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If I offered you either 1,000 Mexican pesos or $100, which would you take?
Being a smart consumer, you’d look up the current exchange rate. While 1,000 Mexican pesos sounds like a lot, it’s only worth ~$56!
In our hobby, not all types of rewards are created equal. So knowing how many points or miles you can earn is just as important as knowing how much they’re worth.
I’ll explain how to compare credit cards that earn different types of rewards. So you can make sure you’re getting the best deal!
Comparing Different Types of Miles & Points
There are 2 important factors to consider when planning your miles & points strategy and deciding which cards to apply for:
- How many miles or points you’ll earn, from sign-up bonuses and bonus categories
- What those miles or points are actually WORTH
Always Do the Math
The Capital One Venture card earns 2X Venture miles per $1 spent on every purchase. Where the Chase Sapphire Preferred only earns 1X Chase Ultimate Rewards points per $1 spent on most purchases (excluding travel and dining).
2X is better than 1X, right? Not so fast!
Capital One Venture miles are worth 1 cent each. But the Chase Ultimate Rewards points you use with your Chase Sapphire Preferred card are worth (at a minimum) 1.25 cents each for travel booked through Chase’s travel portal. Or even more when you transfer them to one of Chase’s travel partners!
Yes, you’ll have to spend twice as much on the Chase Sapphire Preferred card to earn the same number of miles you could earn with the Capital One Venture card, without taking into account which card offers the bigger sign-up bonus. But would you rather have 25,000 Venture miles or 25,000 Chase Ultimate Rewards points?
25,000 Venture miles are worth $250 in travel (1 cent each). But 25,000 Chase Ultimate Rewards points are worth ~$313 in travel booked through Chase’s travel portal (25,000 X 1.25).
In both examples, you don’t have to worry about blackout dates or awards being available!
The Power of Flexible Rewards
Or, even better, you could transfer 25,000 Chase Ultimate Rewards points to Hyatt for a free night a luxury hotel, like the stunningly beautiful Park Hyatt Maldives Hadahaa. And get a LOT more value for your rewards!
I found rooms here in December 2017, for 25,000 Hyatt points or $1,577 per night. Meaning you’re getting a value of ~6 cents per Chase Ultimate Rewards point (~$1,577 / 25,000 points)!
So even though you’re earning rewards at a faster rate with the Capital One Venture card compared to the Chase Sapphire Preferred, the Chase Ultimate Rewards points you earn with the Chase Sapphire Preferred can be much more valuable.
This isn’t to say that Capital One Venture miles aren’t a good deal. It’s just important to understand what the rewards you’re earning are worth when deciding which card to use.
Compare Sign-Up Bonuses With Points Value in Mind
It’s also worth doing the math when you’re comparing sign-up bonuses!
The 25,000 Starwood points you’ll earn after completing minimum spending requirements on the AMEX Starwood card sounds like a lot less than the 100,000 Hilton points you can earn with the Hilton Honors™ Surpass® Card from American Express. But depending on how you plan to use the points, the Starwood points could be worth more!
For example, you can transfer 20,000 Starwood points to an airline with a 1:1 transfer ratio (like American Airlines), and get 5,000 bonus miles. So 20,000 Starwood points becomes 25,000 American Airlines miles. And you’d have points to spare!
That’s enough for a round-trip coach ticket between the mainland US and the Caribbean, Mexico, or Central America in the off-season. Or a round-trip coach ticket within the US!
Tickets like these could easily cost ~$500+. Meaning your Starwood points would be worth at least ~2.5 cents per point (~$500 / 20,000 points).
In comparison, you could use 100,000 Hilton points for 2 nights at a Hilton hotel like the Hilton Los Angeles / Universal City. On this sample date, it costs ~$203 (including taxes and fees) or 50,000 Hilton points per night. And you’d be getting a value of ~0.4 cents per point (~$203 / 50,000 points) for your Hilton points.
That’s MUCH less than half of the value you’d get using Starwood points in the other example!
Plus, you have to use the Hilton points you earn for hotel stays, and you don’t have the flexibility you have with Starwood points.
Using those values, the 25,000 Starwood point sign-up bonus from the AMEX Starwood card could be worth ~$625 (~2.5 cents per point X 25,000 points). While the 100,000 Hilton point sign-up bonus from the AMEX Hilton Honors Surpass card would only be worth ~$400 (~0.4 cents per point X 100,000 points).
But keep in mind this is just one example. There are plenty of ways to get Big Travel with Hilton points! Million Mile Secrets team member Harlan used 200,000 Hilton points for 5 free nights at the Hilton Hawaiian Village and had an amazing time!
Keep These Factors in Mind, Too
Don’t forget about the various bonus categories different cards offer. Because they’re an easy way to earn more points!
For example, both the Chase Sapphire Preferred and Capital One Venture card earn 2X points on travel and dining. But as I mentioned before, the Chase Ultimate Rewards points you’ll earn with the Chase Sapphire Preferred can be worth a LOT more.
And consider each card’s annual fee, too! Make sure the ongoing benefits are worth any yearly fees.
In my comparison of the AMEX Starwood card to the AMEX Hilton Honors Surpass card from above, you’ll also need to take into consideration the annual fee for the AMEX Starwood card is $95 (waived for the first year). Whereas the AMEX Hilton Honors Surpass card has a $75 annual fee that isn’t waived the first year.
When you’re planning your credit card strategy, it’s important to not only understand how many miles or points a card earns, but what those rewards are actually worth! Because comparing different types of miles & points is like comparing apples to oranges.
For example, 20,000 Starwood points can be a LOT more valuable than 20,000 Capital One Venture miles – if you use them wisely. 😉
Carefully examine each card’s features, like the sign-up bonus, perks, and bonus categories, when deciding which card is right for you. So you can take your dream trip sooner rather than later!