Many of you may already know this, but Yahoo maintains a fairly comprehensive credit card optimization engine. You provide your credit card usage habits (spending levels, how often you pay the bill in full, etc.) and it spits out the "perfect" card for you. It has the potential to be a great tool, it appears to be unbiased (except for Goldpoints - see below), and it has made me aware of a lot of cards from smaller banks, although I haven't acted on any of the suggestions (yet).

However, there is one problem with the engine: it predetermines the value of the reward associated with each card, and it won't let you alter the Yahoo-determined value.

For example, I place a higher value on 1 AA mile than I do on, say, a Northwest mile. The reason is that I earn and redeem AA miles frequently, whereas a Northwest mile would sit in my account for years losing value - and I'm also in the final stretches of a Million Miler run on AA. Unfortunately, I can't customize this in Yahoo.

Anyway, here are some of Yahoo's valuations. They vary by airline, and they follow a wierd algorithm that seems to assume that people sell their FF awards in the newspaper for $260 per ticket. It's too wierd to explain - read the fine print on the website.

American, Delta, United: 1.04 cents
Continental, Northwest: 1.116 cents
Alaska, America West, Hawaiian: 1.13 cents
Southwest: 1.63 cents (1 segment = $16.30)
US Airways wasn't on the list.

Hotels:

Marriott: .37 cents/point
HHonors: .31 cents/point
Priority Club: .39 cents/point
Starwood wasn't on the list.

And here's the most bizarre part of all: Goldpoints are valued at 2.7 cents per point. No matter what numbers I use for my spending habits, Yahoo tells me I could save hundreds of dollars a year by switching to the Goldpoints Visa. I had to look at this about three times to confirm that the decimal point was really where it was! My problem with this is that this appears to be severely biased, even though the rest of the site seems not to be. According to Yahoo, Goldpoints Visa is the greatest credit card product ever created in the history of mankind, yielding a 7% discount on every purchase you make!

The link:
https://biz.yahoo.com/d/c/step1.cgi

Thanks for the joke (I mean the link).

I am very surprised the site doesn't tout the Yahoo Visa as the best rebate card in the universe though.

That's GOT to be a mistake. There's no way that 3 GoldPoints are worth 2.7 cents, especially after they went to 8:1 for the redemption. I'm sure there's some math f***-up at Yahoo. They claim that they're not sponsored by any company for the matching part.


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- Sameer

"Didn't we just leave this party?"
www.liningup.net

Actually, that analysis is the closest one that I've seen to my calculations. Southwest vouchers trade hands at $260 consistently (buy or sell), and their RR voucher represents an unrestricted, full fare ticket. At least Yahoo comes out and admits it.

The massive restrictions on the other awards values a typical domestic award at about a penny, since you can buy the "equivalent class" for easily $260 or less. I haven't paid more than $225 for a RT leisure fare on the "little 6" since September 11. Sure, you can value the awards for international trips at more than a penny, but again, you have to plan these way in advance. I can get great fares if I have a one-year window as well...

However, I'd value the Marriott and HHonors points at about a half-cent from some recent stays. At least 10 cents of that is the value of avoiding local tourist-gouge taxes.

We've had many discussions on this board about the value of airline and hotel miles/points. Bottom line is that it is impossible to put a number on them that is acceptable to everybody: it's personal.
Yahoo suggests a accuracy (by using very exact numbers with several decimals) that simply is not possible. If a decision is based on Yahoo's calculation I think the wrong decision will be made.
The value of GoldPoints is ridiculous IMHO.

I understand we've talked about the valuation of miles ad nauseum here on this board. That's not the purpose of this thread.

I started this because of a couple of reasons:

(1) I think the Yahoo credit card engine has the potential to be very useful. I've looked all over the Internet for a good comparison, but always end up at sites that only compare a handful of cards or are clearly biased to link you through to an application. Other than an apparent Goldpoints bias, I think the Yahoo site is fairly objective. I guess that's the Buzzworthy part of it: you can use this site to compare and contrast a wide wariety of rewards cards all at once.

