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- Managing Credit Cards & Payment Options
Credit Card Award Points: Are They Worth It?
The short answer is yes. I know several that frequently get free airline tickets by cashing in some points. The thing I have always wondered is how much are the points worth? Since the value changes from card to card and from time to time with the same card, the best one can do is get a general idea.
For instance, Chase bank recently offered 75,000 points to sign up for their Sapphire Card. This was a $900 value. Citibank gave select users of their premier account 80,000 points, this had a value of $1,060. American Express offers 100,000 points to use their Platinum card, this value of $1,200. However, PNC offers 100,000 points to join also, yet, this is valued only $200. So, really , the consumer needs to ask what the value of the points are.
Most of these high award point offers are for people with credit scores of 720 or higher and those earning $100,000 or more. However, once you join, you have criteria to meet to continue getting reward points. Usually the annual fee is $100 or more, most require you to spend at least $1000-3000 in three months and most have an interest rate of 14-16%. Some banks require a minimum balance in their bank for their premiere awards cards. Another aspect of taking a new credit card is that your credit score will take a hit- 5 points lower.
Many of the points offered, like Citigroup's, which offers 80,000 points, condition on getting this amount if you spend $5000 within three months of sign up. If you fail, you don't get them.
Like any card, do not sign up if you cannot meet their requirements and if you cannot payoff the card every month due to the high interest rates. Ask what the dollar value is of the points, it might be cheaper just to buy the item than accumulate award points to get it!