Capital One Rewards for Travel, Not for for Everyday Purchases

Capital One is the company that claims they have No Hassle when it comes to their credit cards but when it comes to their miles and points redemption programs it’s a maze of tiers and numbers.  I was sent a Capital One offer in the mail back in January and decided I would try out one of their cards again.  Seems like I could not remember why I did not like them from the last time I gave them a try.

Turns out their rewards program may be the worst of the bunch and is more hassle than I can afford to spend my valuable time with.  The upside to all Capital One cards is that they do not charge a Foreign exchange fee like all big bank credit card issuers such as American Express.  This is no doubt the only reason I would bring a Capital One card with me for a European Vacation.  Three percent is the typical foreign exchange fee charge and that adds up.  Adds up to much more than you would earn with any other rewards card cash back of 1% to 2% you would earn.  On top of that you could get the measly rewards they offer at Capital One.

Let’s talk about the rewards you would earn with Capital One.  Most of their cards seem to give you 2 times the rewards the first year then it goes down to 1 point per dollar.  The Venture Card offers 2 miles per dollar but you have to pay an annual fee of $59 a year (which kind of takes some of those miles away).  The Cash rewards card that has “cash” in the name gives you a straight 1% back and is the best selection of a true rewards card if you want a real redemption of 1:1 ratio.

The redemption rate of using the Venture Card will be better for travel than the other cards and not on a tiered level.  Most of the other Capital One Cards redeem at a tiered level with travel rewards where if you spend $150 or less (one cent to $150) on travel you have to use $15,000 miles.   $150 .01-$350 is a redemption of 35,000 points.  Then it tiers up to the next level after that until you get to $600.01 and greater and the cost and then the number of these No Hassle Rewards needed would be the cost of travel times 100.

It makes more sense to use your no annual fee Capital One Visa for a year at 2 times the points then move on to the Venture Card to get a better redemption value from your travel purchases without the tiered mess.  Although the Venture has an annual fee it pays itself with that better redemption value.   A spend of $50 in travel would be 5,000 points with Venture.  A spend of $90 would be 90,000 miles.

Say if you had a car rental with the regular version you would pay $90 for the car rental but Capital One would make you use your entire 15,000 miles to pay for that $90 rental since its under $150.

The ratio in the first year on the typical Capital One Visa rewards card is not all that bad since it is 2 points per dollar then you go to redeem it it seems to turn back into that one point per dollar so after a year it goes down to less.

An example would be spending $5,000 and not being able to redeem that for the 1% of that which would be a $50 gift card or statement credit like you can do on most rewards cards.  You may have earned 10,000 points off of $5,000 the first year but when you go to redeem it you will have to have 7,750 for a $50 gift card.  If you get 5,000 points you only get $25.  5,000 points can come from a first year multiple of $2,500 in spending though but after that first year when it goes down to 1 point per dollar its kind of a rip off to only get a $25 statement credit for spending $5,000.

I asked about foreign exchange fees on Business Credit Cards and they said they do not charge these fees on any of their cards so that is their best selling point at Capital One.  If you do international travel this card is hands down a must have.  One card that stuck out to me was the newer card offering 3x the miles on a select category including Advertising and Shipping or a category such as Travel and Lodging.