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I want to accrue flight miles/points from everyday purchases. I'm looking at the "Capital One Venture Rewards Credit Card". It states "Earn unlimited 2X miles on every purchase, every day." I pay about $2,000 on rent for my apartment. I verified that my apartment supports paying with credit card. If I were to pay for a month's worth of rent with this card, does that mean I will accrue 4,000 miles? That's enough miles to cover more than half the country (United States).

This must be too good to be true. I'm new to credit card rewards programs, so I'm likely overlooking something.

chicks
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Dividable6919
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3 Answers3

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If I were to pay for a month's worth of rent with this card, does that mean I will accrue 4,000 miles?

It sounds like it, yes.

That's enough miles to cover more than half the country (United States).

Redemption rates vary, but it is certainly not the case that one mile of points can be redeemed for one mile of travel. Usually you earn one reward mile per mile flown, so obviously they can't redeem at that same rate - if they did, you'd be getting two tickets for the price of one.

Usually redemption is more like a factor of 10: 10 times as many rewards miles must be cashed in than the length of the trip. For example, DC to LA on Southwest ranges from 25,000 to 50,000 points/miles. Details will vary by program and airline.

Remember, rewards are paid for out of fees that the card provider charges to the bank. These vary, but after subtracting what the bank keeps for itself, roughly 1% is available for "rewards". This is why "1% cash back" is very common. On your $2000 rent payment, that's $20 per month or $240 per year. That could possibly earn you a plane ticket one a year, but certainly not every month.

nobody
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If there's no added fee to pay by card, then this is a no brainer. If there is a fee, you'll have to do the math. Often, they charge a convenience fee that will then outweigh the card rewards.

You can also consider other cards. You don't have to get a travel card. There are lots of reward cards, and some just give a cash rebate directly to your statement. Of course, any rewards aren't worth a nickel if you carry a balance on the card, and end up paying those usurious interest rates.

Footnote: To repeat the other answer, "miles" are not a one-to-one miles to travel when you redeem them for a flight. They are simply points. As such, expect 10K to 50K award miles needed to get a free trip.

Second Footnote: In my experience, companies that sell large expense items are sometimes willing to discount if you pay in cash or check, instead of card. I bargained 3% off $11K for HVAC appliances and install last year, for example. If your landlord doesn't charge to use a card, call and ask for a discount to pay by ACH, check, or cash. Bargain for 3%, bring up their "savings in merchant fees". That will outweigh any card rewards program, by a lot.

Robert Longson
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Whenever you use a credit card, the merchant pays 2% to 4% to the credit card system as merchant fees*. The amount depends on their contract with their bank, but it often varies by reward card type. For better reward cards, the merchant pays more.

This must be too good to be true. I'm new to credit card rewards programs, so I'm likely overlooking something.

Those miles aren't coming out of thin air; the merchant (read: landlord) pays for them.

The bank is turning around and buying those miles from the airline. And here's a gotcha - "miles" are not the same thing as "an airline gift card". You may find the rates at which miles are redeemed are not that advantageous compared to cash.

Whether to accept credit cards and this arguably-usurious fee structure is a personal decision made by each merchant. It's a complex question, as it depends on particular facts relating to their business and customers. Note that taking cash or checks isn't "free" either - there are internal business costs to any payment method.

There are also costs TO YOU. I had a landlord who wanted me to pay by credit card, but to do that I needed to use their "online system" and to do that I needed to sign their TOS, which included an arbitration clause.

* depending on the arrangement, they are not necessarily a pure percentage. They may have per-transaction fees, batch fees, oh they've got all sorts of fees for many merchant systems. In most fee arrangements, Few but Large transactions (furniture store) have a better effective rate than Many but Small transactions (pizza place).

Harper - Reinstate Monica
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