Capital One Venture Rewards vs. Blue Sky Preferred from American Express
January 16, 2013
Airline miles have always been the original currency of reward credit cards since they were first offered. After all, who wouldn’t jump at the chance for a “free” airline ticket. But in the intervening decades, the airlines have successfully moved the goal posts when it came time to redeeming miles for actual flights.
First, they starting adding fees including government taxes (which they previously absorbed), fuel surcharges, and close-in booking fees. Later they started reducing the availability of award seats at the lowest mileage levels. Today, frustration with the airline’s frequent flier programs is so acute, that banks are trying to offer their own alternative “miles” that can be used on any airline at any time.
The Capital One Venture Rewards card and the Blue Sky Preferred card from American Express are two similar products that offer proprietary points that can be redeemed for statement credits. They both made the cut for some of the best airline credit cards, let’s see how these two cards do against each other in a head to head match up:
Capital One Venture Rewards Visa
Capital One offers its Venture Rewards card that features two of their “Miles” for every dollar spent on all purchases. You don’t have to spend your money with particular merchants, or keep track of bonus categories that change each month; you get double miles all the time.
When it comes time to redeem your miles, each one is worth a half a cent each towards all sorts of gift cards, statement credits, and merchandise reward options. But smart cardholders will redeem their miles for statement credits towards any travel related purchase at a rate of one cent per point. These purchases can include airfare, car rentals, cruises, or vacation packages purchased from travel agents.
So in essence, using this card is like earning two cents per dollar spent. There is a $59 annual fee for this card that is waived the first year. As with all Capital One credit cards, there are never any foreign transaction fees assessed on purchases made across the border.
Insider tricks: Since the best reward value is for statement credit toward travel expenses, cardholders should only choose this option. Fortunately, Capital One is very generous with the expenses it will count toward this category. If you feel that there is a travel expense that you would like to use your points for, call their customer service and just ask.
There are many reports that Capital One will grant just about any reasonable request. Also, a neat feature of this rewards program is that airline tickets that you purchase with points are treated just like any other tickets paid for with cash. Unlike airline mileage rewards, you can earn miles and be eligible for upgrades if you hold elite status. Finally, Capital One offers its similar VentureOne card with no annual fee, but it only earns 1.25 miles per dollar.
Blue Sky Preferred from American Express
The Blue Sky Preferred card from American Express is aimed at travelers, but it features a different rewards program than many of its other products that feature Membership Rewards. Instead, American Express offers two points per dollar spent at restaurants, for hotel rooms, and for car rentals. Cardholders receive one point per dollar spent on all other purchases. This doesn’t seem nearly as good as the Capital One Venture Rewards card, until you realize that these points are worth 1.33 cents each towards cash back.
In addition, cardholders also receive a $100 airline fee credit that can be used to offset expenses for checked baggage, in-flight meals, and entertainment. That’s good, because this card has a $75 annual fee that is not waived the first year. It also has a 2.7% foreign transaction fee that is imposed on all transactions processed outside of the United States.
Insider tricks:Â The $100 fee credit is extremely valuable, especially in today’s environment where airlines seemed to be addicted to taking every last dime they can from passengers. But be careful. American Express has some interesting rules that they use to determine which fees are eligible for reimbursement. For example, you could be reimbursed for paying $50 for an economy seat with extra legroom, but not if you pay the same fee to be upgraded to first class. Likewise, you could be reimbursed for in-flight entertainment, but not you purchase wi-fi from a third party provider such as GoGo.
These two cards both have their share of strengths. Capital One cardholders enjoy the equivalent of two cents worth of miles per dollar spent in cash back on all purchases, while American Express customers receive either 1.33 cents or 2.66 cents in value, depending on the purchase. The Capital One card has a leg up in that the first year’s annual fee is waived and there are no foreign transaction fees.
In the end, there really is no clear winner. The Capital One card is probably best for those who travel outside the United States, and those who don’t spend much at restaurants, on hotels, and rental cars. Cardholders who do incur a lot of expenses from restaurants, hotels, rental cars, and airline fees will do better with the American Express Blue Sky Preferred.
When you decide you are no longer going to play the frequent flier mile game, you have to look for the travel rewards card that offers the most value. In this case, it all boils down to the kind of spending habits you have that will maximize your rewards.
Which credit card would you prefer? Leave a comment and let us know!
All posts by Jason Steele