see: https://www.nytimes.com/2020/10/10/y...dit-cards.html

Found this article quite interesting. Basically the author makes the point that loyalty programs would not be nearly as valuable if people understood the math behind currencies. While I agree 100%, I think it is more about innumeracy than anything else. I do a lot of math each year trying to understand whether to switch my spend to a cash back card versus a points back card.

In recent years my Southwest Companion Pass has delivered more than $2,500 of value which I would have earned with cash back cards. This said unless things change dramatically between now and December, I will not try to earn a Companion Pass for 2022. I've switched most of my spending to Bonvoy Cards which don't offer sufficient points to be interesting most of the time, but have had enough Covid bonuses.

Any other thoughts on the article?

It's a paywalled article, but I can kind of guess what it says and it is probably correct in that the novice user loses out. Hell, even the expert user often doesn't get what he/she had hoped from the programs.

At this point, I have abandoned all airline credit cards. I have cashback and hotel cards, and only carry hotel cards where I get more value from them annually than the annual fee even if I don't use the card at all.

At some point I might run through a cycle of signup bonuses and/or a Southwest CP, but won't bother with that until 2022 at the earliest.

I too don't find much use for the airline-affiliated bank cards, and it's because the airlines' fleecing the frequent flyer program customers has gotten so much worse over the years and even worse in more recent years. Due to that issue with the airline frequent flyer programs, I prefer earning Chase UR points, Amex MR points and Citi TY points from bank card use over earning airline points from airline-affiliated bank card use.

Quite useless article - it is all about mileage earning via credit cards. Kinda like a reverse travel blog post.

Consider my case:

I am (used to be?) a very frequent (business) flyer, but I can't see myself losing out on the different FFPs. One can of course set up "value" for the miles, but as long as they keep coming in, their "book value" is zero, so if I save only $1 by using miles, I'm ahead. Same goes for hotel loyalty points. Yeah, a Maldives over-the-water villa might offer the "best value", but what if I never go to the Maldives? Again, if I save only $1 by using points for my room, I'm ahead.

The article is simply telling people the obvious. It must be a slow news day.

well having FF balance can be a liability - there was an entertaining thread recently about AA holding miles hostage until a flyer paid a penalty for skiplagging...
i agree that with some exceptions cc points are a safer and more flexible option to accumulate; not entirely sold on pure cashback yet as points/miles can still carry a lot of value for special cases but flexibility with carriers and programs is essential

The counter argument would be that if you don't use miles/points for those aspirational awards - things like the Maldives that you *probably* weren't going to book with cash - then in some cases the cashback card or home-grown-points card might be better.

Instead of earning 30,000 HH points to redeem an award at the Hampton Inn, your cashback card generated $200 and you just book a paid room at whatever hotel you like.

The hollowing-out of all the hotel elite status benefits has made the math a lot simpler for me, and tipped the balance back in favor of cash or home-grown-points that allow you to book travel on any airline/hotel.

You make the same mistake as the NYT - equate FFPs with credit card earnings. There are people out there who earn those miles by actually flying and if those flights are paid by someone else, their cost price is zero. Same with hotel points - earning them while actually staying in hotels on someone else's dime. So my proposition of zero cost vs any cash benefit is valid. Of course being human we try to milk as much benefit as possible but if the supply is close to unlimited, it tends not to matter.
My example - earning 50k+ miles monthly by flying makes the redemption "value" irrelevant. Should I spend 100� on a short hop or 20k points? Real no brainer.

When it comes to credit cards, your (and the NYT's) analysis does have merits, of course - the main argument being that cashback can be used for anything, not just hotels (or flights)

Covid aside, considering the reported continued growth of affinity credit card spend, what may be obvious to us is not so much so to a great many of the general public.

uh, not anymore? odd timing. i guess in terms of airlines getting federal money.

will be interesting to see if credit card issuing decreases, and what happens to business spend.

The problem is that *most* programs have vastly diminished the value received from flying and basically morphed into credit card signup marketing schemes. It's almost become a joke how the planes themselves are merely a vehicle to get people together in one place to hear the credit card sales pitches.

I still fly a little AS and credit my BA and EK there as well. But they've become an anomaly (at least among US carriers) in terms of still having their primary earning path be flying, with a comparably mild credit card offering. And I wonder if they're going to kill off their current model when they fully integrate into OW.

I guess you do reach a point where you have a mileage balance that is so far beyond what you'd actually consume on "ideal" awards that you just start using the points/miles for everything. Sometimes I feel that way with Hilton, where I have a couple million and absolutely *know* that program devalues every 2 years like clockwork. Random Hampton Inn for 30,000 points? Ah hell, might as well...gonna by 50k next year.

That's why it is so important to have a baseline value for miles & points. Most commentators value points and miles at <2 cents (USD) - if you concur then it makes no sense to spend on cards that earn 1 mile per $1 as your ROI would be better with a 2% cash back card. However there are many opportunities to earn bonus miles and points for dining, groceries, etc. at which point your ROI is potentially higher with the mileage/point cards.

I just redeemed 600k Chase UR for 4 RT business class seats from USA to the middle east. Assuming I earned at an average of 2 UR per $1 spend, my $300k spend would have generated $6000. That would not even buy 2 seats at current prices nor would I have the flexibility to cancel, rebook etc. (current waivers aside). At normal fares cash back would buy 1 seat at best.

Yes, most people would be better off with a 2% cash back card if they plan to use miles for domestic RTs. But definitely not for aspirational redemptions.

"aspirational" is such a terrible term, but yeah 'half of us' go for high value rather than cashback

values cant be 'compared' because some only redeem low value, some only redeem high value

Earning from flying? I didn't know you could earn frequent flyer miles by flying.

Clever participants in these programs know to maximize the value of points and miles. I suspect that the great majority of members simply want a free 25k coach ticket and a 20k/night room at a Fairfield Inn every year or two. But there are much higher value propositions, especially in expensive locales (NYC, Paris, Tokyo) where the hotel points get a value of almost 5 cents. Likewise, international business class usually redeems at a value of at least 5 cents per mile.