Frequent Miler on the Air - Award Travel is Free! No, it's not. Does it matter? | Ep176 | 11-12-22

Episode Date: November 12, 2022

Are miles and points free? Do we use them for "free travel"? Does how we earned the miles make the travel more or less free? This week, we talk about costs and trade-offs of "free" travel. Join our email list: https://frequentmiler.com/subscribe/ 00:43 Giant Mailbag 04:59 What crazy thing....did Barclays do this week? Arrival Plus adds transfer partners https://frequentmiler.com/barclays-arrival-plus-adds-transfer-partners-are-more-changes-in-the-offing/ 10:44 Mattress Running the Numbers: Why Greg isn't transferring to Aeroplan https://frequentmiler.com/chases-30-transfer-bonus-to-aeroplan-is-awesome-but-im-not-buying-on-my-mind/ 16:27 Awards we booked this week Greg: A weak use of a Cat 1-7? Nick: Hyatt suite success 26:20 Main Event: Award travel is free! No, it's not! Does it matter? https://frequentmiler.com/the-joy-and-myth-of-free-travel/ 27:39 Opportunity Cost 31:16 Redeeming points: is it free? 42:50 When people say "my travel is free", are they talking about the earning or redemption side? 52:55 Is acquisition cost relevant to your redemptions? 1:08:44 Does free matter? What is the Joy of Free worth? 1:20:05 Question of the Week: How can one meet minimum spending requirements on business cards?

Let's get into the giant mailbag. What crazy thing did City do this week? It's time for Mattress Running the Numbers. Ready for the main event? The main event. Frequent Miler on the air starts now. Today's main event, award travel is free. No, it isn't.

Does it matter? That's what we're going to be discussing today for the main event. It's not free, Greg. It's not free. It costs you. We'll talk about it. Travel is free. Okay. A little nod to an oldie but goodie favorite old blog. Anyway, let's get into the giant mailbag. Today's giant mail is quite giant. It comes from Erica and it's in response to a conversation we had, I think it was a few weeks ago, where I talked about how I had success in changing an award flight to New Zealand because there was a schedule change. I was able to call up United and get a

much, much, much better routing. And in that conversation, we said approximately 17 different times that the reason I was successful in getting that great routing change was because the new flight and the old flight, but it doesn't really matter about that. What the new flight was on United's own metal, meaning it was on United's own flights and it was a United award. So I'd used a United miles and I called up United and I was able to change it to another United flight. They have a lot of flexibility in what they do. So Erica wrote, says, hi, listen to the podcast last week.

You were talking about Greg's schedule change to New Zealand that allowed him to rebook. Just FYI, it is possible on at least some airlines when there's a schedule change to get them to put you on a partner flight. I live in Portland and pretty constantly use Avios, which is British Airways and Aer Lingus and others. I use Avios to book the one way from Portland to Hawaii on Alaska Metal using Avios for 12,500 miles. Often the red eye will open up for partner bookings, but not the earlier flight. I book a year in advance and pretty much bank on a schedule change.

It hasn't failed me yet, knock on wood. Done this about a dozen times. British Airways has a way to back-end message Alaska and ask them to open up the space following a schedule change. I've had to do this multiple times and coach them through this once when they claimed it was impossible as well. One time I even three-way called an Alaska agent who told the BA agent how to make it happen. So it is definitely possible. I feel like I have also done this with American or United as well, but I can't remember the specifics. So anyway, so this is in short, what Erica says is

that she's booked really badly timed, like red eye type flights using obvious points, British Airways points, but to fly an Alaska metal. And then when there's been a schedule change, she calls British Airways and they've been able to get her on a better Alaska Airlines flight, even though that Alaska flight, the better one, does not have award availability accessible to British Airways directly. Yeah, that's a great piece of feedback. And actually, it reminds me that I've run into similar situations once or twice where the airline has like there's some partner. I remember I can't remember the situation exactly, but I had this type of thing with American once where they had to contact the partner desk or something, which had to contact the airline about figuring out the ticket. And so they do have relationships and they can ask,

though I think more often than not, I think most airlines are not going to open up space unless it was their mistake. And even then, I don't know. But this is a really good tip that it works specifically with Alaska and British Airways. That doesn't really surprise me because Alaska has pretty good customer service, to my knowledge. Anyway, agents have always been pretty knowledgeable on the phone. So I didn't know that this was possible, but I'm at the same time not wildly surprised as I would be with some other airlines, I think. But good to know that you can try. You might as well try, right? I mean, you got to take a swing.

Right, right. Good info. Yeah. And it sounds like she not only tries, but sort of counts on it in this specific case, which is pretty amazing. That is amazing. So that's great info.

I had no idea. I can be pretty confident in saying this wouldn't work if you use ANA miles to book Air Canada. I'm pretty confident. He's pretty confident about that. Pretty confident about that based on my three carts, three continents experience. Anyway, so that was the giant mailbag. So what do we have next up?

All right. Well, we've got what crazy thing did Barclays do this week? Barclays, where are you coming? Like Barclays coming from deep here. Like we haven't talked about Barclays in forever because they haven't been anything to talk about, right? Out of the blue. So the Arrival Plus card, do you remember this card?

I mean, vaguely, vaguely. If you hadn't brought it up, I probably would have forgotten about it. The only Barclays card I really care about these days is the Wyndham card. And even that I think of as the Wyndham card first and not Barclays first, because Barclays got rid of their in-house card, the Arrival Plus. This card did exist years ago. It was very similar to the Venture card in that it earned two points per dollar and you could use those points to

offset travel expenses, right? The Arrival Premier, I think that was. Oh, okay. That... No, I'm sorry. So they had the Arrival Plus, which is what I was asking about. Yeah, it earned two points per dollar and you're right, yes. You can offset travel for... One cent per point.

Originally, it was one cent per point, but you would get 10% back. So it was sort of worth 2.2 cents per dollar spent on the card since you earn two points per dollar. Anyway, it doesn't matter. Then they changed it to a 5% rebate and they made the minimum redemption like 100 bucks. And it made it very awkward to use a card. And while other cards were getting better, this one was getting worse. So this card has not been available new for a long time, but for a brief period of time, there was another card. And this is what I mentioned, the Arrival Premier, which was very

similar to the Arrival Plus in some ways, except it had the ability to redeem for airline miles. You could transfer points to airline miles at a weird ratio. So it was essentially like, I don't know, 1.4 to 1 or something like that. And so that card didn't go anywhere and it died in about six months after being introduced. So the crazy thing that Barclays did now is the Rival Plus, which still exists, but is no longer for a while, for a long time, hasn't been available in new applicants. It exists if you've had it and never got rid of it. It exists for a small pool of people that opened it. I don't know. It had to have been at least three, four years ago they stopped taking applications on this, right?

Right. So, this is the people that still wanted to pay the annual fee on this card each year. Right. Which was not me. I stopped that quite a while, yeah. And yeah, so still have the card. Anyway, you now have the ability to transfer points to airline miles. Yay. Amazing. Yay. But it's not one-to-one. So you're going to have to do some serious math to figure out if it's worth it.

And in some cases, it probably will be. But yeah, it's not a slime dunk necessarily. I mean, if you've still got the card and presumably you've been earning points, then it might be worth it for transfers to Japan Airlines miles. So I totally forgot about the transfer partners on the old arrival premier card that was, you know, flash in the pan and gone. Right. But I guess it's the same partners in the same ratios. Yeah. When I went back and read my post about that arrival premier card that lasted for

all of six months, all I talked about was using the miles for Japan airlines, because that was the only thing that seemed worthwhile at the time. And without even looking at the transfer partners, again, I can tell you that probably you can earn miles in any of the other programs at a better rate than what Barclays is offering you with lots of other cards on the market these days. So there's just no point unless you're going to transfer probably to Japan Airlines. But anyway, all that out of the way, just nuts, nuts that they would do this years after the fact. Like I said at the time when I wrote my post about the arrival premiere dying in six months, I said it was really strange because they were going to continue servicing that card. So people who got it during the six months it was available

could keep having it and using it and transferring to airlines. And I said, you know, it's kind of crazy that they went to the expense and trouble to create a transfer partner program and only keep it alive for this small group of people that got the card and are going to keep it and just for that one ultra premium card.

