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With signup bonuses at record highs on American Express’s duo of Starwood Preferred Guest credit cards (the Personal SPG Card and the Business SPG Card), a lot of information is floating around, and a lot of bloggers are heavily recommending these cards. But in the excitement and zeal, it’s easy to gloss over some important details and questionable claims. I’ll be the first to admit that I love these products and currently carry both cards, but I’ve seen some misinformation being circulated that I’d like to correct. And, of course, before making ANY personal finance decision, it’s important to consider the details in the context of your personal situation. So without further ado, four myths about Starwood points and cards.
Myth #1: The business card is better
While the two versions of the SPG credit cards are nearly identical, the business version comes with lounge access at Sheraton Club Lounges (in Sheratons which have them), while the personal card does not. That’s pretty straightforward. So, why wouldn’t you always get the business card if you can? For starters, the minimum spend required to get the signup bonus is higher than on the personal card (on the business card you need to spend $5,000 then $3,000 in the first 3 and 6 months respectively, compared to $3,000 and $2,000 for the personal card), but the signup bonus is the same. The extra $3,000 you’d spend on the business card to get the same signup bonus could be enough to get another entire signup bonus on a different credit card! If you’re in a situation where you can apply for lots of cards, that club lounge access could wind up costing you an entire signup bonus from another card.
It’s also worth noting that Amex business cards usually don’t count on your personal credit report. This is awesome if you’re trying to stay under Chase’s 5/24 rules (where they’ll reject you for having 5 or more new accounts in the last 24 months), but it could work against your credit score if you plan to keep a Starwood card indefinitely. If the card isn’t on your personal credit report, the credit limit can’t help your personal credit score.
Unless you’re trying to game Chase’s 5/24 rule or know you’re going to be spending time in Sheratons with club lounges, I’d argue the personal card is almost always better.
Myth #2: Starpoints are rarely devalued
I’ve heard this a lot. Starpoints are rarely devalued. The SPG program doesn’t massacre their award chart like Hilton did in 2013 or constantly make good properties more and more expensive like IHG seems intent on doing. The points are also transferrable to many airline programs, which just increases their value! That’s all true, but it doesn’t add up to “Starpoints are rarely devalued.” It adds up to “Starpoints are devalued CONSTANTLY, just in relatively small ways.”
If a Starpoint is valuable because of all the airline partners, then the value of a Starpoint takes a hit every time one of those viable airline transfer partners devalues their own miles. That’s been happening a lot over the past few years. One thing I used to love about Starpoints is that they’re the only points that can transfer easily to American Airlines. But as American Airlines has been devaluing AAdvantage miles, that use of Starpoints is declining in value as well. Whether that amounts to a meaningful devaluation to YOU depends on how you like to use Starpoints, but to say they’re rarely devalued is just false. It’s more accurate to say that SPG’s many good transfer partners and stable award chart has made the many minor devaluations much less impactful.
And speaking of that hotel award chart, the same disclaimer you see on mutual fund commercials applies here too: past performance is no indication of future returns.
Myth #3: 1 Starpoint is worth a little more (or less) than 3 Marriott points
A lot of people put different values on their points. I might think a Hilton point is worth a penny, while someone else thinks it’s worth 0.4 cents. That’s fine. We all have different expected uses for our points, so there’s a range of reasonable values for those points as well.
What is NOT reasonable, however, is valuing a Starpoint at anything other than exactly three times what a Marriott point is worth. I’m not going to call out other writers and commentators by name, but I’ve seen quite a few valuations that imply a Starpoint is worth a little more or a little less than three Marriott points. 2.4 cents may be a reasonable valuation for a Starpoint, and 0.7 cents may be a reasonable valuation for a Marriott point, but they are NOT reasonable valuations to have at the same time.
Why? Since Marriott bought Starwood, you can turn Starpoints into Marriott points at a 1:3 ratio, and you can change them back into Starpoints at a 3:1 ratio. Saying “three Marriott points are worth a little more than one Starpoint” is like saying “four quarters are worth a little more than one dollar.” As of right now, they’re completely interchangeable.
(Actually, saying “four quarters are worth a little more than one dollar” makes MORE sense than the equivalent claim about Starpoints, because maybe you need quarters to do laundry or play pinball and there’s no easy way to change them back and forth. You can’t make that claim with the hotel points, because you can change them back and forth online without having to go to a bank or a special machine.)
Myth #4: These cards are “no-brainers”
Let me level with you: when it comes to applying for credit cards, there’s no such thing as a no-brainer. If having a minimum spend will make you spend more than you would otherwise, a new card could cost you a lot of money. If you don’t think you could avoid the temptation to carry a balance, a new card could cost you a lot of money. And even if those aren’t issues, there’s no reason that this is the best card for you to get right now. Maybe you don’t want to open a card just to cancel it a year later. Maybe you have plenty of Starpoints or you have no need for them at the moment. I happen to think they’re among the most useful points, and I can never have too many, but I’m not you. Think about your own situation and make an informed decision. Don’t follow a herd or jump on an offer because of the buzz.
In the interest of disclosure…
In the interest of disclosure and openness, I’ll say that I have both cards. I’ve had the personal card for over a year, and I recently got the business card. I personally value Starpoints at about 2.4 cents each (and yes, that means I think Marriott points are worth 0.8 cents each), though I’ve gotten as high as 4.29 cents on a hotel redemption. The main reason to have both cards is if you care about the 5 nights and 2 stay credits each card gives you every year, but personally I’m also holding onto both to see what happens after the loyalty programs combine (if the card sticks around and winds up being awesome, but new signups aren’t allowed, I don’t want to regret canceling one card or the other).
If I were starting fresh and didn’t care that much about Chase cards, I’d almost certainly go with the personal card (spend $3,000 in 3 months for 25,000 points, then $2,000 in the first 6 months for another 10,000). But if I were under 5/24 and eligible for a business card (and it’s really easy to qualify; any extra source of income, even a hobby like blogging, could count as a business), I might go with that one, just to preserve my options with Chase cards.
As they say in the travel game, though, YMMV: Your Mileage May Vary. Do what’s best for YOU, and don’t let any annoying know-it-all bloggers like me tell you what to do!
Would you like to know more about this or anything else related to travel, hospitality, loyalty programs, or personal finance? I’ve put up a form to collect questions, and I hope to be answering some of the questions in future blog posts! I can’t promise to answer every question that comes in, but I’ll do my best, and hopefully this becomes a way to steer content on this blog towards your interests!
Featured image: the Walt Disney World Dolphin hotel, a Sheraton property. Photo taken by the author.
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