To us at Middle Age Miles, Capital One has always been the weakling of the major credit card issuers. However, through the brilliance of its marketing, Capital One has placed its cards in many wallets across America.
Today, though, Capital One has some big news, on two different fronts, that make it much more competitive in the credit card/points-and-miles world. First, Capital One announced that the “miles” earned by its travel rewards credit cards will soon be transferable to several major international airline loyalty programs, starting next month. And second, Capital One announced some interesting new sign-up bonuses on three of its cards, two of which are of the big-spend, big-reward variety.
Let’s take a look at the Capital One news and start to assess what it may mean in the points-and-miles world.
As an initial matter, you may wonder why the points-and-miles world has had disdain for Capital One. Setting aside from other issues that have made Capital One less attractive, it boils down to this: The benefits of every Capital One personal card can be topped by even the very simplest card on the market, the no-annual-fee Citi Double Cash Back card.
Let’s take a closer look: The two heavily-marketed Capital One personal cards are the Venture Rewards card and the Quicksilver card. Here are the earning structures and annual fees on those two cards:
- Capital One Venture Rewards – 2x “miles” on all purchases, which can be redeemed for 1 cent each as statement credit for travel purchases only – Annual fee, $0 first year and $95 thereafter
- Capital One Quicksilver – 1.5% cash back on all purchases – Annual fee, $0 first year and $95 thereafter
And here is the Citi Double Cash Back card:
- Citi Double Cash Back – 2% cash back on all purchases (1% back when purchase is made and 1% back when paid) – Annual fee, $0
And let’s compare:
- Double Cash Back beats the Venture Rewards hands-down, because it gets 2% cash back (which you can spend on anything you like), whereas the 2% earned on Venture Rewards can only be used to “erase” travel purchases
- And Double Cash Back beats the Quicksilver hands-down, because 2% cash back beats 1.5% cash back
Simple enough, right? God bless Jennifer Garner and Samuel L. Jackson for selling a whole lot of Capital One cards against these odds. And let’s just say that those of us in the points-and-miles world think we can do a fair bit better than the Double Cash Back card’s 2% cash back on every purchase we make.
Today’s Capital One Announcement #1 – “Miles” Will Be Transferable to Some Major International Airline Loyalty Programs
In a move that we certainly did not expect, Capital One announced today that, starting sometime next month, the “miles” from its travel rewards cards will become transferable to 12 major international airline loyalty programs.
The transfer rate for each program will be 2 Capital One “miles” to 1.5 miles in the airline loyalty program. This will give you an option with your Capital One miles. You will still have the ability to redeem them for statement credit to “erase” travel expenses at 1 cent per “mile”, OR you can transfer them to an airline partner. If you’re going to be transferring your Capital One “miles,” then you’re effective earning 1.5x airline miles per dollar of spend on your Capital One rewards card.
Here is a table listing all 12 of Capital One’s initial airline partners, broken down by airline alliance:
Capital One says that it will be adding more airline partners in the future, but we don’t know what those might be just yet.
All 12 of these programs are also transfer partners of Amex, Chase and/or Citi, which will give us the ability to use multiple programs to collect enough points in the airline program for the redemptions we desire. It’s beyond the scope of this article to delve into redemption sweet spots, but we know there are valuable opportunities with some of them, including at least Cathay Pacific, Flying Blue, Aeroplan, Avianca LifeMiles (see our article from yesterday for a recent LifeMiles redemption that was very good for us (see redemption #3 at the end of the article)), and Etihad.
There are 4 Capital One cards that earn “miles” that will gain this transfer ability: the Venture Rewards card, the VentureOne Rewards card, the Spark Miles for Business card, and the Spark Miles Select for Business card. We’ve compiled a chart summarizing these cards, including their current sign-up bonuses, their points-earning abilities, and their annual fees:
Obviously, points-and-miles hounds would focus on the Venture Rewards card and the Spark Miles for Business card, as those have the biggest sign-up bonuses and best points earning abilities.
Which leads us to …
Today’s Capital One Announcement #2 – New Sign-Up Bonuses for the Venture Rewards Card, the Spark Miles for Business Card, and the Spark Cash for Business Card
Why stop with one splash when you can make two? Capital One also sweetened the pot by introducing new sign-up bonuses, effective immediately, for 3 of its primary cards. This includes two of the “miles”-earning cards we just discussed, the Venture Rewards personal card and the Spark Miles for Business card. In addition, there’s a new sign-up bonus for the Spark Cash for Business card.