So at the time I kind of thought maybe they would expand it to the arrival plus but then they got rid of the arrival plus also so like they've been paying to maintain this transfer partner program for years whatever that costs to maintain uh to now suddenly add it to the arrival what what a weird weird thing yeah yeah you know. Yeah. I would be excited. Maybe this means that they're going to be coming out with a line of arrival cards that are going to compete against Chase and Capital One and Amex and Citi. But if they're going to keep these transfer ratios, I'm just not interested. You're probably better off just buying miles when they're on sale and using a 2% cashback card than doing something like this. Right. I mean, I'm thinking that if they brought it back with the terrible transfer ratios,

then maybe they intend to launch a good product that has like regular transfer ratios, one-to-one type of things, except maybe not. I would put the smart money on probably not there. I don't know what Barclay's strategy is, but that's probably not it. So yeah, crazy, crazy. Thanks for giving us a little something to laugh about this week, Barclay. So I don't know where you came from with that, but okay. All right. let's talk next about mattress running the numbers. So we talked recently about the Aeroplan transfer bonus that's on through November 30th,

where you can transfer your Chase Ultimate Rewards points and get a 30% bonus when transferring to Aeroplan. And we both talked about how this is that rare instance where it might be worth speculatively transferring, but here we are only 10 days into November and you are ready to confidently assert that you're not going to do this transfer bonus, Greg? Yeah. Yeah. Last week I said I was thinking I probably would, but I wasn't sure yet. I thought about it some more and here's what I realized that I have a finite number of Chase Ultimate Rewards points.

Yes, I earn them, but I've been spending them at a faster clip than earning them. So I want to spend them on the thing that I know I need, which is Hyatt. And so I need to keep my points available to transfer to Hyatt because all my other transferable points that I have don't transfer to Hyatt. Built is the only other program that allows that. I don't have a built card. And even if I did, I mean, it's hard to earn, you know, huge numbers of built points quickly. It's a great card, but not one for earning

hundreds of thousands of points at a time. However, Amex membership rewards is like the opposite for me from Chase, which is I've been earning at a far greater clip than I've been using the points in that program. They transfer to Aeroplan. They occasionally have transfer bonuses, not 30% to Aeroplan, but occasionally they're 15% or something. I would much rather transfer when I need Aeroplan points, transfer from Amex membership rewards, even if it's going to cost me more rewards, because they're so easy to replenish. I've been just earning like crazy with all these 150K and larger business platinum offers, with referral offers, with Rakuten shopping portal allowing you to earn membership rewards. So all those things add up to the cost of acquiring my membership rewards is tiny. So indirectly, the cost of getting

Aeroplan miles is less, even if I compare with a 30% bonus. That's interesting. So I was ready to argue why you were wrong from the get-go, but you made a really compelling argument there as to why. And I sit in the same boat with lots of membership rewards points, far more than I have ultimate rewards points right now. Uh, so I was on the other side of this and I'll explain why I was on the other side of it, even though maybe you convinced me, uh, not to do it. So I was on the other side of this because I was looking at it and I was saying, yeah, I want all my points for Hyatt and I I've used a lot this year and I, I intend to continue using a lot of points for Hyatt. So I've used a lot this year and I, I intend to continue using a lot of

points for Hyatt. So I kind of want to protect my ultimate rewards points, but then I was like, well, but aeroplane is so useful. This is such a valuable bonus. And I said to myself, well, you know what? Staples just keeps running these fee free visa gift card promotions. And this last week I've been a number of times to Staples. The last two weeks they've had, I think, straight. They've had 5X promos. And you can buy up to eight per customer per day. So my wife and I will both walk in and walk out of there with $3,200 in cards, 15,000 Ultimate Rewards points quite easily.

And next week, there's another one coming. So they just keep running these things. So there's constantly the ability to earn Hyatt points or earn Chase Ultimate Rewards points at 5X. And they've got the new 90K offers on the Unlimited and Ink Cash card. And so I'm thinking we could add one of those cards with the new 90K offer and hit up some of these 5X things that Staples keeps doing. And I could replace whatever it is that I transferred to Air Canada in not that long.

So I said to myself, well, how many Hyatt stays do I have coming up? I have several that are already booked. So I've already had the points for those. And I asked myself, well, if I transferred, let's pick a number, 100,000 or 150,000 points to Aeroplan, how long would it take me to make those points back up for my next Hyatt stay? And I thought, well, not that long with all of these opportunities to earn ultimate rewards right now. So I was actually leaning towards, you know what, I'm not going to make

that many more Hyatt stays between now and two or three months from now when I could have earned the points back. So I was leaning towards maybe doing the speculative transfer, but you're right. I do sit in that situation with lots of membership rewards points. They do every now and then. It's pretty rare, but every now and then they offer a transfer bonus. And even if they don't, I have a lot more of them. So we'll talk more about the cost of redemptions later on. But yeah, I think that was a good argument and I'm still on the fence. I'm not totally convinced either way. No, it makes sense. And it sounds like you're earning or have the potential to earn ultimate rewards at a faster clip than I've been doing,

mostly because of me just being lazy. It's been easy to earn the membership rewards from home. It's very true. It's very true. So that's the deal with that one. Yeah. Yeah. That makes sense. That makes sense. But I, and I say, I still am willing, very much willing to go out and hit up a Staples or two. And I've been lucky in the last few weeks, I've been in places where there've been a few stores and blah, blah, blah. So it's, it's not been bad. Yeah. All right. So that's Mattress Running the Numbers. You make up your own mind out there. Choose your own adventure.

Let's talk about awards we booked this week. So, Greg, you booked anything interesting or had any interesting dilemmas? Yeah. So I have a Hyatt stay booked in New Zealand. The Park Hyatt Auckland. Very nice. Okay. Looks nice.

Yeah. And at some point, I realized that I have a category one to seven Hyatt free night certificate. And so I messaged my Hyatt concierge, which is a contact you get when you reach 60 nights at Hyatt, you get someone sort of assigned to you who can do things for you, like apply a certificate to an existing reservation, which is what I asked her to do. But then after she did it, I realized, wait a minute, that Park Hy height is only a category five property. Oh, no. What are you doing with a category five?

I just sort of had in my mind. Yeah, right. I just sort of had in my mind, well, it's a park height. It must be like at the top. And so I then emailed her and say, wait, nope. Can you reverse that? And at the time I asked her to reverse it, I didn't remember when the thing expired. And when it expires now, now that it's reversed,

is in April. And the Park Hyatt is at peak pricing, so 23,000 points per night. So I could basically exchange my category one to seven cert that expires in April for 23,000 points, or I could hold onto it hoping that I have use for it before mid-April for more than 23,000. The most it can be used for is category seven peak, which is 35,000. So at best I can get 12,000 extra points basically for the free night certificate. I'm on the fence. That's tough. That's tough. I mean, I think, oh, I don't know. I'm not sure what I would do there. I think I would probably make the exchange now. And then if something comes up, you could probably trade it back again. Right. So I'd probably have it attached so that you know that it's being used and it's a done

deal. You're not going to forget about it. But then if a situation comes up between now and then where you're going to be at a place with a category seven, I mean, I like to seek those opportunities out. So I'd probably be looking for one of those opportunities to use it. At the same time, I know my travel plans between now and next April, and I don't think I would have a place that I would have a category seven to use it at that I'd I would want to use it at more. So I mean, this is a dilemma with the free night certificates. This is the problem with them, right? Because I ran into this too, where I just, I used an IHG certificate last week, a certificate worth up to 40,000 points for a property that was only 30,000 points.

