The Best Card for Smart Travelers = 2%+ Cash Back
Written: Dec 24 '06 (Updated Dec 24 '06)
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Pros: Get up to 2.65% back with smart management, No Foreign Exchange Markup
Cons: Confusing application, no certainty miles will retain value
The Bottom Line: Use this card if you are able to manage a complex rewards program, pay off your bills every month, and can benefit from no markup on foreign exchange.
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| Madrabbit3's Full Review: MilesOne Platinum (Capital One) |
Actually, the payoff is even higher. I'll explain later.
This card is for people who payoff their balances and travel by plane; otherwise forget about using this card. While the finance charge is moderate (I am quoted 13.81%), you can get better with a non-rewards card if your goal is to save money on the financing of revolving debt.
***Advantages of Capital One***
No annual fee
Oddly enough, my credit card was quoted online as carrying a $29 annual fee when I applied. When I later received my card, I was quoted a $0 annual fee. This is bizarre but bank indecisiveness clearly fell in my favor.
Best Miles Program
You get 2 miles per dollar spent.
Since Citi and Chase stopped their 5% back at grocery, gas, and drug retailers, this card is the best on the market. You earn two points per dollar spent. Each point can be traded for travel, 15,000 for $150 or less, 35,000 for $150.01 - $350, 60,000 for $350.01 through $600, and 100 X ticket price for over $600.
So if you buy a ticket just under $150, just under $350, just under/over $600, you are getting about 2 cents in rewards for every dollar you spend. Plan your travel well and you will do alright. While you may pay more in the summer for tickets, say to Europe, than under a traditional airline mileage program, you are unlikely to have to buy a ticket over $1000 (which is equivalent to 50,000 miles under a traditional program, say United) and you will have no availability issues with getting a seat.
Additionally, unlike traditional mileage cards, you earn miles on your rewards. On a rewards ticket with an airline card, you get no mileage rewards. With Capital One you do get a reward from the airline, which can add another 5-15% to the value of the reward.
Finally, you can book through Expedia or another site that offers rebates through Mr. Rebates (in this case 3%). Thus, if you buy a $600 ticket on Expedia through Mr. Rebates, you can get .03*600 - 5 for booking fee = $13 back. Thus, you can squeeze an extra 2% in rewards over traditional airline cards, thus yielding a total 7-17% bonus at the same comparative mileage accrual rates.
(While Capital One will not keep your frequent flier account active just by earning miles; if you need to keep your account active just buy a song at Itunes through AAdvantage mall or the like and you can earn one mile which is good enough to keep your account active for another year.)
Best Grace Period
They give you a 25 day grace period to pay your bill. The industry average is 20 days. In reality, they give you longer. My billing period closes on the 5th of the month and I normally get till the 5th of the next month to pay. In the meantime, I earn 5.05% in my HSBC money market ( HSBC review http://www.epinions.com/content_210282253956 ), which translates to about .45% interest earned per credit card billing cycle by delaying my payment. Over a year, on my average $1000-$2000 balance, this adds up to about $75 over the year (pre-tax).
The rub is they won't let you schedule a payment through their billing interface online. Then you might forget to pay. The solution is to use a third party bill pay interface, like Citi and HSBC offer, whereby you schedule the payment in advance from your bank account. Saves a headache and lets you keep the float!
Combine this savings with the flight miles money back, and you can be earning 2.6%+ back effectively on your purchases.
No Foreign Currency Charge
This is undoubtedly the most attractive part of the card for me. Not only do they refrain from levying an extra exchange fee ontop of the 1% Visa fee (MasterCard is the same), they actually absorb the 1% charged by Visa. You pay the market exchange rate of the day and nothing more. Most other credit cards charge 3% total, and Amex charges 2% total.
Generous Credit Limits
They gave me 15X the credit limit that Citi gave me with their AAdvantage credit card, with a cash advance limit equal to half of my balance. Convenient.
As a signature card, you can go over your official limit and purchases are approved or disapproved at the card company's discretion.
Standard Visa Signature Benefits
Insurance for theft, water damage, etc within 90 days of purchase for items purchased within 100 miles of home, car rental insurance, travel accident coverage, blah blah blah.
***Disadvantages***
Bizarre approval process
When I applied I didn't know whether I would get 1.25 or 2 miles per dollar and whether there would be an annual fee. I applied online. I guess I got lucky.
Also, you don't know your credit limit till you get it in the mail.
Miles subject to change - only valuable if you travel
Reading others' reviews, it seems that Capital One is liable to change the reward redemption ratio, sometimes unfairly. The good news about this program is that the costs of the program are aligned, in that there is no arbitrary amount of miles to reach continent X, thus the program is likely to be more economically sustainable. Still, this remains a risk. Especially as I don't carry a balance and am likely to be unprofitable to Capital One.
(There is a WashingtonPost article with more gripes on this topic)
Website not great
Often takes four days to post my statement after the date it closes. No intuitive way to find rewards program and sign up: I had to search google to find it! Doesn't list my rewards rate. Won't let me pre-plan a payment online. Not enough options to find out about card benefits online. Looks bad.
Caveats
I have not tried to cash in my miles yet. Furthermore, I have not had to do anything complicated with customer service.
However, I already got one of their early fraud warnings which they emailed to me and I dealt with via an automated system; so, I did not have to deal with my card being declined as I tried to use it.
Won't let you pre-plan a payment through their web interface.
Read the section in the advantages about the "best grace period" to read the solution
SUMMARY
Great card if you are able and willing to figure out how to maximize your advantages.
Recommended:
Yes
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Madrabbit3
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Location: Durham, NC
Reviews written: 29
Trusted by: 68 members
About Me:
It is better to be melancholy but interesting than cheerful but dumb - Roger Scruton
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