The new sign-up bonus for the Venture Rewards personal card is outlined in our chart above – 75,000 points (“miles”) after $5,000 spend within the first 3 months. Given that we can, at a minimum, redeem these “miles” at 1 cent per “mile” for travel purchases, the sign-up bonus is worth at least $750. Plus, we may be able to get even greater value by transferring the “miles” to airline programs. We did not see any deadline on the Capital One website for this new sign-up offer, but of course it’s subject to change at some point.
The new sign-up bonus for the Spark Miles for Business card is also outlined in our chart. It’s a two-tiered bonus where you can earn up to 200,000 points (“miles”):
- You’ll earn 50,000 “miles” after you spend $5,000 within the first 3 months; and
- You can earn an additional 150,000 “miles” after you’ve spent a total of $50,000 within the first 6 months
That’s a total of 200,000 “miles” if you can spend $50,000 or more on a business card within 6 months. At 1 cent per “mile” for travel purchases, that sign-up bonus is worth $2,000.
Another way to look at the second “big spend” tier is that you’d incrementally spend $45,000 to reach the $50k threshold. You’d earn 90,000 “miles” on the spend, plus another 150,000 from the bonus. That’s an effective return of 5.33% (240k “miles” at 1 cent per mile, divided by the $45k in spend). It’s a pretty solid return if you’re comparing it to regular unbonused spend, but it wouldn’t be a great return for any spend in a bonus category for a different rewards card or for spend toward most sign-up bonuses.
Finally, the new sign-up bonus for the Spark Cash for Business card is similar to that for the Spark Miles for Business card and also two-tiered – it’s just denominated in cash back rather than miles. It’s up to a total of $2,000 in cash back, as follows:
- You’ll earn $500 bonus cash back after you spend $5,000 within the first 3 months; and
- You can earn an additional $1,500 bonus cash back after you’ve spent a total of $50,000 within the first 6 months
The earning analysis is the same as for the Spark Miles for Business card above.
The new sign-up offers for the Spark Miles for Business and Spark Cash for Business cards don’t have an expiration date, but they are each prominently marked as a “Limited Time Bonus Offer.”
Initial Impressions and Other Considerations
It’s nice to have a new player in the world of transferable credit card points. And all of the news in today’s Capital One announcements is uniformly good.
But is it helpful? Critics would say that you can earn 2 transferable points per dollar of spend on the Amex Blue Business Plus card, compared to just 1.5 for the Cap One cards. And the Blue Business Plus has no annual fee. So, who cares about the new card? This would be a great point. But there are trade-offs. The Blue Business Plus has a cap of $50,000 spend a year to get 2x Amex MR points. Also, the Blue Business Plus points aren’t as flexible, in that they can’t be directly redeemed for 1 cent per point for a wide variety of travel purchases. Plus, the availability of the Cap One card gives us another sign-up bonus possibility with a different issuer. Anyway, there’s some complexity to the analysis, but the Cap One cards are certainly not automatically DOA compared to the Amex Blue Business Plus.
The Cap One cards also have the limitation of having no bonus categories, save for the 10x bonus on the Venture Rewards card for purchases at Hotels.com. For us, we have quite an assortment of cards with a variety of bonus spend categories, such that a whole lot of our spend is bonused. Bonus category earning will almost always beat the unbonused earning we’d get if we used a Cap One card for these expenses.
Another consideration with Cap One would be its application and approval process. Cap One is known to do a “hard pull” with all 3 credit bureaus, which is a negative for those who apply for a lot of credit cards. Historically and anecdotally, Cap One has been known to be difficult to get approvals, especially for people with multiple cards (and especially multiple recent cards). That said, I already see a couple of comments where people are reporting fairly easy (and possibly surprising) approval for new Cap One cards today. A further negative on the Spark Business cards is that it appears that Cap One reports those cards to personal credit reports (unlike almost every other business card). That means, among other things, that Cap One business cards “count” toward the Chase 5/24 Rule and other rules related to the number of new accounts.
Finally, it appears that the Capital One cards have some version of a once-per-lifetime rule for sign-up bonuses. The Spark cards may even have a once-per-lifetime-for-the-Spark-family-of-cards rule. The exact language is as follows:
- For the Venture Rewards card: “The bonus may not be available for existing or previous account holders.”
- For the Spark Miles for Business card: “The bonuses may not be available for existing or previous Spark cardholders.”
It’ll be interesting to follow the developments with Capital One. We’ll report on any meaningful developments in the future, and we may be back with additional analysis. In any event, as we discussed from the top, it’s always good to have better rewards and more options in the points-and-miles world. Welcome to relevancy (I think), Capital One.[Hat Tip to View from the Wing and One Mile at a Time for information used in this article.]
What do you think about the Capital One announcements? And what’s your strategy in response? Please share with us and other Middle Age Miles readers in the Comments!
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