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The Cost of Points and Miles
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When manufactured spending, it’s important to take into account how much you are paying for points and miles. Even though some points/miles are worth more than one cent each, I have a hard time paying more than one cent. With all the different manufactured spending techniques we have available, it’s very easy to buy points and miles for less than that. In fact, my personal rule for MS is to never spend over one cent per point/mile, even if they are worth more when you redeem them (UR Points).
Let’s start out with some $100 and $200 gift cards from Staples, because I love Staples.
Staples $100 Gift Cards w/ $5.95 Fee
| Point Multiplier | Points Earned | Cost Per Point |
|---|---|---|
| 1X | 106 | 5.61 cents |
| 2X | 212 | 2.80 cents |
| 2.2X | 233 | 2.55 cents |
| 5X | 530 | 1.12 cents |
Staples $200 Gift Cards w/ $6.95 Fee
| Point Multiplier | Points Earned | Cost Per Point |
|---|---|---|
| 1X | 207 | 3.36 cents |
| 2X | 414 | 1.68 cents |
| 2.2X | 455 | 1.53 cents |
| 5X | 1035 | 0.67 cents |
The 1X card could be any card. Using a 1X point card such as the Sapphire Preferred, would be a better choice than a 1% cash back card, because you are paying more than one cent per one cent cash back. It’s a terrible conversion rate if you have a 1X or 1% cash back card. 2X and 2.2X aren’t much better, though. A good 2X card would be the Capital One Venture and the 2.2X card I was thinking of was the Barclaycard Arrival. Again, I would never buy these gift cards with any of those cards, because the cost per point (CPP) is awful. The only card I would use there is the Chase Ink Bold/Plus, since the CPP is under one cent.
I didn’t include Visa SavingsEdge in this calculation, but that helps lower the CPP even more. For every $200 gift card you get another 1% cash back with Visa SavingsEdge, so by using a Chase Ink card your CPP would be only 0.47 cents instead of 0.67 cents. Now let’s look at some $500 gift cards or Vanilla Reloads (if you have a store that allows you to purchase them with a credit card).
$500 Gift Cards w/ $4.95 Fee
| Point Multiplier | Points Earned | Cost Per Point |
|---|---|---|
| 1X | 505 | 0.98 cents |
| 2X | 1010 | 0.49 cents |
| 2.2X | 1111 | 0.45 cents |
| 5X | 2525 | 0.20 cents |
| 6X | 3030 | 0.16 cents |
As you can see 1X and 1% cards are now in the running. I still would shy away from them at all costs, since that is a very slow way to manufacture points/miles. But, if that’s all you can do, at least you’re making a profit. 1X and 1% cards get a little better if you can find VRs or Paypal Cash cards since they only charge a $3.95 fee. The CPP ends up being 0.78 cents in that case. The only time I use 1X points is for loading Visa Buxx, since I do not have a 2X or 2.2X card currently.
The 6X card I was thinking of specifically was the American Express Blue Cash Preferred since it earns 6% cash back at grocery stores, where you can commonly pick up $500 gift cards (That is an affiliate link. Thank you very much for your support!). So, with that card you would be paying 0.16 cents for ever 1.00 cent earned. That is a great conversion rate. It’s too bad that you can only earn 6% on $6,000 a year.
Some people would be willing to spend 1.2 – 1.4 cents per UR point, since they are valued at around 1.5 cents each. If there was an easy way to buy these points in bulk at that price, then maybe I would. The only problem is: when you account for time/gas that 1.2 – 1.4 turns into something like 1.4 – 1.6 cents per points, which ends up costing you money per point. I will be going further in-depth on that next week.
This only applies to manufactured spending. If I am buying regular things, like groceries, with a credit card, I will buy those points at any CPP. That’s because the purpose of buying groceries is not for points, it’s for food. Of course, I will try to lower the CPP as much as possible though, by going through portals, or using other rewards programs such as Mperks at Meijer.
What is your limit? Are you willing to buy UR points or other points/miles at more than one cent a piece? Let me know in the comments.
