Executive Summary -
This is the no annual fee version of Capital One's Rewards Card. The annual fee version is famous through the ads by Alec Baldwin, and their "double miles" features. This version is better than most of their competitors because you earn 1.25X miles per dollar. But it now faces competition from Barclays. Read to find out more.
CapOne has got two rewards credit cards. One has an annual fee that allows you to earn double points. The other one has no annual fee. This review will be on the latter one and we will explore how it fares against it's peers. And they are probably competing in the most competitive space.
Key Differentiator - The no annual fee rewards cards is perhaps the most competitive arena in the credit card industry. Every issuer seems to have a card like that in their portfolio and their reward structure tends to be quite similar. Any new entrant will find it hard to differentiate itself from the pack. So the key question is how does Capital One plan to do so?
The first way is that allow card members to earn 1.25 points for every dollar that is spent on the card. This is better than most of what the competition is offering (which is one point for every dollar that is spent on the card). For example, Citi's ThankYou Cards offering one point per dollar. So does the Amex Blue Sky. Other cards like the Chase Sapphire, Barclays Arrival MasterCard allow you to earn double points on dining and travel. But unless you spend a lot on these two categories, it is quite hard to beat 1.25 points/dollar.
The second way which CapOne distinguishes itself is that they do not have any foreign transaction fees (in fact, all their cards do not charge anything on this). The only card that matches them in this regard is the Barclays Arrival Card.
Like most modern day reward program, you can book your travel with anyone you want. That means that you can book it with the airlines or hotels directly, with an online aggregator or even an offline travel agent. You can then claim the reward points to cover these travel expenses. In terms of value, 100 points gets you $1 in value (essentially, you get 1% return from your points). You can earn unlimited points and which never expires. Aside from travel rewards, you can also use them to redeem for cash back, gift card and merchandise products that are in their catalog.
Better Than It's Peers? With every issuer having similar cards, I would say that the CapOne VentureOne Rewards has a couple of features that make it unique and better than most of its' competition. Firstly, you have the ability to earn 1.25 points/dollar for every purchase you make. No other card has such a feature. The closest would be the Chase Sapphire and the Barclays Arrival, which allow you to earn double points on travel and dining (one point/dollar on everything else). Theoretically, you could earn more than 1.25% on these cards if the majority of your spending consist of travel and dining. For most folks, that is simply unrealistic. And most other cards only let you earn the standard point per dollar system. So from a reward points earning perspective, this card is at the top of it's class.
But how about the ability to redeem points? As we mentioned earlier, the redemption for CapOne is the standard 1%. That means that 100 points gets you 1% in travel value. This is true for the majority of the cards and reward programs in the market. There are a couple of cards that offer slightly better than 1% return. For example, the Amex Blue Sky system allows to to use 7,500 points to get $100 in value. That is a return of 1.33%. So from this perspective, it loses out to Blue Sky. The Barclays Arrival Card gives you a 10% bonus points (your account is topped up) when you use points for travel. So effectively, you are getting 1.1% return for your points.
The other advantage that this card has is there is no foreign transaction fee. The only other card that waives it (travel rewards ie) is the Barclays Arrival.
Is This A Good Card
We mentioned earlier that the no annual fee rewards space is so competitive. But this card has managed to stand out with it's points earning feature and the waiving of foreign transaction fees. I would put this card at in the top three of it's category. In terms of overall points earning and redemption value, it loses out slightly to the Amex Blue Sky (though it can earn 1.25 points/$, Blue Sky's redemption value is 1.33%). But it has the edge over the Blue Sky in terms of the absence of FX fees.
The Barclays Arrival Card also gives this card a run for the money. But I would say that CapOne edges it slightly because of you can earn 1.25 points/$ (slightly better than Arrival's redemption value of 1.1%).
So I would conclude with this: If you plan to get a no annual fee rewards card for travel, and you plan to use them only for domestic tickets, then the Blue Sky Amex will probably be the better card in terms of points value. But if you travel abroad occasionally, then this would be the better card because there is no foreign transaction fees.
Another thing to consider whether to get this card is the amount that you will spend on this card. CapOne also has an annual fee version of this card (at $59) that allows you to earn double points on all spending. At a certain point, it might make sense to consider the annual fee version. In fact the break even level is relatively low at about $6,000 in annual spending. Let's illustrate this:
When you spend $6,000 a year, you earn 6,000 points with this card, which gives you a value of $60 for travel. If you spend the same amount on the annual fee version, you will earn 12,000 points, which gives you a value of $120. If we subtract the annual fee of $59, the value you get is $61. Because of the low break even value, you should consider the annual fee version if you spend more than $6,000 a year on the card.