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February 19, 2007

Capital One No Hassle Rewards: Only $48,000 Roundtrip

Filed under: Finance,Travel — Edgar (aka MrConsumer) @ 6:11 am

Capital One card Everyone has seen the Capital One TV commercials that convey the impression that cashing in points you have earned for a free trip with other banks’ credit cards is nearly impossible. Whatever date you want, “the answer is always ‘no’.” [Watch commercial.]

The fix, they say, is to get a Capital One “no hassle” card with no blackout dates on any airline. Sounds great, right?

What they don’t tell you in the ad is that they charge you an arm and a leg in points for some “free” domestic roundtrips — far more than many of their competitors. So, in keeping with the spirit of their press release a few weeks ago, urging consumers to be more informed when making financial decisions, herewith are their terms and conditions: 

*MOUSE PRINT:

§ The number of miles required by the Cardholder for travel redemption will depend on the cost of the itinerary chosen by the Cardholder at the time of redemption. The mileage requirement is as follows: 15,000 miles are required for tickets up to $150.00; 35,000 miles are required for tickets from $150.01 up to $350.00; 60,000 miles are required for tickets from $350.01 up to $600.00. For tickets over $600.00 in value, the required number of miles will be determined by multiplying the cost of the ticket by 100 (ex. $768 ticket requires 76,800 miles). [see website]

Translation: A $400 airline ticket will require 60,000 points. To earn 60,000 points under Capital One’s revised system where every dollar spent earns 1.25 points on their regular card [up from 1 point], you would have to purchase $48,000 worth of goods and services.(Some purchases and other of their cards may earn 2 points per dollar spent.) 

It has been a rule of thumb in the travel industry to charge 25,000 points or miles for a free domestic roundtrip. Bank of America, for example, lets you redeem 25,000 points for a ticket worth up to $400. Earning points at the rate of 1 point per dollar spent, your free trip would require $25,000 in expenditures on the card, about half what Capital One requires.

Providian’s “Real Rewards” card earns a point per dollar spent, and one can get a $500 ticket for only 20,000 points. [Card no longer available to new applicants.]

Both Chase and Citibank, the two leading credit card issuers, make it almost impossible to determine in advance of applying for their cards how many points are required for particular rewards. And some of them are now imposing up to a $59 redemption fee.

The power of repeated advertising for Capital One’s “no hassle” card no doubt has brought it many customers who didn’t bother to check the fine print before applying.




  ADV

• • •

65 Comments

  1. I am trying to figure out the rewards portion of my Capitol One card.
    I have 26,700 miles and am going to Hawaii at a cost of about 450. round trip. Can I use these miles for that and will it cost me extra.
    Thank you.

    Comment by Lorine Gaines — December 31, 2008 @ 11:55 pm
  2. Finally got to 65,000 Capital One points and went to get the $599 credit to my account to defray the three $1,225 tickets we purchased. Sure enough, we now need 122,500 points to get a reduction!

    Another thing they are doing is breaking everything down into tiny pieces — we also purchased three $165 tickets at the same time, each was listed separately. Because $165 is just over the $150 tier-1 (15,000 points) maximum, it would have taken 35,000 points to get $165 in credit.

    So when CapitalOne asks, “What’s in yerrr walllet?”, the correct answer should be
    “NOT MUCH, AND YOU?”

    Finally, if you google “Capital One” + rewards + scam, the ONLY thing that appears in the 1st page of hits and on MOST of the 2nd page, is http://www.capitalone.com propaganda, so it appears that they are trying to control the bad press (possibly with google’s paid assistance?).

    keywords: rip-off, scam, bait-and-switch, CapitalOne, credit card

    Comment by Chuck — February 7, 2009 @ 10:30 am
  3. [This post has been edited] Cap1 is not trying to “scam” you. For $39.00 a year I earn 2 miles per dollar spent on my Cap1 CC and I also earned 5000 miles for opeing up a Cap1 Rewards Checking Account which now gives me 10 miles per ANY transaction. And if you do the math you will find out that each mile has a maximun cash value on $0.01. That’s one penny. So the bottom line is this, you are going to spend yhe money anyways, right? Bills, Gas, Movies, Groceries, etc.. So just use your Cap1 CC and pay it off every month and watch your miles grow. And yes the comment by “Edgar — February 20, 2007 @ 6:45 am” is the only one that makes any sense. My refund was next day. So easy. So stop your conspiracy theories …!!! Joey

    Comment by Joey — February 10, 2009 @ 2:27 pm
  4. I am considering the capital one ultra professional. It looks too good to be true. Has any one had experience with this one.
    It gives 2 points per dollar spent. Then to redeem, it says you can buy tickets from any sight and get reimbursemnt based upon
    100 miles X dollar spent.
    I think this means if a ticket costs $480.00 , you need 48,000 miles. However, you only need to spend $24,000 to earn the
    48,000 miles. So this ticket really only costs 24,000 miles (if you had earned 1 mile per dollar)..
    Anyway.. does it really work like this.. I would like to know people’s experience with this card.. Most of the feedback on
    Capital one is negative and I am a little nervous to find out the glitch..

