Alternate Bank Program Showdown Part 4: CapitalOne vs Bank of America vs USBank vs Barclays



Our fourth and final installment in this series covers Capital One (CO), which is the smallest bank we have featured, just trailing USBank in size, but which has an impressively large credit card operation. Even if you do not hold any of their cards, you probably are aware of them from their mass direct mail credit card ads in the 90s and early 2000s. As their banking footprint is relatively small, it is not surprising that they do not reward you for having this type of account with them. They are also relatively new to the credit card miles game with only two cards in this category. As before, please keep in mind that I am covering each of these bank programs as unified systems, but the reality is that most of these rewards are tied to a particular card and cannot be pooled or transferred between accounts save for a few exceptions, which I will indicate when appropriate.

 
 
 
 

CO Cards that Earn Rewards
Earning CO Rewards with Credit Cards
Spending CO Rewards
Rewards Expiration
CO Rewards Program Summary

 
 
 
 

CO Cards that Earn Rewards
The following is a list of the cards, which earn rewards:
Capital One Venture
Capital One VentureOne

That’s right, just like Bank of America, there are just two cards! Capital One does, however, have a large array of solid cash-back cards, which may also be of interest but will not be covered in this post. Please note that Capital One is infamous in performing triple pulls for all applications – that is they perform a hard credit inquiry with all THREE major credit bureaus (Equifax, TransUnion, Experian)! They are the only large bank to do so and there are few ways around this – you can try to freeze a report, but freezing more than one will generally cause a denial based on available datapoints. This is quite unfortunate and downright annoying – if you are thinking of applying, make sure that all of your reports are in good shape and have a plan for the hard inquiries accordingly.

With that out of the way, Capital One’s travel products consist of a card with an annual fee and one without that earn a set rate of points per dollar of spend across all categories. You can think of these cards as somewhat similar to the Freedom Unlimited and Ink Business Unlimited products from Chase, the Business Blue Plus from American Express, and the Arrival Plus and Premier from Barclays, as those card all operate in much the same way, without category bonuses. These would be considered solid introductory (VentureOne) and mid-tier (Venture) cards as they do not offer any travel credits or premium perks like lounge access or in-flight internet access. The Venture card does, in a nice bonus, offer reimbursement for Global Entry/TSA PreCheck, making its’ annual fee a bit more tolerable. As usual, the details for the cards are illustrated in the spreadsheet below:

CapitalOne Rewards Annual Fee

Both of the cards, including the free VentureOne product, do not carry any foreign transaction fees, which is a nice bonus for frequent international travelers. Typically, most cards without an annual fee incur this, so CO is generous in this regard. I’m not aware of any annual fee reduction that is available from CO for the Venture card, but the annual fee is waived for the first year.

As mentioned, the Venture card comes with a Global Entry/TSA Precheck benefit, which, coupled with the right spending strategy, can net you a good rewards return. I would personally avoid the VentureOne card as its’ earning rate is subpar compared to other free cash back cards out there, including ones from Capital One! Thus, I think the Venture card can be a worthwhile consideration for the right person who wishes to diversify their points portfolio, but it would be hard to call it the most valuable cards in your wallet.

 
 
 
 

Earning CO Rewards with Credit Cards
Both Venture cards earn generic ‘rewards’, which CO also sometimes misleadingly calls miles, trying to compare them to airline frequent flyer programs especially in their TV ads. The ability to earn points is summarized below:

CapitalOne Rewards Earning Summary

As you can see, this is about as simple as it gets – there really are no bonus categories! The cards earn a flat rate with one exception – a limited-time promotion (that is unclear if it will be extended) with Hotels.com. Pre-paid purchases through their site will earn an impressive 10 miles per dollar spent (netting a return of 10%) with either card, which is the highest category bonus I have seen! In addition, Hotels.com has their own rewards program, that offers you 1 free night after 10 paid nights (this is actually a credit that is based on the average pre-tax amount spent on all 10 nights – you can see more info here) and you CAN double-dip: that is these Venture purchases WILL qualify for that program as well, further increasing the value of the cards. Note that any Hotels.com nights you accumulate expire if you have no new qualifying stays for 12 months and this program comes with some fine-print, summarized below:

“To participate, use your Capital One Venture or VentureOne credit card to make an Eligible Booking at hotels.com/venture by January 31, 2020. You must pay online at the time of booking to earn 10x miles. Any lodging option where payment is received at the property is excluded from the offer.”

