Why there are no 2X everywhere cards in my wallet

There are two fantastic 2X Everywhere cards available in the US.  No, I’m not talking about Jennifer Garner’s Capital One Venture card.  That’s a good card, and it does earn 2 Capital One “miles” per dollar, but if you want to convert those “miles” to airline miles, you usually end up with only 1.5 airline miles per dollar or less.  Capital One “miles” transfer to airline miles at a rate of 1,000 to 750 (2 to 1.5) or 1,000 to 500 (2 to 1), depending upon the type of miles you want.

Great 2X Everywhere Card Options

The great 2X Everywhere cards that are the focus of this article are the Citi Double Cash and the Amex Blue Business Plus.  Both cards have no annual fee.  Both cards earn the equivalent of 2 points per dollar for all spend.  Both cards offer rewards that are transferable one to one to many different airline programs.  Both rewards programs offer occasional transfer bonuses such that transfer ratios are even better than one to one.

Citi Double Cash

The no-annual-fee Double Cash card is a 2% cash back card at heart.  That’s pretty good, but the thing that makes it exciting is the ability to convert cash back rewards into ThankYou Rewards points.  This then gives you the ability to convert those rewards to airline miles as long as you or a friend has either the Citi Premier or Citi Prestige card as well.  For more, please see: Citi Double Cash Complete Guide.

There are a couple of disadvantages to this card that are worth noting:

• Citi charges foreign transaction fees
• You cannot transfer points to airline miles unless you or a friend has a card which does have an annual fee (either the Citi Premier or Citi Prestige)

Amex Blue Business Plus

The no-annual-fee Amex Blue Business Plus card offers 2 points per dollar for all spend for the first $50K of spend per calendar year.  The card earns valuable Membership Rewards points which are directly transferable to a large number of airline programs, and a few hotel programs too.  Unlike the Citi Double Cash, you don’t need a card with an annual fee to unlock the full power of the Membership Rewards program for transferring points to miles.

There are a few disadvantages to this card that are worth noting:

• Amex charges foreign transaction fees
• 2X earnings are capped at $50K spend per calendar year (then 1X)
• This is an American Express card, so it is not as widely accepted as the Citi Double Cash (which is a Mastercard)

The best “everywhere else” cards

Using our Reasonable Redemption Values (RRVs) to estimate how much each point is worth, we are able to use our credit card database to display the cards that offer the best value for “base” spend.  Base spend is any spend that does not qualify for a category bonus.  Here are the top 5:

At the time of this writing, the Amex Blue Business Plus offers the best “everywhere else” value (3.1%); next is the first year of the Discover It Miles card (which offers the equivalent of 3%), and the Citi Double Cash comes in third (2.9%).  The only reason that the Blue Business Plus and Double Cash cards aren’t tied is that we somewhat arbitrarily set the value of Amex Membership Rewards points a little higher than Citi ThankYou points.  If you’re interested in the full background on this, please see: A big change to Frequent Miler’s point values.

Premium Rewards with Platinum Honors

Another card that shows up in the top 5 list (at the time of this writing) is the Bank of America Premium Rewards card with Platinum Honors Preferred Rewards.  This card offers only 1.5% cash back for base spend, but with Platinum Honors Preferred Rewards status, cardholders get a 75% bonus on rewards earned.  This combination turns the card into a 2.62% everywhere powerhouse.  For details, see: Bank of America cards: awesome if you’ve got $100K lying around.

I’ve posted elsewhere that this is my “everywhere else” card (see: What’s in Greg’s Wallet?).  And readers have asked why.  Why use a card that offers 2.62% returns when I could average 2.9% with the Citi Double Cash or 3.1% with the Amex Blue Business Plus?

2x Everywhere Cards and Diminishing returns

The 2X Everywhere cards from Amex and Citi offer better than 2.62% rewards when using our Reasonable Redemption Values (RRVs) to estimate point values.  Let’s consider what that means.  RRVs are estimates of the value at which it is reasonably easy to get that much value or more.  When transferring points to airline miles and booking awards, it’s reasonable to assume that you can get equal or better than 1.45 cents per point value with ThankYou points and equal or better than 1.55 cents per point value with Amex Membership Rewards.

The problem with blindly using the above numbers is that there’s a diminishing return to earning more points once you already have many.  If you already have enough points to cover trips you are likely to take in the foreseeable future, then any additional points you accumulate become less likely to be used towards good value, or at all.