So I felt a little bit like I was losing out, but at the same time, cash rates were like 250 and I pay $49 a year for the IHG card. So I said, you know what? It's fine. That's fine. And that points I could have bought during a sale for 150, of course, when they run their half off sales. But these are the dilemmas you run into with the free night certificates. So I think you got to use it. You know, you have a good use of it. It's not a great use, but it's a good use.

Would you use it even if it meant going back to the Hyatt concierge and saying, remember how I told you to do something and reverse it? Now I want you to reverse that again. No, I would call. I'd call the 800 number and make somebody else do it. Someone else do it. Or, well, in my case, because I'm not going to have 60 nights again, I'd probably just email back because what have I got to lose? I've only got another couple of months with my concierge anyway.

So if I lose a little face, oh well. Yeah, yeah. But that is a funny situation. I assume you don't have anywhere else in mind to travel where there is a category. I mean, there aren't that many easily accessible high category ones, right? Yeah, the one that I can think of coming up is I think it's category eight that I'm going to be staying at, so I couldn't use it there. There's another one that I think is category seven, but when I had asked her previously about

it, she said because there were no award nights open anymore, she wasn't able to swap it out. And it was SLH. So I don't know if that matters. They might have less ability to get in and swap it in that case. I'm not sure. Yeah. Interesting. Interesting.

Yeah. Yeah. I mean, that's the problem. The first place that came to my mind was the Park Hyatt, New York. And I thought, well, no, that's a category eight. So, yeah, it becomes an issue. Then you got to plan a trip around a category seven property and use points because you're going to stay more than one night.

I'd swap it out for now and hope. And if that's a permanent solution, that's still better. Like if you could trade it in when you get to the end, if you could trade it in for 20,000 points, you'd probably take the 20,000 points. So you're getting 23. It's a small one. Right. Right. Yeah. Good point. Not bad. All right. All right. I'll do that. So I have a Hyatt story also. And this is a very different Hyatt story, but one that I think is useful. So I have an upcoming booking at a Hyatt property, the Andes Fifth Ave in New York. And I ran into a problem and Greg figured out what the

problem was. And so I'll get to his solution in a second. But my problem was this. I had a standard room booked with points and I wanted to apply a suite upgrade award in order to stay in a suite. However, a suite, a standard suite was not showing up as available for my dates. And I kept checking and checking and there was no standard suite available for my dates. I was up and checking for weeks. And then on a whim, I said, you know, let me check the nights individually. I wonder if there's a suite available either of the nights that I'm going to be staying. Right. So I pulled it up and I found not only was there a suite, a standard suite available on one of the nights, there was a standard suite available both of the nights. The Andes suite is the standard suite that the Andes Fifth have.

And when I searched the nights individually, that suite was available. But when I searched both nights together, it was not available. Now that's a problem you run into sometimes the other way around where a particular room type has a minimum stay. But this was odd because, you know, one night stays, it was available, but multi-night stays, it wasn't. So, so that threw me for a loop. And for some reason I also had in mind, and this is a mistake that I had in my mind that I imagine I'm not alone in. I had been looking for a premium suite for some reason, thinking that I needed to see not a premium suite. And I take that back a standard suite.

For some reason in my mind, I thought I needed to see the standard suite available to book as an award stay in order to be able to apply my upgrade. And that's not the case. Of course, if there's a standard suite available for booking and you've got one of those milestone rewards with Hyatt, it doesn't have to be available for booking with points to apply your suite upgrade. Remember that. Anyway, so available on these two separate nights, not together. And Greg realized, aha, I bet the reason for that is because there are different suites labeled as the Andaz suite. And so maybe somebody booked a couple of nights and somebody

else booked a couple of other nights. And so the same exact one isn't available both nights just because of the way the computer system is allocated rooms. So it's not showing up available for two nights, even though there is a suite available. And that made sense immediately because I've stayed in Andes suites at the Andes Fifth Ave a number of times in the past, and I don't think I've gotten the same suite twice there. They've always been pretty different. And so it's just a matter of the computer system allocating rooms as the computer system does. And so it didn't realize that there was this room type available because that specific one was allocated oddly. So anyway, the short version of the story is I called the Hyatt Globalist line and without any problem, I just explained to them exactly what was happening. The end as suite was available on the separate nights, but not both nights together. I wanted to see if it was

possible to apply a suite upgrade award, put me on hold, came back a couple of minutes later and said, yes, your upgrade is confirmed. It's done. So it was, I'm sure just a matter of calling the property and getting the computer system to reallocate the rooms for me to be able to have one that was available both nights. So moral of the story is if you're looking for a multi-night stay and you don't see that standard suite available, maybe check to see if it's available on all of the individual nights of your stay. I think it's wild because Hyatt is missing out on revenue. They don't have that suite available for booking for two nights when it is available. They're missing out on money on that, which blows my mind. But anyway, that's just a tip. Look for those nights individually and see if you've got

a suite available. Yeah, great tip. And actually, the tip too about just look for the standard suite to be available even for cash to see whether it's possible. That's good to know too, or to remember. I think I've fallen into the same trap sometimes. So I need to sort of put that somewhere in my brain so I remember it when I'm looking. And I guess the third thing to sort of keep in mind is more generally that sometimes people over the phone can accomplish things that can't be done online. And so it is often worth calling to see what they can do. So we booked some awards.

You booked some awards. I booked some awards. We talked about whether or not to speculatively transfer. What is all this stuff worth? Let's get into the main event. Yes. Main event time. Award travel is free.

No, it's not. We're going to talk about does that matter? But we have actually four separate subtopics here to dive into. I'm going to read them real quickly and then we'll dive into them one at a time. First one is opportunity cost. I think it's a useful tool. It's not the final answer about whether things are free or not. And I'll explain why. Topic two, earning versus redeeming points. Which one is free? Is it the points you get when you earn them that are free? Or is it the travel you get when you redeem points that's free or neither? Well, we'll get into that. Topic three, when redeeming points, does the cost of acquiring those points matter?

Does it matter that you got your points for free? Does that make your travel free? What if you paid for your points? Is the travel free? So that's the third one. And finally, does any of this matter? Does it matter whether or not your travel is free? And we'll talk about that. It should matter. It does matter at the very least psychologically. And we'll talk about why we think that's true. Okay. All right. Let's talk about opportunity cost. So what do I mean by opportunity cost? Here's an example. Let's say there's a really easy to get bank bonus. Sign up for this bank account and we'll instantly give you $300 just for signing up. There's nothing to do. Or we'll give you 15,000 points. So you get either $300 or 15,000 points. If you pick the 15,000 points, you could say that your opportunity cost is $300, that you had the opportunity to get $300 or 15,000 points. So you're giving up the $300. That's your opportunity cost of this.

