Author Topic: Credit cards - what to do with points questions...  (Read 4697 times)

dandeliongirl75

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Credit cards - what to do with points questions...
« on: December 10, 2014, 12:53:57 PM »
My contribution to another similar post resulted in some great advice, and more questions from me - but I don't want to thread jack so I am moving it over here...:

My questions based on the info below is what should I do with my points when I get them?

The background:

I just started the credit card churning thing to see if it would work for me as a way to get extra cash to invest.
I have a lowish income (just under 50k) and not a lot invested (about 90k in 401k & IRA and I just put 10k in VBIAX as I was too scared to go right for VTSAX). - I am not even able to max out my 401k at this point and also want some in more accessible investments in case I retire sooner than the time I can withdraw without penalties - I am new to investing and am already 40.....

I usually only travel once a year to Europe to visit and stay with family for a month - relatively low cost other than flights which I bought this year (just bought for January travel) with the Barclaycard but I am guessing I will not be able to use the points against it as I will not still have it on my card unless I keep it there and pay interest until I get the points....

Is redeeming the points for cash a complete waste? I am afraid if I keep them I will find reasons to go on other unnecessary trips and then spend more just beacuse I am on vacation (which I really don't have any more time to take anyway) Should I just keep them and use them for next year - if I end up with too many though is that not a waste?

I hope this makes sense...I am new to all this and generally pretty confused - though having fun with all this:)

This was my original post in response to a question from someone else, and then the advice I got:

I just started this month and have started small, aiming initially for cash bonuses as they are easier for me to wrap my brain around.

I got a chase freedom card which I should get $200 cash back after spending $500 in three months - I just met that and am waiting to see how that works out.
I opened a capital one 360 bank account which should get me $100 after 5 charges on the debit card which I am waiting for.

and I just got a barclaycard arrival plus which will get me 40,000 miles which kind of intimidates me as I am not sure about redeeming them, but I do know if it is too complicated I can redeem them for about $250 cash...so....not bad either way. I do need to spend $3000 in three months though which may be tough without manufactured spending which I am still not sure about....

Basically seeing how it works with low risk things....easy enough so far....got all three things I applied for and am working on meeting the criteria....

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johnny847

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Re: Cash Bonus Credit Cards: Any Recent Success Stories?
Reply #7 on: December 09, 2014, 05:17:24 PM

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Quote from: dandeliongirl75 on December 09, 2014, 04:32:41 PM

    I got a chase freedom card which I should get $200 cash back after spending $500 in three months - I just met that and am waiting to see how that works out.

If you have future travel plans, NEVER redeem the points from that for cash. Why? Well you can apply for a Chase Sapphire Preferred sometime in the future, and transfer your points on your Freedom to your Sapphire Preferred, and then from there to airline partners, where you can use them for much better than just 1 cent per point (which is what you'd get if your redeemed them for cash on your Freedom).
Quote from: dandeliongirl75 on December 09, 2014, 04:32:41 PM

    and I just got a barclaycard arrival plus which will get me 40,000 miles which kind of intimidates me as I am not sure about redeeming them, but I do know if it is too complicated I can redeem them for about $250 cash...so....not bad either way. I do need to spend $3000 in three months though which may be tough without manufactured spending which I am still not sure about....

To get the full value your your barclaycard arrival+ "miles" (I use quotes because they're not transferrable to airline partners) is to put travel charges on your card (the terms and conditions define them in detail, but based on merchant codes its airlines, hotels, trains, buses, car rentals, etc), and then you can use your miles as a statement credit against the travel charge. So just wait for your next trip, and then use your miles then.
If you use your miles against non-travel charges, you get a much lower value for your points, I believe 0.5 cents per mile.

To meet minimum spend:
1) Sign up for an Amex Serve. It's a reloadable debit card. You can load with credit cards without a fee from Amex. The credit card issuer may issue a cash advance, but as of now, Barclaycard does not treat the transaction as a cash advance. For the latest, see http://www.flyertalk.com/forum/manufactured-spending/1199432-serve-another-paypal-amazon-payments-555.html You can load $1000/month through this method ($1500/month if you sign up for the serve through Softcard, but that requries you have a NFC enabled phone on AT&T, Verizon, or T-Mobile).
2) Buy gift cards for stores you already shop at (this effectively gives you more time to spend the required amount, but it's not a "true spend" like the next option)
3) Buy Visa or Mastercard prepaid gift cards. Usually you can find $500 ones for ~$5 fee. Then you can load them onto a Serve at Walmart for free, or if that isn't viable for you, just spend them down over time. Once it's on the Serve, you can use the bill pay function to pay the credit card you used to buy the gift cards.

