Wednesday, June 18, 2014

Buying Points vs. Manufactured Spending

One of my favorite bloggers covered Club Carlson's current promotion for a "Flash Sale" on Club Carlson points.    With this Club Carlson deal you can (for a limited time) buy points at .4cpp, a substantial discount over the normal rate.  It got me thinking about the value proposition of purchasing points directly from hotels/airlines versus obtaining them by manufactured spending.

As an initial matter, its rarely a good idea to purchase points prospectively, i.e. without a specific use in mind.  There's always the possibility that the points could devalue before you get the chance to use them.  But when you have a specific purpose in mind, deals like this one can be worthwhile.  For instance:  Mrs. Pointsninja have an upcoming stay at the Radisson Blu at the Zurich Airport.  The non-cancellable Advanced Purchase rate is 260CHF, or about $290.  But an award stay (which is fully cancellable) runs 50,000 Club Carlson points.  Through the current promotion, I could purchase 50,750 points for $203.  I could then use those points to book the room and effectively save $87, plus get a cancellable rate to boot!  The key, of course, is that I'd be purchasing points at a cost of .4cpp, but redeeming them at a value of .58cpp.

Of course, through manufactured spending with the Club Carlson Visa, I can quite easily "purchase" points at a rate of .21cpp, meaning that I could actually get the room for $185 cheaper than the Advanced Purchase rate.

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