Big Spenders: Sign-Up Bonuses, Cash Back & Domestic US Flights

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BIG SPENDER SERIES:

In today’s post we’ll see how Big Spenders can use credit cards for:

  • Sign-up Bonuses
  • Cash Back
  • Domestic US Flights

As a reminder, in this series of posts, I will NOT list cards which give you extra points for spending in certain categories (e.g. gas, groceries etc.), but will cover that in a separate post later on.  This series focuses primarily on regular spending with credit cards.

1.  Credit Card Sign-Up Bonuses

This is the easiest way to accumulate hundreds of thousands of miles and points.

Not everyone is comfortable with opening new cards a year, so do what you feel comfortable with.  Even 2 or 3 well chosen cards can get you over a hundred thousand miles and points, so it may make sense to divert a little of your spending to meet the minimum spending requirements on a few credit cards.

On the other hand, you may not need to apply for credit cards if you can spend hundreds of thousands or millions of dollars on credit cards.

2.   Cash Back

If you don’t want to travel internationally or if you earn tons of points from your regular travel and don’t need any more, you could consider a cash-back card.  These are very easy to use.

For example, if you spend $200,000 a year on a 2% cash back card, you’d earn $4,000 which can be used towards any expense you incur.  So you could book hotel or airline tickets without worrying about blackout dates.

However, you won’t be able to book First Class travel or have a lot of First Class flights or 5 Star hotels with a cash back card.  For example, you would need to spend $1 million on a 2% cash back card to earn a $20,000 First Class ticket to Europe which would cost 125,000 American Airlines miles.

However, you’d need to spend only $100,000 on the American Express SPG credit card to earn 125,000 American Airlines miles which can be redeemed for a First Class ticket to Europe after accounting for the 25% transfer bonus.

But they do make sense if you travel mostly within the US and don’t care much about 5 star hotels.  That’s because you will be able to book air tickets without any capacity constraints if you use a cash back card.  With an airline miles card, you may have to pay double the regular amount of miles to get a seat with no capacity controls.

For example, spending $25,000 on an airline credit card will earn you 25,000 miles or 1 domestic ticket subject to capacity controls.  But spending $25,000 on a cash back card will get you $500 ($25,000 X 2%) which will get you any flight up to $500 value.

Fidelity Investment Rewards American Express  –  You earn 2% on ANY purchase and once you spend $2,500 you can transfer the points to your Fidelity Cash Management account and then withdraw the money. No annual fee and a 1% foreign exchange transaction fee.

Marukai JCB Premium Card – Online Travel Review found a card which offers 3% cash back after spending $5,000 a year, but is available only to folks in California, Nevada, Washington and Oregon.

Capital One Venture – Earn 2% cash back if you redeem for travel.  You earn only 1% cash back if you redeem for anything else besides travel.  Current sign up bonus is 10,000 miles after spending $1,000 within 3 months.  No foreign transaction fee.

Capital One Spark (Business credit card) – Earn 2% cash back on ALL purchases with no limit.  No foreign transaction fee.

Discover Escape – Earn 2 miles per $1 spent or 2% cash back on ALL purchases when redeemed for travel.  You earn only 1% cash back if you redeem for anything else besides travel.

The card has primary car rental insurance.  However, the card has a 2% foreign transaction fee.  $60 annual fee NOT waived in 1st year.

You can earn 25,000 bonus miles (1,000 miles every month, so you have to keep the card open for 2 years to get the full sign-up bonus).

Perk Street Debit Card – Earn 1% unlimited  cash back on all non-PIN purchases.  This is clearly not as good as a 2% cash back credit card, but could be an option for those of you who prefer using debit cards.

American Express Cards:

  • American Express Personal Platinum
  • American Express Business Platinum

These Membership Rewards cards offer a “Pay with Points” option where each point is worth 1.25 cents towards air travel booked via American Express.  That’s a return of 1.25% which is the least attractive of all the cash back options for travel resumptions.

However, the Premier Rewards Gold card gives you a bonus of 15,000 points when you spend $30,000 in a calendar year, so you’d earn 45,000 points for spending $30,000 a year.  But each Membership Reward point is worth only 1 cent towards air travel when you have only the Premier Rewards Gold card.

45,000 points is worth $450 (45,000 points X 1 cents) when using the Pay with Points option, so your return is 1.5 cents per $1 spent ($450 / $30,000).  Still not as good as the other cash back card options, but close enough if you have to use an American Express card.

3.   Domestic (US) flights

If you’re looking for coach flights in the US, your best bet would be the Companion Pass from Southwest airlines or using a cash-back card (see earlier section on cash back cards).

Southwest Airlines Companion Pass – You can earn the Southwest Airlines Companion Pass, which lets you fly free with a companion, for up to 2 years, after spending $110,000 within a calendar year.  This is by far the best perk of any airline!

Each Southwest Airline point is worth 1.67 cents when redeemed for Wanna Get Away flights, so spending $110,000 a year earns you $1,837 (110,000 points X 1.67 cents per point) worth of Wanna Get Away flights.

But if your companion flies with you for free, you’ve effectively earned twice that or 220,000 Southwest points for the $110,000 spent which is worth $3,674 ($1,837  X 2).

That’s a return of at least 3.34% ($3,674/$110,000) per $1 spent, which is much better than the return on cash back cards for domestic US flying.

However, cash back cards could bethe better bet if Southwest doesn’t fly to your airport.

Currently, the sign-up bonus on the Chase Southwest credit card counts towards the points needed for the Companion pass, but I don’t know how much longer this will last.  And there used to be an offer with a 50,000 point sign-up bonus, which frequently comes and goes.