But I will assert that no matter which one you pick, the $300 or the 15,000 points, it's fair to say that the reward, either one, is free. You got for free $300, you got for free 15,000 points, whichever you did. So saying that there's an opportunity cost does not eliminate the, the, the, the, the idea that something is free. It, it, it, it is a tool. Uh, and, and my assertion here is that it's a tool for deciding. So when, when you're deciding whether to pick 15,000 points or $300, you can imagine, would I pay $300? Because I'm giving up the chance of getting $300. Would I pay $300 for those 15,000 points? And if you look at

it that way and say, well, gee, would I pay two cents per point for these points? What are these points worth? And if you know that they're not worth more than 2 cents each, then you might as well take the $300. So it's a really useful tool in that way. Yeah. I mean, and I understand what you're saying, that it's free either way. But you see, I know I look at it a little bit differently anyway, in the sense that essentially, if you take the 15,000 points, it's like somebody saying, okay, here, I'll give you $300 and then you go over there and trade it for 15,000 points. To me, it's like buying the points because you did give up that opportunity at 300 bucks. And I guess that's what you said

at the end there. It feels to me like buying points for 2 cents each when I had the opportunity to take $300. I gave that money up. And so that's a trade that I think I often just don't think hard about, even though I know that it's there. I don't think a lot about it. And I think that some people might not think about it at all, or at least don't present it that way when they talk about it. And I think that that's, I don't know, it's an important thing to consider what you're giving up. Yeah. Yeah. I agree. And that's why I say it's a very useful tool for making decisions. I think it matters when there are choices, right? So if there was no other choice, if it's just like you get these 15,000 points, then it would feel completely free to you.

Whereas because you were given a choice, it doesn't feel as free. That again, we'll get into our last topic of the day. The other side. So that's acquiring points. Like you get points and they're free in that example. They're not always going to be free, but in that example, you get points, they're free because they're just sort of given to you for doing something trivial. What about when you're redeeming points? Let's say you redeem 50,000 points for a two-night hotel stay. But those same points, let's say, those same 50,000 points can be redeemed

for $500 cashback. So again, I would say this is a little different. In this case, I'd say neither one of those prizes are free. In either case, you're paying 50,000 points. So that 50,000 points has become a currency that you own. And in order to get the two free nights or the $500, you're paying for it. You're paying your 50,000 points. The question is, it's not really a question. The opportunity cost for redeeming for 50,000 points is that $500. You could have redeemed for $500. So there's that opportunity cost. And so, yes, so I go back to, it's a useful tool for making a good decision.

Would I rather have these two free nights or $500 cashback? Yeah. And I, again, I mean, it's the same kind of a thing that, that you are making the trade. And I think that it's, you're making a good point there in the sense that either way, whether you take the two free nights or the $500, you have to give up the 50,000 points. So if you take the $500, you give up the chance for a future two nights stay or whatever else you might've done with the points. If you take the two nights, then you give up the chance for the $500.

So either way, it's gonna cost you something to make the redemption. It's deciding which cost is less painful at that point, right, like many other choices in life, whether it's which brand of car to buy or which gallon of milk you're going to buy at the grocery store. It's a matter of choosing which one is the purchase you can live with. So your 50,000 points, I think the thing to remember is that in many cases, they are a

currency and that currency does have other options for redemption. So it's not, they aren't the monopoly money that they look like all the time. There are times when they are, there are times when the points can only be used for one thing. And we'll talk about that later. And it feels more like a monopoly money. But a lot of the current states we talked about, Chase Ultimate Rewards, Amex Membership Rewards, City Thank You Points, many of them can be used similarly to cash. And so you have to consider what it's costing you when you're redeeming. Yeah, absolutely. And you sort of described it as you have to figure out which one's more painful, but I think which one would be more pleasurable, which would you rather have, which would be a

better exchange for your points getting these two nights or $500 cash. See, there's Greg the optimist and me the cynic there. I'm looking at what you lose and Greg's looking at what you gain. Exactly. Now, in the real world, points are not usually limited to just two hotel nights or just $500. Usually, there are many other things you could spend your points on. And so for example, maybe those same 50,000 points could be used, could be transferred to a mileage program and used for a one-way flight to Europe in business class, for example. So that would be another opportunity that you'd have to weigh. If you only had 50,000

points and you were going to spend them in one of these three ways now, which one would be least painful or most pleasurable, depending on whether you're Greg or Nick? Now, so when you say the most pleasurable out of these, so I mean, how do you really think about it? Like, is it the most, see, I understand your point with the most pleasurable, the one that you actually want out of those three options, right? But if the cash price of the hotel or the flight, well, I guess the way you're presenting that makes it sound like the cash price of the hotel or flight is irrelevant. It's what would give you the most pleasure, except that obviously redeeming for something more valuable probably gives you more pleasure.

So, you know, when you look at something like that, the two night hotel stay is probably worth more than the five hundred dollars, but less than the cost of the business class flight. And I say probably, there's so many variables here. So at what point do you decide, okay, I'm going to use it for this or for that? Does the cash price matter? Is that something that you factor into how you use the points? Yeah. I mean, I think the cash price matters to help you make a logical decision. But I'm not really sure it matters in general. So, for example, suppose I just don't really like business class flying, that I'm just as happy in basic economy as a life lab business class seat, then it wouldn't matter to me that I could get a business class flight.

But maybe this hotel I'm really excited about staying at. And so the actual cash prices then don't really matter that much in that example. Fair enough. So now, of course, in real life, you can't know or keep in your mind all possible possibilities of how you can use your points. And they're hardly ever one-to-one the way we're representing it, meaning it's hardly ever a choice between redeeming exactly 50,000 points for this thing or that thing. Usually it's like, do I redeem 32,000 points for the hotel and 87,000 points for the flight? It's going to be much more complicated than that. And so that's one of the reasons why we create reasonable redemption values. These are point values at which we think it's reasonable to redeem your points at this rate. And so that you don't have to consider all possible possibilities. is this at least a decent value compared to the cash rates?

So that I know I'm at least getting something, you know, getting a decent value for my points. Preston Pyshko So let me back up. So if you redeem those 50,000 points for your business class flight or your hotel, did it not cost you $500 to get that flight or a hotel? It didn't cost me 50,000 points. It didn't cost me $500. It mentally may have cost me $500 in that I could have put $500 into my bank account instead of taking the flight or staying in the hotel room. But I don't know. I think it's incorrect from a sort of accounting point of view to say it cost me $500, but I do

think it's a reasonable way of, again, back to it's a reasonable tool for evaluating, is this a good choice? Because knowing that I could have had $500 might make me say, well, wait a minute, I could book this hotel for only $400. It'd be crazy for me to use my points for the hotel when I could instead cash out and book this hotel or maybe some other hotel that I value equally for $400, then that's a really useful tool, I think. I just don't think of it as costing me $500. That's just a little difference in how you, I guess, think about it. Yeah. Well, yeah, I do. Because I do think about it more like it is costing me $500 because that is that 50,000 points. I mean, the points are a made up currency,

right? They are a monopoly money in the sense that they're not anything really you could use at the store, at the grocery store, you know, to pay for. Well, maybe there's some currencies you could, but it's not something you could pay most things with the points directly. You'd have to redeem them. So I look at the points as like a coupon of sorts. And so, you know, I do look at it as, as functionally the same as if Chase said, okay, you can redeem your 50,000 points for $500. And then we'll let you book this hotel for $500 plus this, you know, coupon that we gave you. So I, it almost functions like a coupon code for me in that sense that it's like, to me, it does represent dollars and cents. It's just this ticket to something at a discounted price.

Essentially, I'm paying a discounted price for the whether it's the hotel or the flatbed flight. That's the way that I tend to look at it. Well, I shouldn't say I tend to look at it that way. I tend to close my eyes and ignore it. But I feel like I should look at it that way. I tend to close my eyes and ignore it, but I feel like I should look at it that way more. Yeah. Although I think that, I don't know. I think that sets, in some cases,

artificially low floor for your point value. So if you think about Chase Ultimate Rewards, where with the Safari Reserve, you can get 1.5 cents value, not just for travel, book through chase, but also for pay yourself back categories, including some easy to use ones like dining. At least right now, they potentially change them every three months. I think it'd be reasonable to set the bar more at 1.5. And again, for me, it's not so much that it costs me when I spend my points. I don't think of it as costing me 1.5 cents per chase point. I think of it as

I want to redeem for that much value or better in order to feel good about the choices I've made for how to spend my points. And it's just a different way of thinking about it. Yeah, I think, I think it is. And that is a good point. And I didn't, I haven't been redeeming points, pay yourself back for dining, but somebody commented with that, my post. And I thought to myself, well, darn it, I should be because here's a situation where I really literally am paying out the dollars and cents, you the 50,000 points that we're talking about, I'm sure in the last few months, I've spent $750 on meals out that I could have covered with 50,000 points. And instead, I'm going to use 50,000 points to stay at a hotel.

