For Many Beginners, Earning Capital One Miles With No Annual Fee Beats This Competitor’s Credit Card
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Chase Sapphire Preferred Card cardholders! Let me explain something about Capital One miles.
This is a follow-up to yesterday’s post, but taking into consideration annual fees.
Ask yourself 2 questions:
- Do I use my Chase Ultimate Rewards points almost exclusively through the Chase Portal?
- Do I spend less than $7,600 per year on travel and dining?
If you said yes to both, you’ll go further in the miles & points hobby by using the plain Jane no annual fee Capital One® VentureOne® Rewards Credit Card instead of the Chase Sapphire Preferred.
You Might Do Better Collecting Capital One Miles With a No Annual Fee Card Than With the Chase Sapphire Preferred
Let me say upfront, this isn’t an argument that the Capital One VentureOne is a smarter choice than the Chase Sapphire Preferred. For most of us, it’s definitely NOT. But I bring this up because I know people who use their Chase Ultimate Rewards points through the Chase Portal super often.
Here’s my argument: Earning and redeeming with the no annual fee Capital One VentureOne is the equivalent of earning with the Chase Sapphire Preferred and redeeming through the Chase Travel Portal.
Using the Chase Portal With the Chase Sapphire Preferred
Every point you earn is worth 1.25 cents when you redeem them for travel through the Chase portal.
Your points CAN be worth much more if you transfer them to airline and hotel partners. But folks who want the simplest free travel will probably go through the Chase Travel Portal.
You will earn 2 points per $1 (for travel and dining purchases). That means you’ll earn a max return of 2.5 cents per $1 you spend with the card (2 points per $1 X 1.25 cent value through the Chase Portal). But you’ll earn a value of 1.25 cents per $1 for everything else.
Using Capital One Miles With the Capital One VentureOne
With the Capital One VentureOne, you’ll receive a flat 1.25 Capital One miles per $1. Each Capital One mile is worth 1 cent toward travel. So basically, for every $1 you spend, you’re earning 1.25 cents toward travel.
That’s the same return you’ll get for most of your purchases with the Chase Sapphire Preferred. And the Capital One VentureOne doesn’t even have an annual fee!
When Does It Make Sense to Use the Chase Sapphire Preferred?
Let’s assume you (like many others) redeem your Chase Ultimate Rewards points solely through the Chase Portal for 1.25 cents each. You would have to spend $7,601 on travel and dining before your return would overtake the Capital One VentureOne. Here’s why:
- The Chase Sapphire Preferred has a $95 annual fee
- The Capital One VentureOne has NO annual fee
- You would therefore have to earn $95.01 more with the Chase Sapphire Preferred than you’d earn with the Capital One VentureOne for the card to be worthwhile
- Both cards earn an equivalent of 1.25 cents per $1 on most purchases
- The Chase Sapphire Preferred earns an equivalent of 2.5 cents per $1 on travel and dining only
If you aren’t spending in bonus categories, you’re not getting a return better than the Capital One VentureOne.
To reach that $95.01 mark, you’ll need to spend $7,601 on travel and dining per year (2.5 cents per $1 for bonus spending – 1.25 cents you earn per $1 on the Capital One VentureOne = 1.25 cents. $95 annual fee / 1.25 cents = $7,600).
Only then will your spending be more profitable with the Chase Sapphire Preferred.
There Are More Reasons to Choose the Chase Sapphire Preferred
Again, I’m not claiming that the Capital One VentureOne is a smarter choice than the Chase Sapphire Preferred for most of us. Here’s why.
Sign-Up Bonus: The Chase Sapphire Preferred sign-up bonus is unquestionably superior to the Capital One VentureOne bonus:
- The Chase Sapphire Preferred comes with 50,000 bonus points (worth $625 in travel) after you spend $4,000 on purchases in the first 3 months from account opening
- The Capital One VentureOne comes with 20,000 bonus miles (worth $200 in travel) after you spend $1,000 on purchases within 3 months from account opening
Transfer Partners: You can of course get huge value from Chase Ultimate Rewards points (much more than 1.25 cents each) by transferring them to travel partners like Hyatt, Southwest, and United Airlines.
My friend and I transferred our points to United Airlines for a fancy lie-flat Business Class flight between Istanbul and Boston for 70,000 miles each on United Airlines’s partner, Turkish Airlines. That same exact seat costs ~$3,200 per person. So I received a value of ~4.5 cents per point ($3,200 per ticket / 70,000 points per ticket)!
Ongoing Benefits: The Chase Sapphire Preferred benefits are WAY better. Here’s what you’ll get with the Chase Sapphire Preferred that you won’t get with the Capital One VentureOne:
- Primary car rental insurance – Covers damage or theft to your rental car, when you pay for the rental with your card. (This has saved me literally thousands since I’ve had the card)
- Trip delay reimbursement – Get up to $500 back per ticket when your trip is delayed more than 12 hours
- Baggage delay insurance – Reimburses you for essential purchases like toiletries and clothing for baggage delays over 6 hours by passenger carrier up to $100 a day for 5 days (this has saved me hundreds)
Do you redeem the bulk your Chase Ultimate Rewards points through the Chase Portal? Do you spend less than $7,600 per year on travel and dining?
If so, you’ll have better luck achieving your bucket list with the Capital One VentureOne instead of the Chase Sapphire Preferred. In fact, you would do better with some no annual fee cash back credit cards at the top of your wallet! Some have return rates of 2 cents per $1.
But if you want your miles & points travel to take you exponentially farther, check out my post on what Chase Ultimate Rewards points are REALLY worth. You can learn how to use the points to take your whole family on an amazing vacation for perhaps the amount of points you would spend on just yourself!
You should also read this post on opening multiple Chase Ultimate Rewards points earning cards to get the best return.
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