The Curse of the Credit Card Points

Psychologically, the concept of rewards is a powerful thing.  We really like to receive rewards and they can be a very effective motivator.  Trader Joe's gives my daughter stickers at the check out, and that motivates her to be still long enough for me to pay them.  My credit card company gives me reward points, teasing me with the idea of free travel, so I will use their card and help them make money.  But accumulating points is only half the story.  Ever try to actually use those points to take a trip? You'll often spend so much time trying to make it work and get the best deal that it becomes your second job. There's that pile of points that you have worked every angle to amass, and now you want to use them.  But you soon discover you either can't use them on the dates you needed, or you can't get the best prices because you have to book through the company giving you the points (AMEX, for example), or you can't share points with your spouse, and eventually, you give up and just pay full price so you can stop thinking about it already.  

I have 68,000 Amex points, and I'd like to take a trip with my family.  That should get me a reward equaling about $600 off air travel, but while a $600 ticket costs you 60,000 points, a $601 ticket can cost you 90,000 points because of the tier structure.  Also, the mileage award is on EACH ticket, not the total price for all the tickets, and you have the fun of comparing all the different ways you can use your points. 

So if, for example, I take my family to Chicago for a few days, and buy the tickets through AMEX, each one costs $319. here are the options:

1. I can use 60,000 to get a 15,000 point reward of $150 off each of 4 tickets, plus pay $169 in cash on each one, and buy one ticket for cash, for a total outlay of $998 in cash, OR
2. I can us 67,500 point to buy three 22,500 point rewards and then pay $923 for the other two tickets (and be left with no points)  OR
3. I can use 50,000 points to buy two 25,000 point rewards and then pay $1,098, thereby spending an extra $100, but having 18,000 points left, which is worth a $150 travel reward.
4. mind numb yet?

With AMEX, I have to book the travel through them, and that means I can't always get the best prices on tickets.  So am I better off just trying to get cheap tickets on my own, paying with my credit card to accumulate more points to spend at a later date? 

And let's face it, $600 won't get a family of five very far on a plane, so am I better off trying to use my points for a hotel stay, for example?  I proceeded to spend more hours researching this, and discover that the really cute hotel in San Francisco that would be just perfect for my family is not available for booking through Amex.  While I can get 5 bonus points for every dollar if I book it through Hotels.com through the Perk Central part of my Capital One Venture Card website (see yesterday's column), the price isn't as good as if I book it through the AAA site!  The experts always say you should just call the hotel directly and ask them for their best rates, and so I do, and they tell me that if I join their rewards program, I can get 15% off, which makes the price even lower than the AAA rate, but then I can't book it through hotels.com and get 8x the points!

I am preoccupied with the "opportunity costs".  If I use my points for flights, would I have gotten more value using them for hotel stays or merchandise?  If use my points now, when I can't get very much for them, will I regret it later, when I could have saved up so many points that I could take us all somewhere great for free?  What if I use my time to work and earn money rather than wasting it researching this stuff?

Ok, so what about cashing in points for gift cards?  I see Amex has Marriott gift cards, what about cashing in points for those and then using them to pay for a few nights in a Marriott?  Turns out a $100 Marriott gift card costs 14,000 points, which isn't a very good deal at all, in my opinion, because my amex points would only buy me 4  $100 Marriott cards, and I'd be spending 56,000 points to get a $400 benefit, which is probably less than the price of two nights, and I don't want to stay at the Marriott, anyway.

What if I just book a trip through Groupon or Living Social or Jetsetter?  Won't that just be cheaper overall?  I know I can't use Amex points to pay for that, because I can't book it through them, but what about Capital One points?  I call Capital One again (I figure they'd miss me if I didn't call them today), and I learn that I can not only use their points to pay for those types of discount deals, but I can pay for ANY travel expenses, like dining and shows with their points too!  I like that.  Capital One is now pulling ahead of Amex in the race for my spending dollars.

And what about stuff?  How about if I just cash in my miles for a new TV?  Or I can cash in my miles for a Best Buy gift card and get a TV there that's on sale and then just buy my travel separately…  I can get a decent little Samsung flat screen for 58,000 points, or I can get a $250 Best Buy or Amazon gift card for 35,000 points, which would probably be enough to buy me a decent little TV…

And then there are those points I accumulated on Continental before it merged with United and became United points?  What can I use those for?  Wow, look, I have enough points for one free ticket somewhere in the U.S., and so do 2 of my kids!  We should go somewhere!  And I'm really exhausted right now!

There is just no right answer.  You just have to choose.  You can spend your life obsessing over this minutia and end up wasting 3 days to save $10. I think the best idea is to use the points as a "travel savings program", and just let the miles accumulate until you have enough to save a substantial amount on a really great trip. 

And me? I think I'll just book the hotel I wanted in S.F. for the best price I can get (yes, I'll join their loyalty program too, what the hell.), using the 2-mile-per-dollar Capital One card, and keep the Amex points, the United points and the Capital One points for now.  

Now I really need a vacation.