Well, I mean, 750 bucks has come out of my bank account to pay for those meals that the 50,000 points could have. So it does very much look to me like I'm paying $750 to keep the points. So they do feel like, I don't know, more like I'm spending something, but we could be the labor this point all day long. So I think your points are good. And so, all right. So we got a reasonable redemption values and we talked about the opportunity cost for earning and now a little bit about the redeeming. Right. But the redeeming, of course, we said, like, it's never free because there's always a cost. There's something else you could have or at least a trade. There's always a trade you're making. Yeah. Yeah. You're always you have some kind of currency, some points, some certificates or something.

So whatever you're redeeming for, you're trading that stuff. You have some kind of currency, some points, some certificates or something. So whatever you're redeeming for, you're trading that stuff. So let's dig into that a little bit more, though. When we're talking about free, when people say my travel is free, are they talking about the earning or the redemption side? And whether or not they're wrong about it being free. Let's get to that in a second. But is it free because you sign up for a credit card and get a hundred thousand points and you use those? Or is it free because you redeem points which have like no intrinsic value and so you got something of great value for those points? Is that why it's free? So on the earning side, let's say you have a rewards earning credit card. I would assert sort of like I did earlier that

when you're spending and you're getting rewards for that spend, those rewards are free. It's just that you're making a choice. Am I getting free points or am I getting free cash back? So when you use a 2% cash back card, you're getting free 2% cash back. When you use a Freedom Unlimited card, you're getting free one and a half points per dollar from Chase. So that's the way I think about it, that they're both free. I understand the counter argument and I've made that, I've made the same assertion myself many times in the past on the blog that when you choose to earn points instead of cash back, you're essentially buying those points because you're giving up the cash back. And I'm going to go back to saying, I think that's a tool for making a good decision

rather than literally it not being free. You know, and I hear what you're saying, but if you offered to pay my salary in points, right? If you offered to pay me my salary in ultimate rewards points, would I not essentially be paying my monthly salary for those points? I mean, I'd be making a trade every month. And so I think that it, I don't know, we look at this differently because I definitely do think, and it's not to say that I don't make

the same decision as other people in terms of earning rewards instead of cash back, because I do it all the time. But I definitely feel like it's akin to paying for them. It's akin to somebody giving you two cents for every dollar you've spent and you saying, OK, no, thanks. I'm going to spend those two cents on buying these two membership rewards points instead. Now, I know you're not actually making that transaction, but functionally, it's not any different to me. So if Ed McMahon came to your door and said,

here's, you won, here's a million dollars or a hundred million points, some kind. Would I not? Yeah, of course I'd feel like I'm buying the points, right? You're buying the points? Yeah, because the other option is cash. If the other option wasn't cash, right? If it was like, here's a hundred million points or a luxury yacht, right? Then in that case, it doesn't feel like I'm buying points because I didn't have money either way. Now, you can make the argument I could sell the yacht and have the money. So, I mean, we could probably

dig into that like eight levels deep. But to me, that feels different when the choice is between two non-cash things or cash versus a thing. And if I give up the cash, then yeah, the thing is costing me the cash, right? I mean, it's like, have you ever watched Let's Make a Deal? Did you not look at somebody and be like, you're going to pay $500 for what's behind door number three? Are you crazy? But it's not, you're not literally paying for it. What you're doing is you're making a choice. And that choice is, So the right answer, regardless of what Nick just said, the right answer is that both are free, but the choices, the existence of these choices make it feel less free and make it feel like you're paying when

it otherwise would feel free if you weren't given a choice, which is very interesting, right? It seems like it ought to be better that Ed gave you the choice of cash instead of the points, but if he just gave you the points, you'd be like, woohoo, I got all these points for free. Preston Pyshke Right. David Gardner But because he gave you the choice, now you're in a dilemma and it feels less free to you. And then if he gave me the free points, right, with no choice for money, and I had the chance to either redeem them for

travel or redeem them for money, then the free points are free, but now the travel isn't, right? This is the whole circular logic thing that we get into. It's a challenge, but I think it's a challenge worth considering. I mean, when I go to the store, I have a choice between keeping my money or trading it for items. I mean, to me, the rewards are similar. You have the choice to either take the cash or trade it for the rewards. Yeah, yeah. Absolutely. Yeah. Yeah. Well, absolutely. Once you have a currency, whether it's points given to you freely or, or, uh, points that you bought or something, um, when you go to redeem them, it's not free because you're paying your points. You, you have this currency and it's whatever you

use them for, it costs you that currency. So it's, it's definitely not free except. Suppose the choices for redemption are extremely limited. So here's an example. You win a free cruise or you win a free voucher that can only be redeemed for a free cruise. To say that you got a free voucher and now you're exchanging it for the cruise, that cruise is not free because you paid a voucher, seems like quite a stretch, doesn't it? Yeah, it does. You're right. So there, the lack of choices actually changes how we talk about what's free in that example. So tell me about it then. So with that lack of choices, then does it feel free either way? Is that what you're saying? That's what I'm saying.

That the actual cruise itself is free either way. Whereas if you had won a bunch of points where one of the things you could have done with it was redeemed for a free cruise, then you've got points and that cruise is going to – you got the points for free, but the cruise is going to cost you however many points it costs you. And so at some level, this just seems like dumb semantics, but I don't think it is, and so it's, I don't, so at some level, this, this just seems like dumb semantics, but I don't think it's, I think it's, no, it's important. I think it's important because you see people, you know, I, you'll see people online saying, oh, I, you know, I went to the Maldives for free. Right. And I mean, Greg and I had been to the Maldives and showed you how to get there and where to stay and that kind of thing. But it wasn't free. It didn't cost me cash out of pocket. It did cost me some cash out of pocket, I guess, to get there. And that's a whole other can of worms.

But there's a large chunk of it anyway that didn't cost me cash out of pocket. But that wasn't free. It did cost me points. It was, you know, there was a point cost involved. Yeah, yeah. Whereas if you had just received a, here's a trip to the Maldives certificate and so you used it, then I think it's fair to say it's a free trip. It's free. Yeah. I agree. is somewhere between those two things of rewards being usually much more flexible than a certificate that says, here's exactly what you get to do with it, but usually less fungible than cash.

There's usually less you can do, although in cases where you can redeem for cash, then you can do multiple hops and do anything with it. Um, all right. So I think that covers topic two, which was earning versus redeeming, which is free. I think we answered that definitively by saying basically, um, redeeming is usually not free unless there's no choice involved. Yeah. Yeah. And then that's, that doesn't really happen. Right. I mean, that situation is like not something that happens in this game, in the credit card rewards game where you, you know, where the, where the redeeming side is free, right. That's something like you win a contest and you win a free trip and you know, that's all you can take is the free trip.