You may incur some fees for minimum spend. But if that's the only way for you to meet minimum spend, then its absolutely worth it. To do it on an ongoing basis is another story.

FarmerPete

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Re: Credit cards - what to do with points questions...
« Reply #1 on: December 10, 2014, 02:12:23 PM »
Having an exit strategy for your points/miles/dollars is important.  The fact that you don't have one tells me you probably shouldn't sign up for more offers.

Personally, I only consider the cash value of the points when signing up for anything.  If a CC will give me 20,000 points and those can be converted to $100 cash or $200 travel, I consider it a $100 signup bonus.  The fact that I MAY be able to extract more value out of those points is irrelevant.  Travel may or may not happen.  It's an unknown.  Cash is a guarantee.  When it comes time to REDEEM the points, I will look at my immediate future and the possible options.  If I can extract more than cash value, I may consider it.  I will only consider it for things that I would otherwise do with cash.  For example, I recently signed up for the Chase Ink card.  I generated roughly 90,000 points ($900 cash value) by spending $180.  I was planning a trip to Florida with my family.  I could have withdrawn the $900, paid off the $180, and then spend $720 on travel.  Plane tickets were $450 and the car rental was $300.  Total cost would have been $750 or $30 out of pocket.  Instead, I used the Chase travel services to buy the tickets.  Plane cost me $400 ($400x1.25 = $500 tickets), and the car rental was $234 ($234x1.25 = $292 rental).  Cost = $634 and I have $266 left.  I will cash in the $180 to cover the MS expenses and still have $86 in cash value left in my account.  By not getting cash, I made $116.  It does get a bit more complicated as using points for free travel means I wont earn points on those purchases.  720 * 2% cashback card = $14.4 so technically I only made $101.6.  Either way, still a good deal.

MustachianAccountant

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Re: Credit cards - what to do with points questions...
« Reply #2 on: December 10, 2014, 02:22:58 PM »
1. I think cash back on the Arrival+ works out to 1% cash back (or 1/2 points, whatever)
2. I also think that you have a period of time after the charge to redeem against points, and I don't think you need to keep that charge on the card to redeem against it. As long as there is a statement balance (from whatever), you can redeem the points for the travel charge. Honestly, I'd just call customer service on that one. They can certainly answer the question better than we can. :-)
3. Barclay Arrival only works best for airfare if you can find really low fares. Look into other cards that transfer points to frequent flyer programs, like Chase Ultimate Rewards or American Express Member Rewards. You can find some pretty big sign up bonuses that transfer 1:1 to airline points.

If you're looking for straight cash back:
Citi Double Cash (2%)
Fidelity American Express (2%)
Capital One Quicksilver (1.5%)
PNC Cashbuilder (with the upper tier checking account, 1.75% cash back)

dandeliongirl75

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Re: Credit cards - what to do with points questions...
« Reply #3 on: December 10, 2014, 02:38:05 PM »
Farmerpete - thanks, when I signed up for them I considered it cash only too, it was just the comment I got that made me think I might be doing this wrong.

I might just treat it as cash for now, though I will call Barclaycard and see if I will be able to redeem against the flights I booked  first as suggested by MustachianAccountant.

MustachianAccountant

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Re: Credit cards - what to do with points questions...
« Reply #4 on: December 10, 2014, 02:46:29 PM »
Sorry, just re-read your original post.
You already put the charge on your Barclay card for the flights in January? As in, you already bought the tickets? You can definitely redeem points against that charge right now. You don't need to wait to do the actual travel. As long as the travel charge is on your card, you can use points to "delete" it.
I redeemed points against a trip we're taking in March 2015 just this month, because I was pre-paying some charges.

dandeliongirl75

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Re: Credit cards - what to do with points questions...
« Reply #5 on: December 10, 2014, 02:48:31 PM »
I have not got the points yet, that is the problem there - I have not yet spent enough to get them....I still need an additional $1500 and am kind of afraid of the manufactured spending options....though I intend to read more about them in the next couple of days.....
So I am guessing by the time I get the points, I will have already paid the balance on the card that has the flights on it.....

MustachianAccountant

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Re: Credit cards - what to do with points questions...
« Reply #6 on: December 10, 2014, 02:53:30 PM »
I have not got the points yet, that is the problem there - I have not yet spent enough to get them....I still need an additional $1500 and am kind of afraid of the manufactured spending options....though I intend to read more about them in the next couple of days.....
So I am guessing by the time I get the points, I will have already paid the balance on the card that has the flights on it.....

Ok, gotcha. Yeah, I'd call customer service on that, though I suspect you'll still be able to go back and pay with points.