I've been really confused about credit cards with "miles" rewards. I recently obtained the Capital One Venture Card because of their rewards program. As I'm sure most of you know, the benefits can be summed up as follows:
- For every dollar you spend, you get 2 "miles."
- The "miles" can be used for any travel-related expense.
My problem is that these aren't really miles in the conventional sense -- i.e., frequent flyer miles. In particular, the "miles" that you get from Capital One are redeemed by doing the following: You first purchase a travel-related item with your Capital One card (e.g., $100 airline ticket), and then you go into your online account, and use your "miles" to "erase" the cost.
To "erase" the $100 airline ticket, you need to use 10,000 of your "miles." In order to have accumulated 10,000 miles, you would have had to to spend $5,000 dollars (i.e., two miles per dollar). Thus, you are saving $100 for every $5,000 you spent, or, in other words, 2%.
Despite that this is still a pretty good deal (on most cards, you only get 1 point per dollar), I think it is disingenuous to call these "miles." These are just points; you cannot redeem these miles with any airlines for actual flights. For example, if you go on AA.com and look at the price of round-trip tickets from Chicago to Rome, you'll see that it will cost you over $1,600. But, if you search by miles, you can get the exact same flight for 60,000 AA frequent flyer miles. But, of course, 60,000 Capital One "miles" would only get you $600 in value, not $1,600.
Anyway, I'm just surprised that this is not more frequently discussed. I think it's borderline false advertising to call these "miles." With that all said, what are the best cards for actual miles?
I tried looking into the Mileage Plus Explorer card by Chase because I fly United a lot, but, to my extreme annoyance, I was unable to determine from their website whether you are getting real miles or fake miles.