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Perhaps the single most impressively marketed travel rewards credit card is the Capital One Venture Card.
We’ve all seen the ads, which have some big name stars in them. Like Alec Baldwin:
Or Jennifer Garner:
Which brings me to a question that reader Stav9678 asked in the “Ask Lucky” forum:
I read all of your recommendations about the credit cards for travel and the everyday credit cards. I read about the CapitalOne Venture card that you get 2 miles for every dollar you spend on purchases not just on certain categories, rewards never expire, you can redeem your miles for travel, shopping, etc. but what really stands out to me is that you can redeem them for cash and purchase whatever you want. You get 40,000 miles sign up bonus after spending $3,000 on purchases in the first 3 months, no foreign transaction fees, etc. I would like to get your thoughts on this card please.
It’s a great question, because Stav9678 isn’t the only one who thinks this card sounds compelling. On one hand it amazes me how many people have the card, though I guess it’s not surprising given how brilliantly they market it. Not only does Capital One have big stars in the commercials, but more importantly they market two things which consumers respond really well to:
- No blackout dates
- Double miles
Who wouldn’t want double miles and no blackout dates?!?
Well, if it means earning double miles and no blackout dates through the Capital One Venture Card, you can count me out. Because as usual, when it sounds too good to be true, it usually is.
Basics of the Capital One Venture Card
I won’t get into the minutiae of the card, though let’s talk about the basics:
- Sign-up bonus: 40,000 miles after spending $3,000 within three months
- Annual fee: $59 (waived the first year)
- Rewards structure: double miles on all purchases
A 40,000 mile sign-up bonus, $59 annual fee (waived the first year), and double miles on all purchases sounds great in theory.
The catch is that each mile can be redeemed at most for one cent towards the cost of a travel purchase:
- To get the one cent per mile value, you can only redeem for travel purchases, and you have to do so in minimum increments of 2,500 miles
- If you redeem miles for anything other than travel, you’ll get a lower redemption value than one cent per mile
How could you turn down 2x miles?!?
This is the thing I get asked about most often regarding the Capital One Venture Card — “this card offers double miles while others offer only one mile per dollar… how can I turn down double miles?!?”
First of all, not all miles are created equal. 55,000 American miles is enough for a one-way Cathay Pacific business class ticket between the US and Asia. 55,000 Capital One miles is enough for up to $550 in travel.
Even among “traditional” miles, their values vary considerably.
So saying you earn 2x miles per dollar spent is sort of useless without context. They could also make each mile worth 0.1 cents each, and then claim the card offers 20x miles per dollar spent.
Rather than viewing the Capital One Venture Card as a card which accrues double miles, I’d suggest thinking about it slightly differently. It’s essentially a 2% cash back card, with the catch that you can only redeem the cash back towards travel at that rate.
If it’s cash back you’re after…
As I wrote about last week, if it’s cash back you’re after, you’re much better off with something like the Citi® Double Cash Card. It has no annual fee and offers 1% cash back on every purchase, and then an additional 1% cash back when you pay for those purchases. That’s a return of 2%, all things considered.
Except unlike the Capital One Venture Card, the rewards earned on the Citi® Double Cash Card can be spent on anything, and not just travel. And that’s for a no annual fee card!
Now the thing worth noting is that the Citi® Double Cash Card doesn’t have a sign-up bonus, while the Capital One Venture Card offers a $400 sign-up bonus upon completing minimum spend. So some might consider the card worth acquiring, though once you’ve completed minimum spend I see little marginal value in spending beyond that. Keep in mind Capital One typically pulls your credit from all three bureaus when applying, so I really don’t think the $400 sign-up bonus justifies an application exclusively to try and earn that.
If it’s “real” miles you’re after…
We get requests all the time through PointsPros from people who have a bunch of Capital One miles and want to redeem for international first & business class.
We’ve received dozens (maybe hundreds?) of requests from people along the lines of “I have a million Capital One points and want to fly first class to Asia on Cathay Pacific.”
It breaks our hearts to have to explain to them that they put $500,000 of spend on the wrong credit card, based on what their goals were. Because understandably, someone who has earned a million miles assumes they have enough to go just about anywhere.
A million Capital One points will get you $10,000 in airfare. That could potentially be a lot of domestic airline tickets, or a lot of international economy tickets. But for first & business class travel, the value isn’t quite as good.
A first class ticket between New York and Hong Kong on Cathay Pacific will set you back over $28,000:
That means you’d need over 2,800,000 Capital One Venture points to redeem for that ticket.
Meanwhile with a “traditional” mileage currency, like American AAdvantage miles, that ticket could have cost you as little as 135,000 miles roundtrip. For a million American AAdvantage miles, you could book the above itinerary seven times, with miles to spare.
The catch is that there are capacity controls when redeeming “traditional” miles. But if you ask me that’s only fair given the price difference.
If it is traditional miles you’re after, you’re best off with a card which accrues a flexible points currency. These are points which can typically be transferred to quite a few hotel & airline partners and can also be redeemed towards the cost of an airline ticket, if you so choose.
If that’s something you’re looking for, you’re best off with one of the following cards:
- Chase Sapphire Preferred® Card
- 2x points on dining and travel
- no foreign transaction fees
- Citi ThankYou® Premier Card
- 3x points on travel and gas
- 2x points on dining and entertainment
- no foreign transaction fees
- American Express® Premier Rewards Gold Card
- 3x points on airfare purchased directly with an airline
- 2x points on US dining, US gas and US restaurants
- no foreign transaction fees
- Amex EveryDay® Preferred Credit Card
- 3x points at US supermarkets (up to $6,000 per year)
- 2x points at US gas stations
- 50% more points when you use your card 30 or more times on purchases in a billing period
Don’t get me wrong, the Capital One Venture Card isn’t horrible. It’s a solid enough card, and with a certain type of spend profile, it’s not the worst option out there. That being said:
- If it’s truly cash back you’re after, you’re better off with something like the Citi® Double Cash Card, which offers a flat 2% cash back with no annual fee — no need to redeem specifically for travel, pay an annual fee, etc.
- If you want to use miles in the “traditional” sense, you can’t beat a flexible points currency card, like the Chase Sapphire Preferred® Card, Citi ThankYou® Premier Card, Amex EveryDay® Preferred Credit Card, or American Express® Premier Rewards Gold Card
But kudos to the folks at Capital One for their marketing!
Does anyone have a different take than I do on the Capital One Venture Card?