Like that's something where you'd find that. Right? What about Hilton out of the generosity of their hearts gives you a free night certificate? Is the night you use free? Yeah, I think so. I mean, if they gave it to me out of the generosity of their heart, it is. If they gave it to me because I pay $450 a year for the Aspire card, that's different

because then I paid the annual fee. But if they just gave it to me to give it to me, yes. But they gave you a free night certificate. It can be used to book any Hilton hotels. So certainly the certificate was free. But when you redeem it, it's costing you that certificate, right? I mean, yes, I guess. There we are getting too deep into the semantics,

I think. And I mean, I guess it costs you the opportunity to stay at some other hotel. But I think that I don't, I guess I just don't concern myself deeply with that end of things. I'm more concerned. Yeah. I think it's an example where, you know, there's less choice. Yeah. And so it's feeling more free. And that's a theme. That's a good point. That's a good point. Yep. Yeah. The less choice there is, it definitely feels more free and that's enjoyable. So that's a fun thing. So when you're redeeming points, does it matter what it costs you to acquire the points? So your acquisition costs, whatever it costs you to get your points, is that important when we go to make redemptions?

So my first off the top of my head thought is, of course not. It shouldn't matter whether you got 100,000 points from a signup bonus or 100,000 points because there was a sale on points. Either way, you've got these points in your account. And so when you're going to redeem them, it shouldn't matter how much you paid for them, right? Preston Pyshko But it has to, doesn't it? I mean, come on, if you paid a cent, a point for your points, of course it matters how much you paid for them because you gave up a thousand dollars. You better darn well get more than a thousand dollars worth of value out of those hundred thousand points, right? Yeah. This is a topic I feel like I'm the most conflicted about of all the topics we have on today's show because, yeah, I mean, let me give you an example

where the cost of buying points absolutely matters. And I don't think anyone could argue against this. If you go to book an IHG hotel stay and you see that it would be cheaper, and this is a real example because it happens all the time, you see it would be cheaper to buy the points to book this hotel rather than paying cash for the hotel, then of course the acquisition costs, the cost of buying the hotels matters. Buying the hotel points matters because you want to buy, you're only going to do it if the cost of buying them is less than the hotel stay you would have paid for. Yeah. Well, I agree. And so this brings me back again to that whole concept of the points, the freeness of the points and the redemption side of it. Because when you're saying that redeeming the points, 100,000 points, let's say that those were ultimate rewards points, your 100,000 points, right?

And so when you redeem them here for this IHG Hotel, in my mind, you are paying $1,000. I mean, let's say you were doing it, you earn most of your points on a cashback ultimate rewards card. Chase is certainly telling you that you've earned cash back, even though they award it in the form of ultimate rewards points. And so you've essentially decided to redeem $1,000 worth of cash for 100,000 IHG points. I think I look at it as you're buying the points all the time when you transfer them. And then yes, of course it matters what it costs you because it costs you the thousand dollars you could have had with that 100,000 points. No? Preston Pyshko

Well, boy, when you start talking about transferring points, I think that's sort of complicating the question here. Let's talk more about- Mark Leary From a welcome bonus. Just saying whether, let's take these two examples. Let's say Aeroplan Miles. Okay. Either you bought them on sale when they were, let's say a penny each, just to make the math easy in case we get into math, or you signed up for a 100,000 point credit card offer. Now, when you're going to redeem the points, does it matter how much you

paid? You have 100,000 points either way. Yeah. But I mean, well, it matters in the sense that I don't want to trade $1,000 for something that's worth less than $1,000, right? I mean, I don't, because- But you've already done it. I mean, you've already made the trade. For the 100,000 points. Let's say it was last year. Yeah. Yeah. I've already made the trade for the 100,000 points, but that doesn't mean that I should use them willy-nilly without considering how much I paid for them because then it will have been a very poor decision to have bought them if I'm going to redeem them for less than what I paid, no? Well, I mean, that's a question worth asking, I think. But it's also, you know, what if Aeroplan miles had just devalued in the meantime? So you made a bad purchase. Do you just hold on to these useless miles then forever because you can't get more value than what you paid? That seems like a really bad decision. Yes. I mean, like if you're sure you're never going to get more value than whatever you paid for it.

But then I still don't know as though it, like, I mean, do you really think it doesn't matter how you got them? Explain to me. I don't know. I can't even understand where you're coming from on that. Like, of course, it matters how much you paid. You're going to consider that when you consider how much value you're getting when you redeem. No?

No, no. Let's say you, let's talk about cash. When you go to redeem cash, meaning buy something, do you worry about how you got that cash? Whether you won a million dollars in the lottery or you earned a million dollars from your hard-earned business that you've worked on for years? Yeah. Does that really matter? No, well, I mean, I do think about it. In fact, my wife often explains to my son

when, you know, he wants another toy or something, she'll often say, you know how daddy's working and so he can't play sometimes, that's so that we can buy stuff and that's a trade that we make. And so, you know, that's why we can't buy unlimited things because it doesn't work unlimited hours or whatever the case may be.

However, that conversation plays out. Yeah, I do think about what I've traded away in terms of what I've given up to get that money. You don't? I don't think that's a logical way of thinking. You have this much money in the bank. Uh-huh. And so if you're going to buy something, deciding whether or not to buy it based on

how that money got into the bank, seems like a strange way of thinking to me. Yeah. I mean, I understand what you're saying. Um, but, but I, I mean, I do think of the, like, I've definitely thought of things before, like small things in terms of like, okay, well, how many hours of my life did that cost me? You know, what did I trade away for it? And is it worth that? I mean, I don't think about that day to day when I go to the grocery store or when I'm, you know, buying a new iPad or whatever, maybe an iPad is a good example where I'll be like, okay, did I really want to trade

this much of, you know, whatever I put it, is this worth that trade to me? Whatever it costs me to earn that. I do think about that. I think, and I think that is valuable to think about sometimes because it can be very easy if you don't think about what it costs you to earn the money or the points, then I think it can be easy to make very poor decisions and say, well, whatever, I've got the money in the bank, so I can go ahead and buy that Lamborghini. Or I've got all the money sitting there. It doesn't matter what it costs me to get it. I can go ahead and waste it on A or B. I think it is important to consider the origin or the cost. So I can understand if you're talking about the cost of replacing that money if you need it for other things. But not getting it initially.

But you already have this money. Let's say it's more money than you need for daily living and everything. You're trying to decide whether to buy this fancy new car. Is it really going to matter to you? Should it matter to you? I'd say not. How that money got in your, how that extra money, excess money is in your bank account. Yeah. I mean, I guess I, and I'm not saying you should buy the car. I'm just saying, I don't think it should matter how it got there. Okay. Yeah. Yeah. All right. But so let's say you're right. Okay. But now that I've argued that point, I, I, I sit on a completely opposite side with some of my miles,

which is with my American Airlines miles. I took advantage of a great deal last year to buy over a million miles for less than half a cent each. And so when I go to redeem those miles, I don't worry much about the award, the value of the award, which I do with most other airline miles. Like normally I'll look for like, well, is this a good deal for my miles? But with American Airlines, it's like, well, if I'm getting better than if I'm getting even around one cent per mile, which is not usually something I'd be willing to do with most of my miles, that's great because I paid less than half a cent for those miles. And so I do think about it with that case. So that's why this subtopic of our main event is most challenging for me because I have

this one built-in intuition that says it shouldn't matter at all how you got the miles. On the other hand, I absolutely behave as if it does matter. Well, I guess that's where I'm confused because I look at that and that's a very good example to me of, of course, it matters how much you, you know, it costs you to get because that's how you're going to decide what is a good redemption. You know. The fact that those miles cost you less than half a cent each is what is going to help you decide, okay, well, is one cent per mile a good redemption? Yes, I paid half of that. And so that's a great redemption in this case. It's going to cost me, the miles to pay for this flight are going to cost me less than the cash to buy the flight that I would otherwise buy.