(2) I find Yahoo's valuation method to be bizarre. It is obviously based on the aftermarket for Southwest vouchers. My problem with this is that Southwest's program is apples-and-oranges different from any other program in the world, yet Yahoo's valuation of miles for every program is tied to Southwest. LUV obviously has a great advantage in the capacity control category. The other major programs obviously have great advantages in route structures, upgrades, alliances, etc. To take the other programs (UA, AA, etc.) and value their miles based on the worst possible redemption (a 25,000 mile ticket when a $260 fare is available) isn't fair. Add in the fact that actually selling a UA or AA award for $260 is against the rules of the program, and this method becomes even more nonsensical.

The flip side would be if Yahoo said "AA miles are worth 10 cents apiece because you can fly first class to London with them. Southwest miles are worth zero because they don't go to London." Equally nonsensical.

(3) I find it equally bizarre that CO/NW miles are worth 1.116 cents each. I get the 1.04 and 1.13 valuations, even though I don't necessarily agree with them. They represent 25K and 20K awards, respectively, and are based on the $260 Southwest voucher. But 1.116??? Help me out CO/NW fans...any idea how Yahoo came up with that?

(4) I wrote Yahoo a quick suggestion through their provided link to (a) review the valuation of Goldpoints in case it's an honest mistake (perhaps off by a factor of ten or something), and (b) add a generic feature that lets me compare against a "custom" credit card where I specify the reward I get.

I also wrote to Yahoo suggesting that the Goldpoints were vastly overvalued. My first thought when looking at the site was that they were pushing the Goldpoints card - but after looking some more I was convinced they are trying to be objective, but got a very strange valuation for Gpoints. When it takes 107,000 to get a 13" TV that you probably could buy for $100, or 5000 will get you 500 miles that they value at about 1 cent each - you know something is wrong.

Hopefully they will read everybody's comments, and make an adjustment.

I don't find it bizarre. It's like going to the store in Russia and seeing a sign offering bread for 25 rubles a loaf. Under the sign is an empty shelf. The shopkeeper will tell you that the price is 25, but there is none to had at that price. Another store is offering a different kind of bread that you may find inferior, but you can get as much of it as you want for 20 rubles. What's the value of a loaf of bread? 20 or 25?

I don't see a $260 fare as the "worst outcome". If you can't find a $260 fare by planning a couple months out (now the REQUIREMENT of American and others to use an award), you're not a very good shopper. Again, I haven't paid nearly that on any domestic leisure fare in a long time.

See the earlier example. What if you can't buy that 25 ruble loaf? Is is still worth as much?

How do you see this engine?

Chris

What I meant by "worst possible redemption" is that using 25,000 FF miles to get a ticket when a paid seat is available for $260 is a bad idea. I agree with you: I haven't paid over about $220 for a leisure coach domestic ticket in my life.

Perhaps I shouldn't have said "worst possible redemption". There's another thread here somewhere about the worst possible FF awards, and there definitely are a few worse than a domestic ticket. Free rental car days comes to mind.

The value of FF miles is a personal thing, and it varies based on how fast you earn/use them and what you use them for. (We've been over this road many times.) I just found it strange that AAdvantage mileage value is pegged to eBay results for a Southwest voucher. Sort of like saying that since my apple is worth 24.653 cents, your orange is worth 31.421 cents. That's all.

If my link didn't work, go to Yahoo.com and search for "credit card". The first thing in the search results is Yahoo's Money Manager link to compare 200+ credit cards.

I recently laundered a pile of United miles through Diners Club to Southwest tickets, at a rate of slightly higher than a penny each. 50k UA -> 50k DC -> 2 SW tix + 2k DC

No Amex cards were listed except the cash rewards card.

I found that I could "save" ~$5k/yr with the Goldpoints card. What a crock!