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Cash back cards are more attractive than ever before, given how complicated airlines are making their frequent flyer programs. Beyond that, with the constant devaluations from airlines, each mile seems to be worth significantly less year-after-year.
This is one reason the Capital One® Venture® Rewards Credit Card has done so well, as they’ve based a lot of their marketing around what a hassle it is to redeem airline miles, like in this commercial:
Last year I wrote a post entitled “Why You SHOULDN’T Get The Capital One Venture Card,” which a lot of people took issue with. My point was simply that there were cashback cards which were more flexible and had no annual fees, but it was (correctly) pointed out that I wasn’t factoring in the sign-up bonuses.
In this post I figured I’d compare what I consider to be the two best travel cashback rewards credit cards, and then share my thoughts on whether they’re worthwhile, hopefully with a more well-rounded analysis.
The marketing on these cards can get complicated, given that they advertise earning “miles,” even though it’s really a cashback card. So I figured I’d break down how these cards really work.
To start, here’s a chart comparing the basic characteristics of these two cards, which I’ll explain in more detail below:
|Capital One® Venture® Rewards Credit Card||Barclaycard Arrival Plus™ World Elite Mastercard®|
|Sign-up bonus||$500 towards travel after spending $3,000 within 3 months from account opening||~$420 towards travel after spending $3,000 within 90 days of account opening|
|Annual fee||$0 intro for first year; $95 after that||$89 - Waived first year|
|Return on everyday spend||2 cents per dollar spent towards travel||~2.1 cents per dollar spent towards travel|
|Foreign transaction fees||None||0%|
|Minimum redemption amount||Minimum of 2,500 points ($25 statement credit)||Minimum of 10,000 points ($100 statement credit)|
|Eligible redemption categories||airlines, hotels, rail lines, car rental agencies, limousine services, bus lines, cruise lines, taxi cabs, travel agents, and time shares||airlines, hotels, motels, timeshares, campgrounds, car rental agencies, cruise lines, travel agencies, discount travel sites, trains, buses, taxis, limousines, and ferries|
|Time limit to redeeming points||90 days||120 days|
Capital One Venture Card benefits
The Capital One Venture Card offers 2x miles per dollar spent, and each mile can be redeemed for one cent towards the cost of a travel purchase. Eligible purchases include those made with airlines, hotels, rail lines, car rental agencies, limousine services, bus lines, cruise lines, taxi cabs, travel agents, and time shares.
When you’re ready to redeem your points, just make your travel purchase with the Venture Card, and then within 90 days you can request to have the purchase “erased” by redeeming points. You have to redeem a minimum of 2,500 points, which translates to a $25 statement credit.
This card offers a sign-up bonus of 50,000 miles after spending $3,000 within the first three months. Given the value of one cent per mile, that means your 50,000 miles can be redeemed for a $500 travel purchase.
Barclaycard Arrival Plus Card benefits
The Barclaycard Arrival Plus Card offers 2x miles per dollar spent, and each mile can be redeemed for one cent towards the cost of a travel purchase. Eligible purchases include those made with airlines, hotels, motels, timeshares, campgrounds, car rental agencies, cruise lines, travel agencies, discount travel sites, trains, buses, taxis, limousines, and ferries.
When you’re ready to redeem your points, just make your travel purchase with the Barclaycard Arrival Plus Card, and then within 120 days you can redeem your points for statement credits against those purchases. You have to redeem a minimum of 10,000 points, which translates to a $100 statement credit.
This card offers a sign-up bonus of 40,000 miles after spending $3,000 within the first three months. Given the value of one cent per mile, that means your 40,000 can be redeemed for a $400 travel purchase.
There’s one added feature on this card, though. You get 5% of the miles back to use towards your next redemption every time you redeem points. This means that points are really worth ~1.05 cents each, meaning your return per dollar spent on the card is ~2.1 cents per dollar, and the sign-up bonus is potentially worth ~$420.
Comparing the two cards
Let me focus on the aspects of the card which I consider to be important. The exact categories on which you can redeem points and redemption window doesn’t really matter to me. Similarly, let’s assume you don’t care about the redemption minimum, to keep the math simple (though if that’s something you care about, you can do the math differently). Here’s the most significant comparison between the cards, in my opinion:
- After the first year, the annual fee on the Barclaycard Arrival Plus Card is $6 per year less than on the Capital One Venture Card
- The return on everyday spend on the Barclaycard Arrival Plus Card is 5% higher than on the Capital One Venture Card
- Doing the math on that (factoring in the $6 annual fee difference and 5% difference in return), after the first year:
That’s because that’s the breakeven point of the additional return you get on the Arrival Plus vs. the $6 per year higher annual fee.
Ultimately the cards are very similar. We’re talking about a minimal difference, and it’s not accounting for the minor pros and cons of each card (with the Arrival Plus Card you can redeem points for a window of an extra 30 days, while with the Venture Card you can redeem for smaller purchases).
Alternative cashback options?
I’ve written in the past about the Citi® Double Cash Card, which offers 1% cash back when you make a purchase, and 1% cash back when you pay for the purchase. To me that’s the equivalent of a 2% cashback credit card.
- The Citi® Double Cash Card has no annual fee
- Cash earned on this card can be redeemed towards anything, and not just travel purchases
- This card has 3% foreign transaction fees, unlike the above cards, which have no foreign transaction fees (so this isn’t a good card to use when traveling internationally)
- This card doesn’t offer a sign-up bonus
Purely in terms of return on everyday spend in the US, I think the the Citi® Double Cash Card is tough to beat. You earn 1% on purchases and 1% as your pay for those purchases, so getting the equivalent of 2% cashback without an annual fee is fantastic. The “catch” is the lack of a sign-up bonus and the foreign transaction fees.
Based on what metrics would I compare the Citi Double Cash Card to the Arrival Plus Card or Venture Card?
I’d say the most significant metric is how long you plan on holding onto the card, which allows you to compare the benefit of the sign-up bonus against the cost of the annual fee. So let’s look at the breakeven point of the Citi® Double Cash Card against either of the above travel cashback cards:
- After having had the Capital One Venture Card for seven years, you’ll have paid $570 in annual fees ($0 intro for first year; $95 after that), and will have received a ~$500 sign-up bonus
- After having had the Barclaycard Arrival Plus Card for five years, you’ll have paid $445 in annual fees ($89 - Waived first year), and will have received a ~$420 sign-up bonus
For most consumers, there’s a lot of merit to cashback cards in lieu of traditional points earning cards. The question is which card makes the most sense. Of course everyone has to crunch the numbers for themselves based on what they value most (and hopefully I’ve provided a decent basis for doing so above), but in general:
- The Capital One Venture Card is more rewarding than the Barclaycard Arrival Plus Card for those who spend less than $6,000 per year on the card, since that’s the breakeven point for the $6 annual fee difference
- The Citi® Double Cash Card offers a very similar return to the above cards, with the added flexibility of not having to redeem the cashback towards travel; the card also doesn’t have an annual fee
- Whether or not it’s worth paying that annual fee probably depends on how long you plan on keeping the card, given the annual fee vs. the sign-up bonus; with the Capital One Venture Card you’re coming out ahead until year seven, while with the Barclaycard Arrival Plus Card you’re coming out ahead until year five
The truth is if you’re looking for a cashback credit card which you want to redeem towards travel purchases, you can’t go wrong with any of these cards.
What cashback card do you think offers the best return?