    Comment by gloria Sherman — February 27, 2009 @ 2:47 pm
  5. Not only do they rape you with their undisclosed mileage costs, but even after they supposedly close an account, they arbitrarily reopen it and send a letter telling you that a NEW charge has been charged to your closed account. Closed in May and a charge then processed in Dec. What a company that claims to do business the RIGHT way. Every time I have tried to do what is “right” with them I learn they don’t believe in fair and honest business practices. It is only what will line their bottom line. You who are happy with them beware. I was too once, but your day will come…

    Comment by David — March 16, 2009 @ 5:09 pm
  6. So for no reason I see my rate increase 7.4%. now up over 22%
    So I call the customer service number and I’m in another country (you know)
    So I ask why?
    He said….actual words..Due to the economic problems in your country Capital one wants to increase rates to everyone. they are all going to above 22%.

    What can we do to let them know they cannot do this?

    Comment by Steve — June 23, 2009 @ 9:09 pm
  7. Part1
    First of all, I would like to say thank you to all the comments in this blog. I have been researching different mileage credit card blogs about Capital One and this is definitely the most informative. With that said, I would like to contribute my own experience.

    Background:
    I have also worked in the banking industry and work on putting together financial products and promotions like the ones you have reviewed. I have spent over 20 hours researching different mileage credit cards (both on-line and via customer service) and in final summary, the Capital One No Hassles miles Ultra for Professionals appears to be the best card FOR ME. I say for me, because it really depends on what your credit status/ Cost Tolerance/ CC usage/ travel frequency and pricing is in order to determine what is best for you. Of course the true test will be when I try to redeem my miles as I have just signed up for the card.

    My situation:
    I have excellent credit so all products/offers are available to me. I pay my balances off every month, so I don’t care about APR. I am willing to pay annual fees < $50 if I can get more miles or bonuses to achieve my trip faster. I spend over $10K a year on CC purchases for various expenses and so I want to maximize the miles I can get. I would like to use my miles at least once every 18 months and plan to buy tickets to destinations likely in the $400 – $500 range.

    Comment by Gregg — September 2, 2009 @ 6:37 pm
  8. Part2
    Capital One No Hassle Miles Ultra for Professionals Summary:
    Based on those needs, I think this card is really the best, but like I said I am reserving judgment until I acquire and redeem my rewards. Promotional APR is 0% until Feb of 2010, which I guess cool and with some fancy banking transactions, I can stash the money I would have paid for the balances into a 2% APY savings account. There is no bonus miles offer (too bad), but the card offers 2 miles per every $1 spent. There is a $39 annual fee, which I am willing to pay to get more miles, and a $0.50 per month minimum finance charge. The redemption is 100 miles for every $1 spent on ticket/travel purchases which include taxes, surcharges and fees.
    Finance and Annual Fees: I do care about finance fees and Capital One charges only a $0.50 per month minimum. Other cards (especially airline cards) can charge between $1 – $2 per month. That’s up to $24 a year just in additional fees although you probably won’t feel it each month. Annual fees should be paid on mileage cards only if you receive some type of accelerated mileage attainment or bonus miles. You have to think in the 4 – 5 year range of what you expect to get out of this card…multiple trips, higher priced trips, etc. At $39 a year for double miles, it is better than airline cards (which tends to charge between $50 to $75/ year).

    Comment by Gregg — September 2, 2009 @ 6:40 pm
  9. Part3
    Rewards Accrual:
    At 2 miles for every $1 spent, I think this is better than those bonus miles you get up front (30,000 bonus miles in a DM piece I received from Capital One on a 1 mile per $1/ no annual fee card, BTW which is the best I have seen) because #1 it will probably take a while to accumulate enough for a trip and usually those offers are awarded in a tiered annual structure. The double miles will add up really fast and at year 3, assuming the same CC usage as me, you will have received more miles vs those bonus miles (trust me, I did a spreadsheet). Be aware of other cards that offer different calculations based on your buying behavior. Some other cards offer more miles when used on weekends only, or on travel only, or on gas/groceries only, or only above a monthly spend level, etc. In my opinion these cards are for niche shoppers of which you probably won’t get the full value unless you spend majority of your dollars on those specific situations. My card offers 2 miles for each $1 spent, period. So I don’t have to worry about my purchasing behavior. Discover Card actually offers better rewards accrual rates, but I want either a Master Card or Visa (which is pretty much accepted everywhere).

