Put Down the Capital One Card...

How many of you read my post yesterday and said to yourself, "excellent, I have a travel rewards card right here, the Capital One Venture Card"? If you did, you're not alone, that's how I started in the travel rewards game. Let me be up front about that though, it was a mistake.



Let me tell you why the Capital One card isn't what you're looking for.

First off let me say I understand why people choose this card. Capital One is supremely good at advertising their cards. How many of you even knew about the Chase Sapphire Preferred card before you started into the travel rewards game or before reading about it here? If you were anything like me, I didn't even know it existed. Capital One, for better or worse,  make it known they have cards. So when the general public hears travel rewards cards, they think Venture card.

There is a use for it, but its very few and far between, and I would highly recommend you don't spend using Capital One cards. In order to fully understand what the problem is, lets take a look at someone who spent a whole lot of money on a single card. We'll compare what a person gets spending $500,000 on a Capital One card vs a simple card like the Citi AAdvantage Platinum card.

If this person spent $500,000 on a Capital One card, he'd have 750,000 points on a standard card, or 1,000,000 points on the card that gives double points... we'll give him the benefit of the doubt and say he used the double points card. The important distinction here is the worth of those points. Capital One values their points at 1 cent a piece. So that 1,000,000 points is only worth $10,000 of travel costs. That seems like a lot, but if you want to really treat yourself, say to a first class ticket. On a long haul flight, this $10,000 likely wouldn't even cover the cost of a round trip fare in first class.

To contrast, lets look at spending the same amount on the AAdvantage Platinum card. Now we'll ignore the if you spend anything on American Airlines flights with this card you get double points, let us assume this person never used it for that purpose. This $500,000 in spend equals 500,000 points. Seems like thats less, but we must now look at how these points are redeemed. American Airlines allows booking on their flights or partner airlines. You must be a little more flexible to get the best deal, but a 1st class ticket to Europe will cost you 120,000 points if you find the best use of the points. That means this same spend gets you 4 round trip tickets in first class. When round trip first class tickets top out in the $30,000 range, thats quite a good reward card. 

When you start to account for cards like the Chase Sapphire Preferred, or the Citi ThankYou Prestige, or any number of transferable currency card. You can get bonus spend on many categories, get more than 500,000 points for your spending, and transfer to a number of airlines... well that all adds up to a huge advantage over Capital One card, not to mention the huge amount of other perks that come with these cards. 

So I'll say this again, put down that Capital One card, and pick up a rewards card that will get you where you want, for less money spent on that card.