Frequent Miler on the Air
When are points better than cash & vice versa? | Coffee Break Ep39 | 12-31-24
Dec 31, 2024
Discover the intriguing battle between points and cash back in credit card rewards. The discussion highlights the Smartly credit card's enticing 4% cash back rate, weighing when cash trumps points. Explore strategies for maximizing both travel points and cash rewards, revealing hidden costs of point accumulation. Delve into the unique benefits of using travel points for flexibility in bookings. Plus, learn how to efficiently evaluate loyalty points versus cash rewards to enhance your spending power!
16:47
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Quick takeaways
- Earning high cash back can often outweigh the value of points, especially for consumers without a points strategy.
- Utilizing cash back to purchase discounted points can maximize overall rewards, making a dual strategy advantageous for consumers.
Deep dives
The Value of Cash Back vs. Points
Earning cash back can often provide greater value than accumulating points, particularly with cards offering high rates like 4% cash back. When comparing a standard two points per dollar card to a cash back option, for instance, the cost of earning points becomes significant—up to two cents per point when opting for the points instead of cash. This raises the question of opportunity cost, as many users are giving up potential cash benefits for points that may not yield equivalent value in redeemable rewards. It suggests that for many consumers, especially those without a specific points strategy, cash back may be the more advantageous choice.
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