This time last year I would have never guessed that this time this year I’d be comparing a card earning Capital One Venture Rewards points on an apples to apples basis with a card earning Ultimate Rewards. Yet here I am doing just that. Today, we’re comparing the Chase Sapphire Preferred to the Capital One Venture Rewards Card.
I’ve never been involved with Capital One in any credit card capacity. I’ve just always found more compelling products from Chase, Amex and Citi. And I always found their advertising to be of-putting. Only slightly less annoying than Flo from Progressive.
Anywho, you can redeem Venture Rewards for 1¢ per point on travel or gift cards and just .5¢ per point cash back. On a redemption-only basis, they haven’t historically held a candle to Membership Rewards from Amex, Ultimate Rewards from Chase or ThankYou Points from Citi, but that’s about to change.
I’ve already made a video detailing what’s new, so I won’t get too far into it here. But the bottom line is this. Capital One is adding transfer partners to its Venture Rewards program. In other words, they’re about to become competitive with the big, established, transferable award currencies. In my latest evaluation, I came up with a value of 1.73¢ per point. Still less valuable that what Chase, Citi or Amex offer, but at least we’re now in the same league. Of course, value per point doesn’t even begin to consider earn rate.
Moving on to our contenders. In the blue corner, we’ve got the Chase Sapphire Preferred. A longtime favorite of the points and miles community. My guess is that this card has taken a lot of award traveler’s transferable points virginity. It did mine. Prior to jumping in bed with this card, I had always been part of the no-annual fee cash-back crowd. The same group I now look at as if they’re missing a chromosome or something. Though it’s star has been outshone recently by the likes of the Sapphire Reserve, it remains extremely popular.
In the other blue corner, we’ve got the Capital One Venture Rewards Credit card. A longtime competitor to the CSP that has traditionally not received near as much attention. Until now.
Whenever I’m comparing two cards, I like to start the same place everyone else does, with that annual fee. They will both run $95 for a year, and they will both waive that fee the first year. So far, it’s a wash.
Next up is the signup bonus. Capital One is currently offering 75,000 points to new Venture Cardholders. This is worth $1,297.50 at a valuation of 1.73¢ per point. This is offered after a $5,000 minimum spend over the course of 3 months. I consider that on the high side, especially for a mid-priced card.
New Chase Sapphire Preferred cardholders will be granted 50,000 Ultimate Rewards as a bonus for signing up. This is worth $1,095 at a valuation of 2.19¢ per point. The minimum spend requirement here is a more reasonable $4,000 over that same three months.
The Capital One Venture Rewards credit card wins for total signup bonus value, while the Sapphire Preferred wins for return on spend.
Next up is earn potential. As I’ve done for the last several head-to-heads, I’m going to use my own 2017 whole year spending patterns and apply that to a hypothetical $20,000 annual spend. However, because travel lumps hotels, airfare and a bunch of other things together, I’m going to keep this category relatively simple and just split it between airfare and lodging. Is it the most precise way, no. But trying to estimate spending patterns as they apply to a broad audience is kind of like a monkey throwing a turd at a bullseye. We might hit it, but it’s still going to be shit.
Our earn categories are as follows. The Chase Sapphire Preferred will earn 2 Ultimate Rewards per dollar on all travel and dining spend. What I really like about Chase, is how they define travel, it’s extremely broad. Plane tickets, hotels, AirBnb, Uber’s, subways, they all count. Some stingier card issuers, like American Express, limit bonus earn to airfare only. All other spend on this card will earn at a rate of 1 point per dollar.
For it’s part, the Capital One Venture Rewards Credit Card will earn 2 Venture Rewards per dollar on everyday purchases, and a spectacular 10 on lodging booked through hotels.com.
Just real quick before getting into the numbers, travel cards that earn bonus points on travel related purchases are a bit of a catch 22. The return on spend might be great, but you end up spending less than normal because you travel via point redemptions. So make of that what you will.
Here are the numbers. We can see that annually, the Chase Sapphire Preferred is projected to earn $526.48 worth of rewards, while the Capital One Venture Rewards Card is projected to earn $773, or, 47% more. That’s a lot.
Normally, I like to talk about misc statement credits, but you won’t typically find them in this class of card. Except here. In a very rare move Capital One is providing a Global Entry or TSA Precheck reimbursement to the cardholder. This perk is very common among premium cards, but not so much at this price point.
Next up, we’ve got miscellaneous insurances and purchase protections. These ancillary benefits never quite grab the headlines that signup bonuses or big category earn bonuses do, but they can be massively valuable. I would even go as far as to say that if I had to pick a great earn rate, or great purchase protection and trip insurance, I’d pick the latter. Recently, I had to put Chase’s outstanding purchase protection to use when my camera was stolen from a restaurant. With very little hassle, I was reimbursed $500.
The first thing I like to compare under the realm of insurance and protection is rental car coverage. This is a category that Chase almost always wins. The Chase Sapphire Preferred provides primary rental car coverage, while the Capital One Venture Rewards card only provides secondary. What this means, is that if one needs to file a claim for a damaged rental vehicle Chase picks up the tab from the start, while Capital One only pays for the portion in excess of what your personal insurance covers. It’s such an important distinction, that I would never consider charging a rental car to any card other than the Sapphire Preferred or Reserve.