Note the following:

“Payments made through PayPal are not eligible). If given a choice, select the “Pay Now” option at checkout.”

“This offer is presented by Capital One and Hotels.com, so using any third-party extension or service (e.g. Ebates.com and similar websites) in conjunction with your booking will make your booking ineligible for this offer. This offer is not valid for: bookings made by phone or the Hotels.com mobile app; bookings for groups; bookings that include flights; and bookings where payment is made at the property.”

“The 10x miles earned through this offer will be posted within two billing cycles from when you’ve paid for your stay with your eligible Venture or VentureOne card on hotels.com/venture. Please Note: The regular miles you earn (2 miles per dollar with Venture, 1.25 miles per dollar with VentureOne) may post to your account before the remaining miles you earn through this offer.”

And, finally, if you thought of combining this offer with other portals:

“You can combine Hotels.com promo codes and Secret Prices with this offer, but using any third-party extension or service (e.g. Ebates.com and similar websites) in conjunction with your booking will make your booking ineligible.”

Overall, I don’t find this aspect of the cards as too restrictive apart from the fact that you have to remember to use a specific link to access these deals (these are NOT the exact same listings as the general Hotels.com site and using that instead will NOT earn you 10% back) and these pre-paid stays will generally NOT qualify for any elite status or points earnings with the hotel programs in question. Also, remember that if you already have status, it is actually up to the discretion of the hotel to decide if they will honor it and the benefits it confers to your stay on a case-by-case basis. Thus, you have to balance how important it is for you to attain (or be recognized for having) status in a particular hotel chain as opposed to getting 10% back. I would say that the latter is definitely tempting, even for the die-hard loyalists out there. In any event, I would consider booking small or independent hotels that do not participate in any programs a great use of this aspect of the Venture cards!

Pretty much all other purchases can be put on autopilot – there are no categories to keep track of, no hassles of figuring out if the right number of points were awarded, and no spending bonuses to calculate apart from the usual sign-up requirements. Again, it really does not get any simpler!

 
 
 
 

Spending CO Rewards
Now, onto the fun part! By now you’ve hopefully amassed a ton of points from maximizing the 10% Hotels.com opportunity and getting in on a record high sign-up bonus, and are eager to redeem all that hand work for a first class ticket. Not so fast – there are some additional quirks to note. Let’s begin with another spreadsheet, delineating what each CO Reward Point is worth:

CapitalOne Rewards Spending Summary

Continuing the theme of simplicity, you can see that pretty much all redemption opportunities are equal with a flat value of 1 cent per point. The only exception is cash back, which comes in the form of a mailed check or statement credit, and should be avoided as this decimates your point value to a paltry 0.5 cents! With this spending structure, you can see how these are really just cash back cards (1.25% for the VentureOne and 2% for the Venture) except in the case of the Hotels.com partnership. Either card allows you to make travel purchases through the Capital One Travel Center at 1 cent per point – this offers airfare, hotels, and car rental options.

If you account for the fact that the airfare booked with either is treated much like any other ticket that you purchase and earns both award miles and award dollars from the carrier, you get more than 1 cents in value. Your ultimate value will vary slightly based on how many extra miles you earn but it’s only fair to account for them when figuring out the true net redemption value that you receive. However, it is also possible to inadvertently book basic economy fares, especially with the Travel Center, which may negate any of the above additional mile-earning benefits, depending on the carrier (looking at you, United!), and may come with nasty surprises such as inability to select a seat without paying extra. My advice for this is to always double check the fare code of the ticket you purchased with points and reference these with the fare codes for your carrier; if you risk getting stuck in basic economy, you have 24 hours to change or cancel your purchase.

