Credit Card Bonus Categories
I like process of earning points and miles just as much as using them. Perhaps some of you can relate – that may be why you’re reading this right now. Next to welcome offers and a few recent referral bonuses, spending in credit card bonus categories may be the most prominent way to earn large chunks of points and miles in a short timeframe. In addition to spending in such categories, I’m constantly on the lookout for cards with them, increasingly so with smaller, more obscure banks and credit unions. The hunt is part of the fun. But along the way to earning in attractive categories, I must remember doing so isn’t necessarily the most optimal move. Today, I’m describing how bonus category spending can work against us.
Solid Award Redemptions? No, Thanks.
I’ve known points and travel fans across the spending spectrum who routinely choose bonus categories over award redemptions bringing substantial value. Indeed, redemptions involve an earnings opportunity cost. One of my favorite redemption methods, Pay Yourself Back, means spending on my Chase Sapphire Reserve for 1x in categories that can earn 5x, or maybe more, elsewhere. In general, I take this immediate PYB redemption over the bonus points. Why? Because points and miles are worth nothing until redemption.
Choosing to earn in bonus categories instead means deferring redemptions. But plenty of “unpleasant” can occur in the meantime, including devaluations and shutdowns. That earning isn’t exactly a bonus in those and other situations.
But I’m Earning Bonus Points!
Let’s talk about something even trickier for many. Many card bonus categories entice individuals to spend more than they actually need to. Spenders rationalize all sorts of unhealthy purchases based on card bonus categories, whether permanent or limited time versions. Maybe it’s buying stuff in bulk when you don’t have the need or storage space, overindulging at restaurants, or buying gift cards you swear you plan to use someday. Most all of us are vulnerable in one form or another.
A more defensive mindset toward bonus categories has helped me. Before I make everyday purchases, I remove point earning from the equation. Do I need this item or service? How does it apply to my priority goals? Remember, when it comes to points earning and many other things, you don’t have to do everything. Keep in mind that you’re probably making other efforts to earn points and miles – frivolous purchases shouldn’t play a role.
I Just Love Wyndham Rewards Points!
In my view, perhaps no bonus category has been more overblown than 8x gas spending on the Wyndham Rewards Earner Business card. No doubt, that’s an eye-popping earn rate, and so is the point balance for some individuals going particularly hard. They really like Vacasa redemptions, apparently. I don’t, incidentally. It’s just not our thing. Plus, we don’t exactly plow through Wyndham points elsewhere, either.
Regardless, it seems that earn rate distracts individuals from the reality of the currency. On a couple occasions, I informed these previously-unwitting spenders that Wyndham points expire four years after they are earned (in addition to 18 months without activity – not an issue for them). That’s a tremendous asterisk on the end of that point balance.
Many points currencies come with attached strings, some more obvious than others. Know what you’re getting into before you stock up!
Credit Card Bonus Categories – Conclusion
To borrow again from Peter Parker’s Uncle Ben, “With great power comes great responsibility.” The hobby provides us so many options for earning points, including card bonus categories. Spenders should be judicious in partaking of them; otherwise, they’re at risk of becoming the suckers. For me, that means not maximizing everything all the time. All in moderation. I don’t think I’m alone here. So then, what card bonus categories do you focus on, which do you shy away from, and why?
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Wyndham points are way overblown. In 2023 I redeemed 54,000 points for a 1 bedroom condo in San Diego. Well, actually, I wound up with a three bedroom, 1400+sqft. duplex on Mission Bay because the first owner dropped out of Vacasa. Valuation for my upgraded stay: $2,585. I also got my Caesars Diamond status match due to Wyndham (including annual $100 F&B credit) that I matched to MGM Gold and I also matched to Hard Rock Icon ($100 F&B credit). Truly not my best move as the Wyndham Business Card cost me a whopping $95 to get that initial sign up bonus and only got $2,785 in value.
On to 2024, I booked a Maui condo only worth about $1,200 for four days plus a three day Wyndham time share rental on Kauai (“no, I didn’t have to attend a time share presentation”) only valued at $1,050. I did get my annual Caesar’s Diamond F&B credit and a status match to Fountaine Bleau ($150 status match), oh , and Wynn Platinum status match (another $150 F&B credit). Once again, by pursuing sign up bonuses, I squandered $170 to sign up for two more Wyndham cards (I have a player 2) to get this measly payout of $2,650.
Upcoming is another trip to Mission Bay with Wyndham points for a two bedroom house valued at $2,850 for five days. I may have to use the status with these casinos to parlay that into a free cruise or two or three (I’m sorry, four; I forgot about the Wynn offer). At his point, I have gotten less than $10,000 in return for the many hundreds of dollars I have spent. I wish I had read your article sooner.
Beavis, those are strong redemptions there! Thats why there are always uses cases for these programs.
Lol & I squandered 4.5 whole hrs of vacay time on 3 timeshare presentations to replenish 85k of WRs that expire in 4 yrs/a lifetime in travel redemptions – dang it, what a huge misstep for 6 nights in a nice Vacasa rental with my 10% Biz Card refund
Beavis and Pam,
Bravo! As I said in the post, “They really like Vacasa redemptions, apparently. I don’t, incidentally. It’s just not our thing.” Indeed, the redemptions you tout have zero value in my situation. We can each be correct for our respective circumstances.
And, that’s the key. Different people have different objectives and preferences. One reader of another of Benjy’s articles commented that Benjy took an amateurish position on a topic. Paraphrasing, “no one in their right mind would do that.” Failing to consider a person might have different preferences is all too common in comments.
Clear thinking article. Sometimes the best redemption is not necessarily the biggest return. Points do expire or get devalued as I have seen a dozen or more times. Perhaps this is a bird in the hand is worth two in the bush thinking. Smart.
Flex points like Chase or Amex do not devalue per se. Programs have been changing since the dawn of time. Sweet spots and oppotunities always seem to pop up. If you can take advantage of them and act quickly. Transfer bonus opportunities also help mitigate some program changes or devalues. I am fairly experienced with this.