50,000 to $100,000 of organic credit card spend (which is pretty generous for most families, notwithstanding that exceptions exist), given that this card has no sign-up bonus or ecosystem, the best you could do would be $2,000 to $4,000 in cash back. That’s not nothing but it’s one pretty modest trip to Europe for two in the off season.

Compare that to earning bonuses on perhaps six new cards between two players for 500,000 points (not difficult if you follow Frequent Miler), plus a few hotel certificates or companion fares conservatively yielding between $7,500 and $10,000 of value along with contributing to the intangible value of elite status. That will consume much of your organic spend, leaving perhaps $20,000 to $40,000 available for cash back earning.

The 4% cash back is a great marquee feature but in the real world I’d rather have points. Lots and lots of points.

Lee

One must factor in likely transfer bonuses into the equation. If the redemption value of a person’s target loyalty program points in less than 2cpp, sure. And, if a person’s target loyalty program points can be purchased for less than 2cpp, sure. But, if a person’s target is (say) Emirates or Singapore, then earning 2X would seem to be the choice. Would you buy Emirates or Singapore points for 2cpp? Sure. So, depending on a person’s targets, the mixed strategy you propose seems reasonable.

If someone with lower assets wants 2.5 percent Cash back with no foreign transactions fees, without the hoops US Bank requires, check out Alliant Credit Union Signature Visa. Which few people talk about.

Last edited 2 days ago by Lee
ffi

I sat on the BofA Plat honors for a while before I did ir as I had both Fidelity 2% and Citi Double Cash.
At some point I understood lost cash and went all in for ALL unbonused spend
Fast forward a few years …
I did NOT wait even a day to sign up for this one

I look at all points as lost cash cost vs points earned – EVEN welcome bonuses
e.g., Korean 30k for 3k spend is 33k for 79$+99$ annual fee = 33k for 178$ = about 0.55c each
AA Aviator 70k for 3k spend = 73k for 79+95$ = about 0.2c each
Hilton 175k card for 2k spend = 53$ lost /175k = 0.03c
Amex business Plat = 100k for 10k spend (695 fee with 600$ coupons) is 115k miles for 263$+95 = about 360$/115,000 = 0.3c each

The smartly card now resets those numbers
The Korean Card is now 120+99$ = 219$/33k = about 0.65c
AA aviator is 215$= 21500c for 73000 miles = 0.3c still a good value
Hilton is 80$ = 8000c/175k = about 0.05c still a great value
Amex Business Plat is 400+(695-600) = 50,000c/115k = about 0.45c

I would continue to do these all day long – just understanding that my cost went up a bit.
For most people who do not play the game well, their opportunity cost went from 2c on double cash to 2.5c with even a small cash balance 5k with USB

No points are free – or were ever free including SUB
The smartly card has raised the cost by 20-50% even if this is an infinitesmal change for some SUB offers
The amount of increase depends on annual fee and size of SUB

Last edited 2 days ago by ffi