Special Mention:  Chase British Airways.  British Airways has a distance based award chart which means that certain flights could cost as little as 4,500 miles each way on American Airlines.  The same flight would cost 12,500 miles if you were redeeming American Airlines miles.  On the other hand, certain British Airways flights could cost more than 12,500 miles, so do the math for yourself to see if collecting British Airways points makes sense.

I also wouldn’t like to stockpile hundreds of thousands of British Airways points either, because British Airways could make it harder to redeem points in future.

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23 responses to “Big Spenders: Sign-Up Bonuses, Cash Back & Domestic US Flights

  1. I’d also include the Travelocity Amex as a quasi-cashback card. One point is worth 2 cents booked for travel through travelocity.com, which I find nearly equivalent to Orbitz or Expedia. So, you get basically 2% back on all spend, plus 4% on one category, and 10% on travelocity spend.

    Warning though: their customer service is pretty terrible.

  2. There’s also this new BankAmericard Privileges Visa. It looks like it has a similar reward structure to the Capital One; 2 points per dollar on all spend, redeemable towards any travel purchases. It is basically 2% cash back. Plus, it looks like you get a 10% annual bonus if you have a Bank of America account. So, you could argue it is 2.2% cash back on all purchases.

    This might even be better than the Fidelity Amex. This BankAmerica is a Visa so it’s accepted in more places. If anyone gets this card, I’d be interested in hearing if the points can be transferred to Aeroplan like Fidelity Amex’s can.

  3. Also, Barclays Priceline VISA – effectively a 2% card, can be more if you use priceline often
    5 points earn per dollar spent on “name your own price” Priceline purchases
    – 2 points for every $1 spent everywhere else
    – 2500 rewards points after first purchase
    – 1 point per $1 for balance transfers in the first month (up to 2500) (But seems there is a 3% BT fee)
    – Awards apply as statement credit, minimum 2500 to apply.
    – no annual fee

  4. When looking at some Cash Back cards, ask them when you get paid. Sometimes, the Capital One and Costco cards take an entire year, while the Fidelity Amex (also have a Visa at 1.5% to 15k, then 2%) funds your Fidelity account every month when you have at least $50 worth to fund. So ask questions about CB limitations.

  5. Every time I go to Amex to try out the Pay With Points for travel, it only gives me a value of $0.085 per point. Am I missing something? I have an Amex Premier Gold.

  6. Do the 2% cash back cards for travel only require that you use the card company’s travel agent to use the cash?

  7. I am always having this question: what card would you use for those non category, 1 point per dollar purchases? Now I have the Sapphire Preferred, AMEX SPG, AMEX HHonors, Freedom, Southwest Premier, BA VISA, Blue Cash Everyday, and United Explorer.

    While I tried my best to choose the right card for different categories, I am always wondering which card I should use for those non bonus purchases?

    Currently I value the SPG points the most, I use AMEX SPG for all the non bonus purchases. Am I making a mistake?

  8. @ZL. If you value SPG points Higher, then you’re making a perfectly fine decision using it.
    My 1 pt/$ card is either the card I’m trying to meet a spend on (Currenty Delta platinum Amex, once I hit 25k spending I get 10k bonus skymiles and MQMs. I value 35k skymiles and 10k MQMs more than 25k SPG points). If I’m not trying to meet a spend, then it’s SPG.

    • @bluto – Thanks for the tips – particularly the Privileges Visa. It seems like a great option!

      @Steve – Thanks for the tip – I’ll add it to a future post on cash back cards.

      @Cheaplee @Gary Steiger – The Capital One Venture card allows you to redeem points (which post monthly) for ANY travel expense – even if it is not made via the Capital One travel portal. But I’ll look into the other 2% cards to see if there are restrictions on how to use the points.

      @Amanda A.
      – AMEX Platinum cardholders get 1.25 cents towards airfare and other cardholders get 1 cent per point when redeeming AMEX points for airfare. It will be a lower value when redeeming for other non-air travel. I updated the post, and thanks for letting me know.

      @ZL
      – Depends on how you value the points. But 1.5 miles per $1 on the United Club card or 1.25 points per $1 spent using the SPG AMEX when you transfer in increments of 20,000 points are good choices. If you value elite status, there could be other options.

      @steven in bay area
      – You can use Charge Smart to pay your mortgage, but it will charge a fee.

  9. steven in bay area

    Dear darius,

    Do you know if we can pay our mortgage by credit card? I know if yes there are fees associated with it. But as long as it is not over 3%, i might be a good way to accumulate the points.

    thanks!

  10. Great info! Does anyone know enough about the Marukai JCB Premium Card? Never heard of it and wonder how a lesser known place can offer 3% cash back. I live in Washington so we don’t have Maruakai stores here (it’s my understanding stores are in Calif). You have to search their website to find out it’s a Discover card. A little wary, but if there’s reassurance out there, I’ll sign up ASAP. Thanks in advance!

  11. How does Chase Ink Bold business card + AMEX prepaid card at OD trick come into play? The return on first $50K spent using this trick nets 3.8-4.2% back.

    • @Soosie – I don’t have experience with the Maruakai card, but would not expect the 3% to last long because that’s almost the entire merchant fee for processing a credit card. But please let us know how it works for you!

      @Gary S – I have not included that here, because I want to focus only on actual spending – not leveraging category bonuses (that will be another series of posts!)

  12. What do you think about US Bank’s Cash+? They offer 5% cash back on 2 categories that we can choose (e.g., airline, hotel, department stores, etc.).

  13. What do you think about US Bank’s Cash+? They offer 5% cash back on 2 categories that we can choose (e.g., airline, hotel, department stores, etc.).

    PenFed Travel card offers 5x rewards points for airlines. How valuable are those points?

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