How to get the best value from your Capitol One credit card rewards

credit card

A few months ago, Nick and I signed up for a Capitol One travel rewards credit card so we could make purchases in foreign countries without incurring the foreign transaction fee. We now have enough reward miles to be able to start using them, so I thought I’d check out what our options were.

Turns out there are lots of ways to redeem miles. Cardholders can

  • buy airplane tickets or hotel stays through Capitol One’s Travelocity portal,
  • eliminate or cancel travel purchases already made,
  • redeem the miles for cash,
  • eliminate any other expense I’ve already purchased with my card, and
  • buy gift cards, merchandise or other experiences.

 
I was particularly interested in seeing how each of these stacks up against the others. Would I get the same value for the miles earned, for example, if I bought a gift card vs. an airplane ticket vs. getting cash back?

It wasn’t easy to figure out, but what I discovered was pretty interesting! Here are the nitty-gritty details:

The best value comes from redeeming miles for travel through Capitol One’s Travelocity portal, eliminating a travel-related purchase, and for gift cards purchased through their website. In these cases, cardholders get 12.5 cents per dollar spent using the Capitol One card.

The worst value came from redeeming the miles for cash or eliminating non-travel purchases. In that case, cardholders only got 0.6 cents per dollar spent using the Capitol One card. Yikes! (I double and triple checked my math on that one and it’s as bad as it looks.)

Merchandise and experiences were hard to gauge. Without the price of each item in front of me I didn’t have a good way to calculate the value. I really wasn’t interested in the things on offer, so I didn’t spend the time to research prices and do the math. If you need something they can offer, and you can get it for free by redeeming miles, I suppose that’s a good thing. It just isn’t clear whether your redemption value is more or less than the other options.

Photo: 401(K) 2013

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