I don't know. I think that, to me, that is something you should be thinking about when you're redeeming your miles, no matter how you got them. But at the same time, let's say someone had given me 150,000 American Airlines miles just for free. Right. So you had no acquisition costs. I had no acquisition costs. I had no acquisition costs. I would probably treat those miles like I do all my other miles, which is to say, I'm going to be looking for good value redemptions where, oh, I could usually get one and a half cents or better from these miles. But there's something

mentally for me because I bought them at such a low rate. I feel like that allowed me to, that like I pre-bought travel and I don't have to worry about it being much more than half a cent. An ideal redemption. So, but are we not saying the same thing to some extent here? So, like how you got them matters, right? If you got them for like, for free, so to speak, like it didn't cost you anything to get them, then you are, well, I don't know. I think that's interesting that you would say that you would look for even higher value if it didn't cost you anything and you'll accept lower value if you had paid for it.

Right. It's a little weird. It's nonsensical, right? Yeah. Right. paid for it. It's a little weird. It's nonsensical, right? But that's the way I've been behaving. That normally when I get miles for free, let's call it free when you sign up for a credit card bonus, even though there is some costs involved and there's some work involved, but let's just call that free. I do worry about the redemption value I'm getting of my points. And this one case is an exception. I think it has to do with partly with how many I have. So here's where it is. If I had only bought 100,000 or 200,000 miles, then I would be aware of if I use those miles on suboptimal redemptions, if I'm only

getting one cent per point value, I'd be aware that that means when it comes time to book that Cutter Q Suites flight to South Africa for only 75,000 American Airlines miles. I might not have those miles to spend and get that incredible redemption. And so that would be really unfortunate. Whereas having like well over a million, it's not something I worry about. Well, so what came to mind when you were talking about this, when you're talking about the free points and you're talking about, you mentioned the signup bonus. And I think for me, the thing that I think of that I think is even feels freer is referral

points. Like, you know, so, cause those, those really didn't cost me. There was no opportunity there that I gave up necessarily. If somebody was going to sign up for a card and they used my link, I didn't really give anything up to get those points. And so I actually feel like I tend to, and I earn a bunch of those from American Express cards. So I feel like I tend to be willing to accept less value for my membership rewards points than I accept for a currency that's harder to earn because there are so many of those points that I've earned essentially for free. They didn't cost me anything. However, I do think about the fact that I can redeem those points for 1.1 cent each through the Schwab card or one cent each with

an Amex business checking account if you got the business platinum, because I do have the business platinum. My wife has the Schwab platinum. So I do think about, okay, I am willing to accept suboptimal value, but not less than 1.1 cent each, because if it was going to be less than that, I'd just cash them out and buy the travel, like we've said. So I think in that case, I do, again, think about how I got the points and how I redeemed them. If they were points that I earned from spending, from buying gift cards at Staples, then I'm much more careful with those ultimate rewards points because they cost me time of my life to go pick them up,

whatever my liquidation costs might be in terms of liquidating those. So I do absolutely think about what those cost me before I redeem them. Whereas I think less about that with membership awards points because a bunch of my points have come from referrals. And so they didn't cost me anything to earn. So I'll assert, I don't think you should, I don't think it's sort of a correct way of thinking to worry about how you got them, but how you got them is related to, very related to how easily you're going to get more of them. And as long as that holds true, I think it's a logical way of proceeding. Meaning I also will freely spend membership rewards points towards less value redemptions than I would chase ultimate rewards because I find they're so easy

to replenish. Like, like there's very little downside to spending them down because replenishing them is easy. Yeah. So, so I'm not going to run out. And, and I think that, that, uh, that's, that's a key, a key consideration that, that if you're going to, if you're going to run out of a currency, especially if it has certain very high value rewards that are possible, then you need to worry about how you're spending them because of the opportunity costs. Like, oh, I could have booked this incredible award or that. But when you have a virtually unlimited supply because they're easy to keep getting or because you have millions of them already,

then worrying about that trade-off isn't really that important because you could probably do both. You could probably redeem for a medium value redemption and also that incredible redemption that you can get later. Okay. So we agree on some things, but I'm going to have to agree to disagree on others because I think thinking about what it costs you to get something is important, whether whatever it is you're working for in life. I think that when you get it, I don't think that you should only be thinking about replenishing. I think you should be thinking about what you put in in order to get it. So I, I, I, I'm going to agree to disagree with you on that. I see your point. I understand the point

you're making. And in some ways my behavior reflects the points that you're making. But I don't know. It gets into the complex psychology. And so I think that's why we need to talk about number four. And that's, does the free matter? And what is this about the joy of free? Because here I am trying to sap all of the joy out of this game by telling you nothing is free. You gave something up to get it. It's going to cost you this much. I'm taking all the joy out of the game, aren't I?

Yeah, you sure are. Thanks a lot, Nick. So it does matter because you can get so much more from your rewards if you think about this stuff and if you make good decisions. And I think that's really what it comes down to is making good decisions about how you're earning your points and how you're redeeming them. So on the earning side, for example, when you just think of it all as being free and you don't think about the options, the opportunity costs, you might have, and actually I know a lot of people who do, you might have a Delta card and where most of your spend is earning just one Delta SkyMile per dollar. And you're not thinking about the fact that you could have easily had a 2% cashback card instead.

So you could be earning two cents instead of every one mile you're earning. So it's indirectly costing you, opportunity costing you two cents per mile. Or you could have had a card that earns two transferable points per dollar instead of one fixed point per dollar. And I think that's super important for the overall wider rewards card audience community, because I frequently see people that have collected points that are not optimal for whatever their use might be. And that Delta card is a fantastic example where I'm sure I know plenty of people who have spent at one mile per dollar forever, and they will end up with less travel than they would if they got the 2% cash back card. Cause those points are probably going to redeem for about a penny a piece. forever, and they will end up with less travel than they would if they got the 2% cash back

card. Because those points are probably going to redeem for about a penny a piece. And I say, wow, if you spent $100,000 over the course of a year, two years, three years, however many years it is, at 1x versus 2%, you're probably only going to end up getting $1,000 worth of Delta travel when you could have had $2,000 in cash. And that could have been growing all this time, potentially, or invested or whatever else if you weren't traveling, could have taken that other $1,000 and done something else entirely with it. So I think it is very important to consider this stuff because otherwise you'll make bad choices that I look at as costing you something. I look

at that decision to spend at 1x on the Delta card as costing you at least $1,000 that you could have had above and beyond what you'll get with those rewards, probably. I'm using a generalization, of course, on the redemption side. Absolutely. And then the flip side of actually redeeming points, if you just feel like they're totally free, you're going to, and many people do, make very poor decisions about how to spend their miles. They feel like, oh, it was free anyway, so I't think about the fact, again, if they had been earning, let's take a simple example, Chase Ultimate Rewards points. And if they had the Sapphire Reserve card, they could have just redeemed far less points, probably less than 50,000 points for the same exact flight, booking through Chase's portal because of the one and a half cents per point value you get. And obviously they could have

gotten far, far better rewards for that same amount of spend to get the points that they then spent for very little value. Yeah. And so I think it's important to remember that none of this is free in the sense that, like Greg said all along here, it's costing you points when you spend. And when you earned those, obviously, you gave up an opportunity at something else. So looking at any of this is free is I think a flaw and a problem. Now, to me, there's a difference in saying that I got this flight for free versus I got this flight for 540,000 Delta miles, or I got this flight for 50,000 Virgin Atlantic points. And I think it's important to highlight those differences because I think that helps people realize the best ways to use their points and how to get more value. And I think it's important to highlight those differences because I think that helps people realize the best ways to use their points and how to get more value.

