Update: If you like this article and decide to sign up for a starwood amex, please fill out this form: http://goo.gl/KS13L. You will get up to the 25,000 points mentioned in my post. I also get some points for referrals.
I just received my new Starwood Preferred Guest Credit Card from American Express in the mail and can’t wait to use it! Not only because I’ll be booking my trip to Paris (Trip-It) with it but because it is a great credit card to have in my arsenal.
- Sign-up Bonus
- Earn 1 Starpoints for every dollar spent and 2 points for every dollar at a Starwood hotel.
- Transfer 20,000 points into 25,000 miles for almost any frequent flyer program
- Starwood points can easily be transferred between any user in the same household with a phone call
After my 1st purchase I will receive 10,000 Starpoints and after spending $15,000 in 6 months I will receive an additional 15,000 Starpoints. What does all this mean? Lets break it down:
Looking at mid-April,
I could stay at W Chicago – City Center (category 5) for a weekend and spend 24,000 of my points (12k/night). This hotel has earned the AAA four diamond award for the last 3 years and costs $239/night. This comes out to $478 or a value of 1.99 cents a point.
More realistically I might go to Minneapolis and stay at the Westin Edina Galleria (category 3) for 3 nights and spend 21,000 of my points (7k/night). This hotel costs $104/night or 1.48 cents a point. This worse than staying in downtown Chicago, but still a good baseline value. (We’ll convert the value into cashback percentage shortly).
Finally, lets take a look at a cost comparison that better fits my hotel habits. Lets compare my Starpoints hotel stay to a travel site’s best rate of a hotel that I would typically stay at.
A few years ago Clare and I went to Disneyland in Orange County, CA. We stayed at a nice average/economy hotel Crowne Plaza Resort Anaheim Garden Grove (I think). If booked through travelocity.com for mid-april it would cost $105/night. Alternatively, the cheapest hotel I could get with Starpoints is 3,000 points/night [staying for 8 nights] (category 2) but realistically for this trip we’d still have to spend 7,000 points a night [staying for 3 nights] (category 3). This brings the value of the Starpoints to 3.5 cents or 1.5 cents respectively.
Looking at these 3 scenarios it looks like my Starpoint value is between 1.5 cents and 2 cents a point. Let’s break that down into something useful.
So how much cashback?
How much does a point cost when the 25,000 point bonus is included? How much without the bonus? How does it compare with my Schwab 2% cashback on everything credit card?
To figure out the cashback % I’m going to use the following formula:
dollars (cents)/point [OR value] ÷ point/dollars spent [OR cost] = cashback % [OR dollars earned/dollars spent]
but first we need to calculate the cost of a point.
Calculating cost (including bonus points)
To get all the bonus points I need to spend $15,000 in 6 months. Don’t forget, though, that I’ll get points for all that spending so:
Spending: $15,000 x 1 points = 15,000 points
+ Bonus: 25,000 points
= Total: 40,000 points for $15,000 in spending
=Cost [point/dollars spent]: 37.5 cents (to clarify this is how many dollars need to be spent to earn 1 point [OR 1x = 15,000/40,000])
Calculating cost (without bonus points)
Spending: $15,000 x 1 points = 15,000 points
= Total: 15,000 points for $15,000 in spending
=Cost [point/dollars spent]: 1 dollar
2 cents/point value: .02 ÷ .375 = 5.33% cashback
1.5 cents/point value: .015 ÷ .375 = 4.0% cashback
2 cents/point value: .02 ÷ 1 = 2.0% cashback
1.5 cents/point value: .015 ÷ 1 = 1.5% cashback
Without a doubt this is a great card. It beats my Schwab 2% cashback credit card in quite a few scenarios. However, it doesn’t beat it in the most typical scenario of choosing a nice, cheap hotel outside the Starwood group without including the bonus.
But wait! I left out one of the coolest things about this card. Look again at bullet #3 in the benefits section. You can transfer 20,000 Starpoints into 25,000 frequent flyer points. That means for 20,000 points I can get a free ticket for Madison (MSN) to San Diego (SAN) through American Airlines which would typically cost me $423.80. Quick – what’s the cashback % of that?
$423.80 [value] ÷ $20,000 [cost] = 2.11% cashback
Now this is a better deal than my Schwab card for sure. Mixing and matching all the flexible options that the Starwood Preferred Guest Credit Card from American Express makes it easily one of my new favorites.
I just want to leave you with a couple of things to be careful about. There is a $45 annual fee but it’s waived the first year. Also, if you are like me you are thinking “Wow, this is a great deal but I don’t think I can spend $15,000 in 6 months – that’s crazy!”. This is why I have waited so long to get this card. If you want the full bonus and aren’t able to use this for company travel or something similar some planning will need to take place. I waited about 9 months until all of our Paris plans were gelling and this seems like it will work well for us.
If you’re interested in signing up for this card, please come back and use my referral link. At the very least I’d love to hear from you about your card experiences.
What are your thoughts on this card? Do you have a credit card that has an even better cashback percentage? Let us all know in the comment section below.