Regarding hotel purchases through the Travel Center, I do not see any specific value benefit to using this as these transactions have the same limitations as the Hotels.com fares that I mentioned – they do not count towards elite status or earn the hotels’ own rewards. You can just make a transaction directly with the hotel to get their program points and perks and then use Purchase Eraser to wipe the charge from your statement. This option works just like similar options described for Barclays’ Arrival products and USBanks’ Real-Time Rewards: you can ‘erase’ any travel transaction from your statement made over the prior 90 days with points. The value stays the same at 1 cent. I need more datapoints on this but another interesting option would be to use Hotels.com for the same purchase AND get 10% back on even your reward redemption, using Purchase Eraser after your transaction. This should be possible in theory as Hotels.com purchases code as ‘travel’ with Barclays – I would greatly appreciate confirmation about this from Venture card users! The following is CO’s official definition as it applies to travel for the Purchase Eraser option:

“The travel category on the Venture cards include purchases made from airlines, hotels, rail lines, car rental agencies, limousine services, bus lines, cruise lines, taxi cabs, travel agents and time shares. Availability for redemption is based on the merchant category code assigned to purchases by the merchant.”

Also, of note, purchase Eraser does allow partial credits with a minimum of 25$, corresponding to 2,500 points, and full credit for any amount (including 1 point!).

Beyond travel and statement credits, CO lets you use points for gift cards at the same flat value of 1 cent per point, which is a nice change of pace from many other issues, who try to game their rewards value with these transactions. And that’s about it! While adding some flexibility, overall CO does not offer quite as many opportunities to redeem your points as Citi, but at least they give value points the same (except with cash redemptions!) There are no merchandise purchases, but this is not necessarily a negative given that this option rarely, if ever, yields the highest redemption value.

To finish this section, I will add that CO is fortunately not as stingy as Citi and has not been known to send 1099-MISC forms, characterizing redeemed points as income. That being said, I would still be conservative and avoid excessive redemptions per calendar year as this may change at any time and there is nothing that prohibits them from doing so.

 
 
 
 

Rewards Expiration
Matching most other issuers, CO points do not expire as long as your account is current. Note, however, that closing an account immediately forfeits all your points – there is NO grace period.

 
 
 
 

CO Rewards Point Program Summary
Whew, you made it to the end and now know as much as I do about all the intricacies of Capital One’s Rewards! I hope this was instructive and serves as a helpful reference guide for you now and in the future. Despite some of this program’s quirks, I think it has a lot to offer someone interested in travel, especially if you don’t want to keep track of categories and just want a flat earning rate. Additionally, I would highly consider this card if you already primarily make pre-paid hotel bookings to maximize your returns. Based on everything I’ve covered, I can summarize the advantages and disadvantages of the program in the following:

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  • Unbeatable 10% return on pre-paid Hotels.com purchases through a dedicated website
  • Hotels.com purchases additionally qualify for 1 night free after purchase of 10 qualifying nights
  • Flat 1 cent per point redemption for virtually all options (except cash back!)
  • Purchased airfare qualifies for elite status and additional loyalty earning, increasing the final value of redeemed points
  • Direct hotel purchases using Purchase Eraser also qualify for elite status and additional loyalty earning, further increasing the final value of redeemed points
  • Earned points never expire
  • Low annual fee, coupled with Global Entry/TSA PreCheck and Hotels.com program, create a quick positive return for the Venture card
  • No foreign transaction fees
  • No 1099-MISC form for redemptions

MileNavigator Neutral Face

  • Points expire immediately upon closing card account
  • No category bonuses – both cards basically act as cash back products with the exception of Hotels.com purchases
    Bad

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  • Lack of transfer partners
  • Hotels.com partnership is currently only until 1/31/2010 and the future of this program is unclear
  • Capital One triple pulls – they perform a hard credit inquiry with all THREE major credit bureaus (Equifax, TransUnion, Experian)

 

Please keep in mind that I did not have time to include any of the additional benefits of having cards with Capital One nor many ancillary benefits in this review. This will follow in the future and is just as important as their Venture programs and Hotels.com partnership in determining whether they are a good fit for you!

 
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