And I think that's more valuable for people long-term than the message that, you know, I got this great free flight. Yeah, no, I think that's a great point. The flip side though, is that the more aware you are of this stuff, the less it feels free as we're saying it should, because that'll lead you to better decisions. But when it doesn't feel free, it's also to some extent less enjoyable, right? The less it feels free, the more painful it is to part with my points, I find. So the points that are the most most flexible that can be used for the most things.

So these are transferable points that can get great value by transferring to various partners. I also feel, you know, when I redeem those points, it's tough because it's like it it's so close to cash that that um well in some ways it's better than cash because it can be turned into cash yes but it could also be turned into uh rewards that are worth much more than the um the cash out value of the points so so so let me ask you then so i i gave away some of the joy well it, it certainly does. And I gave an example in the post this week. So I want to know what you think about it. So I gave an example in the post this week that I redeeming 58,000 ultimate rewards points. I transferred to Hyatt in order to book a Hyatt hotel. And so I said that that's that hotel is

effectively costing me $580 because I could have had $580 in the bank. And instead, I'm giving it to Hyatt to book this hotel. So is it costing me $580 or not? No, it's costing you 58,000 points, which I'd say are worth more than $580. It's just that 580 is an alternative. It's one of many alternative uses for the same number of points. So no, I wouldn't say it's costing you 580. It's costing you 58,000 points. End of story. See, and I look at that and I say, okay, Chase is telling me that that's $580 or I can transfer it to a partner. Because I mean, that's what Chase will tell you that it is. The 58,000 points is $580 or I can transfer it to a partner.

Now it wasn't in my bank account. It was in my ultimate rewards account, which essentially is a bank account, right? So it just doesn't earn any interest. But on the Chase side, that's what they tell you the points are is cash. So I look at it differently than Greg. And I say, no, that absolutely was $580. And I used it to pay for the hotel.

I got a great discount. I mean, I got a great deal on the hotel. It's much less than the going rate for the hotel. But it's a very real $580, I think. I feel like you're undervaluing your chase points by thinking that way. And at least one reader said the same with the fact that they could be redeemed for the pay yourself back, for instance, or for paid flights to the travel portal at one and a half cents each. And and that's not necessarily a bad point. So maybe I should be saying that cost me seven hundred and fifty dollars because goodness knows, like I said, I've spent more than $750 on

restaurants this year. So to some extent, that is a good argument. So there you go, Greg, you sold me. It's costing me $750. That's nuts. I shouldn't have done that. No, it's costing you 58,000 points, which one of the alternatives is to get 700 you know, 700, whatever the amount is. To keep the $750 that I already spent, right? Like I already spent that money and I could put it back in my pocket. You already spent it. Well, because I mean, you can redeem, pay yourself back for restaurants you've spent out in the past, whatever it is, 45 days or 90 days or whatever. So let's say I have $750 worth of restaurant charges within the qualifying period, which

is not far-fetched. Then that's a great alternative use for your 58,000 points. Yes. So I have paid, I say at the end of the day, it doesn't matter to me who I paid to. I paid that $750 to the restaurants and end up with the hotel stay, right? It cost me 750. I disagree with Greg. Tell me in the comments, let us know. Let us know in the comments, did it cost me $750. I disagree with Greg. Tell me in the comments. Let us know. Let us know in the comments. Did it cost me? And I say $750 and I didn't do the math right. It's 58,000 points. So it's more than that. It's more than $800, whatever it comes out to. I'm not going to do the math right now, but tell me, is Greg right? Did it cost me 58,000 points or did it cost me

$800 and change? What do you think? I want to know. I want to hear from readers. Let us know. I want to know too. I want to know how wrong you think Nick is about this. And I want you to tell Greg that, yeah, Nick paid way too much this weekend. Spent too much on his hotel. Actually, I mean, I think the important takeaway is it doesn't matter. Whether you think of it as costing you that or you think of it as that's an alternative, either way, you're doing the mental math in order to make better decisions about how to spend that points. And either way, unfortunately,

it's taking away the joy of free. Yes. Yes. And that is definitely the dilemma. And it's unfortunate because ultimate rewards and membership rewards are the most fun ones to use, because you can get the coolest stuff when you redeem them. I'll get a nice hotel room I never would have paid for, a business class flight I wouldn't have been able to afford. So you get awesome stuff, but it doesn't feel free anymore when you think about it. Right, right.

Whereas if you got a bunch of Amtrak points and then use them to ride Amtrak, which is pretty much the only thing you can do with them anymore, then the Amtrak ride is going to feel a lot more free than whatever you did with your Chase or Amex points. And so you might enjoy that redemption more, maybe not, depending on whether the Amtrak gets stuck and you're stuck on the train track for 18 hours. You may not. Then you might regret that redemption.

But the point is, it'll feel more free to you than spending a more valuable currency, which is kind of unfortunate. It's just this paradox that the points I want most are also the ones that are least fun to redeem because you lose out on the joy of free. Yep. Yep. Interesting. All right. All right. So good stuff to think about. And I think we've probably hit all the points that hit on that and used up all of our points. So let's move into the question of the week because I know we're running probably a little long here. Let's move into the question of the week. This week's question came in via email from Lindsay who asked about meeting business credit card minimum spend.

And I thought this was a good question. I think we've probably hit this once before, but it's been a while, I think, since we've hit this type of question and there are always new people coming in. So I feel like this is a good one to repeat. So Lindsay says, my question revolves around business cards. There are so many amazing business card signup bonuses circulating around, especially with the increased bonuses on some of the chase cards, blah, blah, blah. I know that credit card companies are pretty flexible when it comes to what constitutes a business, but what

about minimum spend? I hear travel hackers all the time say that a dog walking business can count as a business or a garage sale or writing the great American novel can count as a business. But how on earth can you reach the $3,000 to $6,000 minimum spend on those types of businesses? I want to achieve those aspirational signup bonuses, but I also want everything above board.

How can I justify certain spend? What's acceptable? Yeah. So some business card applications have you check a box saying, I will only use this credit card for business spend. And so you might have a business and it is a valid business to be writing a novel or whatever, but you might not have any expenses or you might have like, oh, I have to buy some ink or something, but not anywhere near enough to meet the minimum spend requirement. And that's a real valid point. And all I could say is that most of us who do this do use those cards for personal spend. And if you're not comfortable doing that, then yeah, don't sign up for these cards. Because yes, for most of us, the only way we are going to hit the minimum spend is use it for our personal spend,

use it to buy gift cards at Staples, whatever it is. But you have to be comfortable with that idea that you're not legitimately spending it on the business. And I don't know of any case ever where anyone's gotten in trouble for that, but there is certainly that concern of like, well, I said on the application, I was going to only use it for business. So I have to do that. And yeah, yeah, if that's not for you, then, then don't do it. Yep. Yep. I agree. So when I saw the question, I thought to myself, well, in terms of justifying the expenses, I thought to myself, well, justify to who,

because probably nobody's going to ask you about your purchase. I've never had a bank ask me about the purchases that I've made on a business card. And I've used plenty of business cards for business purchases. But like Greg said, I have also used some of my business cards for personal purchases. And again, no matter what it was, I've not yet had a bank ask me what it was about. Now, that's not to say they'll never ask questions. I mean, if you do something weird, then maybe they will ask questions if you're buying a lot of, you know, the same number or same dollar figure of something that seems like you're laundering money or whatever. I'm not saying that a bank will never ask you about your purchases, but in general, I've not ever been asked about what I'm spending the money on with the cards. But like Greg said, in some cases, at least, they will tell you that you should use your card for business purchases. And that is certainly a concern that you need to think

about. I'm not aware of a law about using a business card for business purchases only. But there may be something you've agreed to in terms of using it for those things. so yeah, I mean, I think that's just something everybody's got to weigh out in terms of what it is that they're willing to do or what matters to them as far as that goes. Yeah. Yeah. All right. Great point.

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