As far as protecting retail purchases, both do a good job, but the Chase Sapphire Preferred does it better. If an item charged to the card is stolen or damaged within 120 days of purchase, Chase will reimburse up to $500 per item or $50,000 per account. Capital One gives you the same coverage limits, common to many Visa Signature cards, but only gives 90 days from date of purchase. A small difference, but a win nonetheless for the Sapphire Preferred.
Now let’s talk trip interruption or cancellation coverage. This one is a no-questions asked win for the Sapphire Preferred. Chase will reimburse up to 10,000 if travel plans are canceled or delayed by injury, sickness or other natural type disasters. The Capital One Venture Rewards credit card offers nothing.
So, this fact raises a really big question. If you are planning on booking a hotel, do you do so with your Sapphire Preferred that earns a 4.38% return on spend but will cover you if something unexpected arises, or, do you book using your Capital One Venture Rewards card and earn a massive 17.3% rebate but forgo insurance. It’s a tough call, not one that I could give a clear answer to either. Just something to think about.
Most other benefits are what I like to call near as makes no difference. Foreign transaction fee waivers, lost luggage coverage and fraud liability are all about the same.
First Year Net Earnings
When comparing two cards, I like to try and tie everything together before wrapping up. I do this by looking at year one net earnings and year 2/beyond.
Starting off in year one and we’ve got two fat intro bonuses to drop in. $1095 for the Sapphire Preferred and $1297 for the Capital One. Next up is year one earn on spend. 526 for Chase and 773 for the Venture Rewards Credit Card.
The value of miscellaneous insurances and purchase protections is a bit subjective and ballparky. Nevertheless I’m assigning $100 to the Sapphire Preferred and half of that to Capital One. Finally, that Global Entry or TSA Precheck credit comes into play, but only on the right.
Finally, we’ll drop in the annual fees, which is $0 for both in year one. This provides us with a year one net earn of $1,721.48 on the Sapphire Preferred and $2,221.16 for the Capital One Venture Rewards Visa.
Year 2/Beyond Net Earnings
Moving on to the second year, and earnings drop, but still remain quite good. Intro bonuses go away, so does the Precheck or Global Entry credit. Miscellaneous insurances and purchase protections remain.
Sadly, we now have to face those annual fees, so $95 gets aborted out of each card’s value. This leaves us a net earn of $531 for the Chase Sapphire Preferred and $728 for the Capital One Venture Rewards Credit Card.
Now that we see the new Capital One Venture Rewards card can bring a whole lot of value to the table, I’m left asking myself who exactly this card is for. I think that one mistake a lot of points and miles players make is feeling the need to hold a card for every bonus category out there. The Amex Platinum for airfare, the Sapphire Reserve for dining, the Amex Gold for groceries, etc. Without thinking that at some point, there’s so much benefit overlap, and diminishing returns, that the cost of these cards can start to outweigh their incremental earnings.
Let’s envision a scenario for a second in which a consumer is obtaining the Capital One Venture Rewards Visa just for the bonus on hotel stays. Let’s also assume this person holds a Sapphire Reserve, and thus already earns a 6.57% return on spend in that category. That’s calculated at 3 points per dollar times 2.19¢ a piece. The Venture Rewards Visa earns a 17.3% return, that’s 10 points per dollar times 1.73¢ per point. To figure out how much we’d need to spend annually on hotels.com purchase to earn back that $95 annual fee, we first take our 17.3% earn from the Venture Rewards card, deduct the 6.57% earn from the Sapphire Reserve and see we get 10.73% in incremental awards by using the Venture Card. Divide $95 by 10.73% and we get $885.36. That’s how much one would have to anticipate spending annually at hotels.com for it to make sense to open a Venture Rewards Credit Card if one already held a Sapphire Reserve.
If that entire math monologue was about as clear as mud, let me put is another way. You need to make sure the incremental awards from the new card, that is, rewards less overlap, can justify the cost.
At the end of the day, I don’t think you can go wrong with either card. Though I could make the case the Capital One Venture Rewards Visa is more valuable on a net earn basis, I could also make the case that the Sapphire Preferred will give you more piece of mind. I make this statement due to the vastly superior trip interruption and rental car coverage. There might be someone who just wants to book some travel, and not worry about something going wrong.
I think one big unknown at this point, or at least I haven’t heard any data points on, is transfer speed. Most Chase and Amex transfers make it to their respective partners extremely quickly. Commonly instantly. However, if for some reason Capital One rolls out a more manual transfer process, the value of their award currency will vastly diminish.
As for how I’m going to play it, I see a place in my wallet for both a Venture Rewards earning Card and an Ultimate Rewards earning one. I’ll still likely use my Sapphire Reserve or Amex Platinum for their superior purchase protection on large purchases. Electronics and whatnot. For smaller, everyday, non-dining spend, the Venture Rewards Credit Card will prove very useful with it’s 2 point per dollar earn. Then of course, there’s hotels, which would likely always be charged to the new Capital One card…unless of course I’m getting the 4th night free via my Citi Prestige. A lot to think about for sure.