The spate (spate?) of devaluations lately has made me re-consider the whole value proposition of frequent flyer miles. I’ve discussed before how any time you put miles on anything other than a cash back card, you’ve basically made the decision to purchase miles at 2.2 cents a piece (as the Barclay Arrival card essentially rebates you 2.2 cents per dollar, as long as you spend that rebate on travel purchases).
For me (and many others) that tradeoff made sense because of the pretty wide availability of business class international awards at what most considered to be reasonable mileage levels. That has changed pretty significantly recently.
As I’ve thought more about it, I’ve become hard-pressed to find a reason to use anything but that Arrival card as my everyday card. A few points:
- I’m not talking about signup bonuses, which are still worth getting (though remember, those are not free — the $5,000 spend necessary for the 50,000 Ultimate Rewards points for the Ink Bold are costing you $110. That’s a good deal, but it’s not free).
- There is not an unlimited amount of manufactured spend. For most people, doing $1,000/month through Amazon Payments and $5,000/month through Vanilla Reload/Bluebird is the most you’ll be able to manufacture at this point (assuming you can find $5,000 worth of VR, which I cannot). And if you are using manufactured spend to meet minimums or just to get points on a card, you are NOT using it for cash back. Maxing out on manufactured spend on a cash back card results in $91 in cash back each month after VR fees (almost $1100 a year).
- If you’re taking cash back it really makes you think about how much you’re “spending” for that “free” business class ticket when you earn through credit card spend. United now charges 140,000 miles for a business class ticket (on United metal) to much of Asia. Earning that through spend means you’re paying $3,080 in forgone cash back for that ticket. Maybe that’s a bargain to you, I don’t know. But for me, I’d be more likely to buy a coach ticket with the cash back for $1,000 and buy up to Economy Plus. Is business class really worth $2,000 out of pocket? Not to me. You may be different.
- I think of the Arrival cash back as a Travel Savings Account. It’s money I’m putting away that can only be used on travel, as a way to replace what I otherwise would have earned in points. That way I still travel for “free” but I believe I’m getting more value than if I put my spend on a points-earning card.
- I could be convinced that if you’re going to use the points exclusively for international business class travel that you would earn some points at least on the Starwood Amex. Though the more I think about it, the less I’m convinced that makes sense for me. Sure, I like sitting in business class for a trip to Tokyo. But with that cash back option, that’s a lot of actual cash that it’s costing me for business class.
- The other option I see is if you have a specific trip planned at an expensive Starwood hotel where it would be worth earning the points to pay for the hotel. There are Category 6 hotels that require 20,000 points but would otherwise cost far more than $440, for example.
What am I missing here? Why wouldn’t the Arrival card be the best option for everyday spend for people who like to travel?