From the desk of the Devil’s Advocate…
Today we continue our three-part series on the downsides of the major flexible miles currencies — Chase Ultimate Rewards, American Express Membership Rewards, and Starwood Preferred Guest (SPG) Starpoints. Yes, we all already know how valuable these various programs can be, especially with their inherent flexibility to transfer points to multiple redemption partners. But no one ever talks about the negatives of these programs, and playing the Devil’s Advocate is exactly what… well, playing the Devil’s Advocate is supposed to be about.
For the last two weeks we’ve covered the cons of American Express Membership Rewards (and had a little fun tweaking our fellow bloggers in the process). But this week, it’s SPG’s turn in the barrel. So here’s why Starpoints are truly terrible…
Almost Impossible To Earn In Any Real Quantity
Let’s look at the category bonuses available from some of SPG’s credit card competitors…
- The AmEx Premier Rewards Gold offers a 3x bonus for airlines, along with 2x for both gas stations and supermarket.
- The Chase Sapphire Preferred offers a 2x bonus for most travel expenses along with a 2x bonus for all dining spend.
- The Chase Ink Bold and Chase Ink Plus business cards come with a 5x office supply bonus (which is possibly the most lucrative category bonus around if you know how to use it) as well as a 2x bonus on both gas and hotel spending.
The SPG personal and business cards? They have a 2x bonus… on SPG. That’s it.
Sure, their category bonus structure is similar to other hotel branded cards which focus on rewarding spend directly at their properties. But we’re talking about Starpoints as a flexible currency here, and for a flexible currency card, that’s super lame.
So if you’re accumulating Starpoints, you’re going to be doing it super slow. Unless you spend a great deal of your life at SPG hotels, you’re looking at no bonus categories for any of your spend. None. Nada. Nothing. It’s 1x from here to eternity, which is how long it’ll take you to build up a useful stash of Starpoints.
The 25% Bonus Is Nice, But Can’t We Do Better Than 1.25x?
But if you’re excited about earning 1 Starpoint per dollar, then I’ve got great news for you! By transferring 20,000 Starpoints (or multiples thereof) all at once to one of SPG’s numerous airline partners, you’ll get a 5,000 point bonus which means you end up with a total of 25,000 points. So if you’re generally earning 1 Starpoint per dollar spent (which we just demonstrated that you most likely are) with the bonus you’re actually getting 1.25 points per dollar spent. Pretty sweet, huh?
Actually, not really, especially when you consider that a Fidelity Investment Rewards AmEx Card earns 2% cash back on every dollar spent. Sure, Starpoints are flexible, but what’s more flexible than cold hard cash? Or the Barclaycard Arrival Plus World Elite Mastercard which gives you an effective 2.2x on all purchases when redeemed for travel. Sure, Starpoints have a ton of transfer partners, but Arrival points can be redeemed for almost any travel you purchase on any form of transportation. Yes, even a Greyhound bus!
We all have some purchases we make that can’t fit a category bonus on any of our inventory of rewards cards, even by using alternate methods like buying gift cards at office supply stores and the like. Therefore, many Conventional Wisdomers advocate putting non-bonused spend on an SPG card. But you’d do better putting your non-bonused spend on either of the above two cards.
Or even better, put non-bonused purchases towards completing the spend for a new card signup bonus. If you’re playing the game right and aren’t purchasing a house or car in the near future, you should almost always be working on a new bonus spend, and the best transactions to put towards that new bonus spend are purchases that won’t get a category bonus on any of your other existing cards. That makes your effective return rate a whole lot better than 1.25x.
Measly Signup Bonuses
Speaking of signup bonuses, SPG is awfully behind the times right now when it comes to offering an enticement to sign up for their cards. In today’s highly competitive world of routine 50,000 point signup bonuses and occasional 100,000 point signup bonuses, SPG remains at a boring 25,000 point signup bonus. That’s on both their personal and business cards.
Yes, yes, once or twice a year they briefly pop it up to 30,000 points. Call me still not impressed. Again, consider SPG on this front versus its direct competitors. The Chase Sapphire Preferred normally comes with a 40,000 point signup bonus for the past few years, and it’s currently 45,000. The Chase Ink cards are always at least 50,000 points and lately even more. Currently we can also find a 50,000 point signup bonus for the Platinum Card from American Express for Mercedes Benz and AmEx regularly pops up with special signup bonus offers (along with targeted offers) on their Gold and Platinum cards for 50K-100K or more.
Even the Arrival card has a standard 40,000 point signup bonus, which is effectively worth a guaranteed
$880 $440 in travel. Are you going to get $880 $440 in travel from 25,000 Starpoints, even with the transfer bonus? Maybe, but no guarantees. (UPDATE: Commenter BoonDR correctly noted that the 2x multiplier on the Arrival card is on the earning side, not the redemption side. So you don’t get 2x on the signup bonus, which makes the redemption for those 40,000 points worth $440, not $880. Apologies for the error and thanks for the correction!)
Partner Transfers Are Super Slooooooooow
Chase Ultimate Rewards transfers are instant, and it’s awesome. It gives you the ultimate in flexibility. You see the award you want, you make the transfer, and you book it all in a matter of minutes. Though AmEx Membership Rewards does have a few partners that are slightly slower, for the most part their transfers are also instantaneous. (By the way, if you’re interested in those AmEx partners with special transfer times, you can find them in this excellent chart assembled by one of our favorite bloggers…)
But SPG? Officially they say points transfers can take up to 14 days.
Now actual transfer times are often faster than “official” transfer times. But in the case of SPG, most first-hand reports find that you’ll wait around 1-3 days for domestic airlines. For other partners, that two-week timeframe is often scary accurate.
All that wonderful flexibility that SPG gains from its nearly 30 travel partners gets heavily diluted when you have to wait so long for your points to show up. That key redemption you’ve been searching for weeks to find that suddenly pops up unexpectedly? Odds are it’ll be long gone by the time SPG gets your points to you.
The Devil’s Advocate says SPG Starpoints could benefit from some new benefits.
It’s a super competitive credit card market out there right now with new cards, new perks, and new signup bonuses being pushed by banks eager to capitalize on America’s endless desire for credit cards. But SPG has been coasting on their (admittedly impressive) list of transfer partners for long enough and it’s time for them to step it up a bit.
Why not have instant transfers, SPG? Clearly the technology exists — in fact your financial partner American Express already has it for their other program. So what’s the delay? Why not a higher signup bonus, even one that comes and goes every so often that offers more than just an extra 5,000 points? And why not a few extra category bonuses? Heck, how about just one extra category bonus? Give me dining or groceries and I’d be a much happier Advocate.
Only SPG and AmEx know the answers to these questions, and they ain’t talking (at least not to me, which is certainly understandable). But in the meantime, I don’t have an SPG card in my wallet or even in my sock drawer, and that’s unlikely to change until SPG changes. So come on, guys. How about gas stations? That’ll help a bit. 7-11 takes American Express cards, right?
Devil’s Advocate is a weekly series that deliberately argues a contrarian view on travel and loyalty programs. Sometimes the Devil’s Advocate truly believes in the counterargument. Other times he takes the opposing position just to see if the original argument holds water. But his main objective is to engage in friendly debate with the miles and points community to determine if today’s conventional wisdom is valid. You can suggest future topics by sending an email to email@example.com.