This concept may be easier to understand if we take a very specific points currency as an example.  Consider Amtrak points.  Amtrak points are worth up to 2.56 cents each on Acela trains and up to 2.9 cents each on other routes.  So, a card that earns only 1 Amtrak point per dollar, actually offers a decent rate of return towards Amtrak trips.  In fact, at the time of this writing, Amtrak credit cards made it into our top 10 list of the best cards for everyday spend.

With that background, imagine now that you’re planning an Amtrak trip that will offer 2.9 cents per point value.  The more concrete your plans, the more sensible it would be to earn points through Amtrak credit card spend.  But, suppose too that this is a “one and done” trip.  You don’t expect to ride Amtrak again afterwards.  In that case, it makes sense to use an Amtrak credit card to earn the required points, but it makes no sense at all to continue using the card once you’ve earned enough for this trip.  Advanced players may note that Amtrak points have another good potential use (converting points 1 to 3 to Choice points), but that complicates my story so pretend that’s not a factor for this discussion.  Or, see this post to understand why Choice is not as good of a deal as you thought.

Deciding how many transferable points you want or need is not nearly as straightforward as with Amtrak points, but the general concept is similar.  It makes sense to keep earning until you get to the point where you’re less likely to use extra points.  I can’t tell you how many you need to feel like you’re there.  In my case, I have enough in either program (Amex Membership Rewards or Citi ThankYou Rewards) for several international first class trips or even more business class trips.  Plus, I have many points in specific loyalty programs (AA, Alaska, ANA, Avianca, BA, Delta, United, Virgin Atlantic, …) such that I don’t even need to dip into transferable points for a very long time.  So, I’m there.  I’m at the point where acquiring new transferable points is no longer a priority.  I’ll happily take them when they’re easy pickings, but I won’t pay a lot for them…

Buying points, inadvertently

I’ve written about this concept many times in the past, so I’ll just touch on it quickly here.  When you have both a points-earning credit card and a cash back credit card and you opt to use the points-earning credit card, the result is functionally equivalent to buying points.  For Nick’s coverage of this topic, see: How much do you pay for your miles and points?

In my case, I can choose to earn 2 Amex or Citi points per dollar or I can earn 2.62% cash back.  If I choose to earn points, that’s functionally equivalent to buying points for 1.31 cents each.  When comparing to most airline mile sales, that’s a great deal.  But, if I don’t need additional points (as I explained in the above section), it’s suddenly a bad deal.  It simply doesn’t make sense for me to invest in acquiring more points.

The exception is when I have the opportunity to buy points for less than the cash-out value.  Since I have the Schwab Platinum card, I can cash out Amex points for 1.25 cents each.  And since I have the Citi Prestige card, I can cash out Citi points for 1 cent each.  If I had the opportunity to buy Amex points for less than 1.25 cents each or Citi points for less than 1 cent each, I’d do it because it would be a money making deal.  Put another way, if I didn’t have a cash back card that offered 2.5% back or better, I’d use the Blue Business Plus card.  And if I didn’t have that Amex card and didn’t have a better than 2% cash back card, I’d use the Citi Double Cash.

Other factors

It’s not the focus of this post, but it’s worth pointing out that points have two major disadvantages over cash:

1. Cash can be invested.  Points can’t.
2. Points devalue more dramatically than cash.  Cash devalues with inflation, but you can partially offset that problem by investing it.  If your investment results outpace inflation, then you win.  Points devalue when airline programs increase award rates.  Holding onto transferable points rather than specific airline miles helps alleviate devaluations because they support many programs and some devalue less often or less harshly than others.  And sometimes an airline program introduces new options that make the miles more valuable.  With transferable points, there’s a reasonable chance that such a program is a transfer partner.  But, still, the general trend over time is toward less value rather than more.

Conclusion

Point programs, and especially transferable points programs, have the ability to offer outsized value.  Our Reasonable Redemption Values (RRVs) give you a mid-point idea of what value you should be able to expect.  With the best transferable points programs and a bit of research, you should be able to get much more value than the RRV.  That’s why I love these transferable points programs.

On the other hand, there are diminishing returns to earning more and more points.  Once you have all of the points that you are likely to use towards good value, any additional points may be used for worse value or never used at all.  Once you have a comfortable pile of points, my advice is to focus elsewhere on other valuable points.  Once you have a comfortable pile of each of the transferable points currencies, it makes sense to focus instead on cash back.  That’s where I’m at.  And that’s why my Bank of America Premium Rewards card with Platinum Honors is the “everywhere else” card in my wallet.