MilesBuzz! - Potential new card that gives 5% interest on miles

I just filled a survey from opinion place yesterday, and it was in regards to credit cards that give miles/points, and it seems that Capital One might come with a credit card that could give you 5% interest on your points.

Looked interesting, I think that depending of the partners that they have, this could be a great new credit card http://www.flyertalk.com/forum/smile.gif

It looks like they are testing the waters, what do you guys think?

Here are the details regarding the potential new credit card.


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Make your rewards work for you

"I work hard for my rewards. However, unlike my money, I can't put them to work for me. The only time they grow is when I make another purchase."

With this new Capital One card, you can earn interest on your rewards points and just like investing your money, they increase over time.

Just like a savings account, earn 5% interest quaterly on your average points balance

With this card, you'll earn 1 point for every dollar you spend - plus interest.
And, when you are ready, you can redeem points for cash, miles, merchandise, college savings fund or contribute to a charity.

The cards also comes with a credit limit of up tp $100,000 and an annual fee of $65
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I would definetly apply for that, but I'm a little wary, whats the catch, theres always a catch.

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DC-10's Forever!

I took the same survey and was intrigued. I'm looking forward to see what, if anything, comes out of it!

Interest on accrued points/miles is a clever idea. Others might pick it up, as it gives people an incentive to postpone their use of miles. (Incentives to use them quickly already exist - especially the possibility that they may be worth less, or even worthless, in the future.)

However, I'm generally negative about cards that keep points in their own program and do not let you convert them to airline miles. The reason is that the points can generally not be used for rewards such as international upgrades or last-minute tickets, where the high returns are. (The reason is simple: the card sponsor has to pay the airline real money for your "free" award.) Other people, with different travel patterns and reward needs, may feel differently.

Sounds great until a program like HH devalues by 75%. You would have to hold the points how many years at 5% to overcome that?

Recall, CapOne does not offer real mileage card and would be reffering to points in their own internal milage program ...with which points are redeemable for free travel but not combinable with any FF card.

Another thing to remember is that not all business plans make sense, or money. If it sounds too good to be true, they may well go bust and the account miles would earn -100%.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by LemonThrower:
Sounds great until a program like HH devalues by 75%. You would have to hold the points how many years at 5% to overcome that?</font>

And SPG devalues it by 45%. http://www.flyertalk.com/forum/wink.gif

I never have really understood why the credit card companies dont give you miles for the interest they charge. It would seem like it would be a good way to get people who might otherwise pay off the balances and carry some on other cards to choose to carry balances on ff cards if they keep the interest rates competitive Citibank are you listening?