    Comment by Gregg — September 2, 2009 @ 6:40 pm
  10. Part4
    Rewards Redemption:
    THIS IS THE TRICKIEST PART OF MY ANALYSIS! BEWARE! The bottom line for any customer is… “what is the value I get based on what I buy/contribute into any program.” If you get 3x MORE points/miles/rewards awarded than other programs, does that really matter when the redemption calculation is 3x LESS than other programs? The answer is that you need to compare both rewards accumulation AND rewards redemption attributes with other programs in order to determine the best value for you. This is what Capital One along with almost all other credit card mileage/points programs are reluctant to disclose which therefore makes comparing seemingly impossible. In addition, at least comparing within the Capital One Product Portfolio, different cards have different redemption calculations.

    Comment by Gregg — September 2, 2009 @ 6:42 pm
  11. Part4(Cont.)
    As discussed by others, many current card holders have a tiered redemption calculation requiring a minimum number of miles depending on the tier your $ value ticket falls into. This means you may be using more miles you would like to and essentially “wasting miles”. This is true for the current and past standard “No Hassle Miles Rewards” cards. For example, if you buy a $400 ticket with these other cards, you will need 60K miles for redemption (see redemption matrix earlier in the thread). Thus you don’t get the one-for-one (or 100 miles to $1 value) you may have initially thought when you bought into a 1 mile per $1 (or 1.25 miles per $1) program as described in the rewards accrual portion of the offer. You must read the disclosures carefully! The “No Hassle Miles Ultra for Professionals” and “”No Hassle Miles” – Excellent Credit have a more straight forward 100 miles for $1 redemption calculation, with apparently NO TIERS. Here a $400 ticket will cost 40K miles, not 60K. This is what I have confirmed through customer service and through the website disclosures.

    Comment by Gregg — September 2, 2009 @ 6:43 pm
  12. Has anyone ordered gift cards through the Capital One rewards and not received them?? I orded 2 $100 cards 29 days ago and I called on them today because I wanted them for when went home at Christmas. They told me they could not tell me anything because it had not been past 30 days yet. So much for using them when I go home to NY… Discover Card is soo much better!

    Comment by Christine — December 16, 2009 @ 3:25 pm
  13. The comments by Gregg on the Capital One No Hassle Ultra Rewards for Professional card are good; I’ve had one of these for 6 months and despite two problems with their Customer Service fraud protection unit turning off the card after purchases that didn’t fit their profile of me, the experience has been otherwise profitable and positive. Somewhat of a surprise because the bank doesn’t have that good of a reputation. With this card, you can go back and ask for a credit for any travel purchases (on=line) for the past 90 days based upon the credits in your account. You earn the travel rewards at 2 cents per dollar for any purchase, but redeem credits at 10,000 points per $100 for anything that is classified as a travel transaction (hotel bills, airline tickets, baggage fees, etc.) It has to be a travel transaction to get that rate, but any trivial amount (e.g. 15 dollars for a baggage fee by an airline) can be credited, and it takes just a few days for the credit to show up after making an online request. So my strategy is just to check my online statement every month or two and ask for an immediate credit for any travel expense for which I have enough credits based upon past purchases to take care of. I think this is better than waiting around to pile up enough miles to take some dream trip. It does cost 39 dollars but that beats most airline cards and you get that money back after you have spent $1950 in a year. The lack of a foreign currency fee is another big plus.

    Comment by Lee — December 19, 2009 @ 10:45 pm
  14. Well I earned 70,000 points and the reason I did was because I have elederly parents and wanted to be able to fly on a moments notice. Well when I needed to do that I found Capital One required (1) 14 days in advance booking (2) MUST stay over a Saturday night (3) MUST book a round trip ticket. what part of “no Hassle” is this?

    Comment by zoe caldwell — February 25, 2011 @ 5:24 pm
  15. Tried to redeem for a gift card…Never got it…Cap One does not put tracking numbers on them. So now I’m Out 25,000 points or a $100 gift card to Toys R us…was going to be Christmas gift for kids. Man, I hate those guys.

    Comment by scammed by cap one — July 24, 2011 @ 1:33 pm

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