There’s a psychological trick used across the points and miles world where we’re fooled by the illusion of something with a fixed value being worth more than it actually is. You can see this with issuers like Discover or Barclays who have ‘miles’ cards that are actually just cash back cards. Given the choice between a card with a $700 sign up bonus vs a 70,000 miles bonus, the miles bonus gets chosen hands down- even though with those cards the bonuses are exactly the same. For issuers like Amex, Chase, Citi, Cap One, etc. we rely on the opposite, to redeem transferable points for outsized value against what one would have to pay in cash. If I can transfer 10,000 Amex points to BA and redeem for a flight that would cost me $300 cash, then I feel like I’ve done very well.
Until recently I haven’t put much thought into the cash value of transferable points I’ve used for travel. There’s a host of blogs out there that try to put a value on an MR or UR point, ranging anywhere from 1.4 to 2.1 cents per point. That’s largely all theoretical and arbitrary, and in no small part influenced by making the points seem more valuable than they actually are when hawking cc referral links. In reality, the cash value of a point is what that point can be redeemed for in cash. I know. Fucking mind blowing stuff there. Most issuers tie point value at 1 cent or less per point. Check your 1099’s from last year- that’s what the banks say those points are worth.
But then there’s the Schwab Amex Platinum card.
Why I love the Schwab
This bad boy of the MR world let’s you redeem MR at 1.25 cents per point. While Chase & Citi will let you redeem their points for >1cpp when you use their travel portal, well, YOU HAVE TO USE THEIR TRAVEL PORTAL. Suddenly with the Schwab I can make my own travel portal. Need to rent a car? Just find the lowest rate & cash out the requisite number of MR to cover the cost. Going through AirBNB, Booking.com, hotels.com, etc? Find the property you want at the rate you want then just cash out the points to cover the cost.
Why I hate the Schwab
Ok, hate is too strong of a word, but the damn thing has definitely introduced some uneasiness into my happy little points earn & churn empire. Before getting the Schwab I wouldn’t hesitate to transfer 200,000 or 300,000 points to redeem for some fancy seats up front. But now… well… 300,000 MR could be cashed out for $3750… Is the transfer I’m making really worth almost 4 grand…?
I’ve fallen into a bizarre reverse psychological trick of my own making where every time I make a transfer or redemption I feel, I dunno, remorseful? I’m now viewing my points earning cards in the context of cash back redemption, meaning it takes an even more outsized value redemption to feel like I’m not wasting money. Am I alone in this? Did the Schwab both make my life easier & more difficult at the same time?