Replacing Hilton Surpass


I like the American Express Hilton HHonors Surpass card, which gives 6 HHonors points per dollar spent at gas stations and grocery stores, for the simple reason that with an earning rate that high, it's easy to get more value per dollar spent than you would using a 2% or 2.105% cash back credit card instead, a point I illustrated early this year with this chart:

This chart helpfully illustrates that whether or not it makes sense to manufacture spend on a mile- or point-earning credit card, instead of a cashback-earning credit card, depends entirely on what your next best alternative is. The worse your cashback alternative, the better a value loyalty programs potentially provide.

Hilton HHonors Surpass cannibalizes two of the most lucrative bonus categories

If you could earn an uncapped 6 HHonors points per dollar on spend everywhere, the above chart would suffice, since 2.105% and 2% are the currently-available options for "everywhere" manufactured spend.

Unfortunately, Surpass cards earn 6 points per dollar only at gas stations and grocery stores (and restaurants), and those are categories where it's easy to earn more than 2.105% cash back.

Replacing Surpass at grocery stores

If you have an "old" Blue Cash American Express card, you'll always do better earning 5% cash back at grocery stores and gas stations than you will manufacturing HHonors points; you'd have to value HHonors points consistently at more than 0.8 cents each to justify earning them instead. The same is true if you're earning 5% cash back during a Wells Fargo or TD Bank promotional period.

Once you've reached your limits with those cards, you can still earn 3% cash back at grocery stores with a card like the Consumers Credit Union Visa Signature Cash Rebate card (on up to $200,000 in annual spend).

Replacing Surpass at gas stations

Besides the "old" Blue Cash card, at gas stations you can earn 5% cash back with a card like the Fort Knox Federal Credit Union Visa Platinum card. Beyond that, there are also 3% cash back options like the Chase AARP credit card (uncapped) and the Bank of America Cash Rewards for Business MasterCard (on up to $250,000 in purchases).

Replacing Surpass everywhere

While it's only worth manufacturing spend on the Surpass card at gas stations and grocery stores, it's also possible to earn more than 2.105% cash back everywhere, including gas stations and grocery stores. Namely, the BankAmericard Travel Rewards credit card gives 1.5% cash back (when redeemed against travel purchases), which rises to 2.625% cash back when you have over $100,000 on deposit with Bank of America and Merrill Lynch through their Preferred Rewards program.

If your principle limitation is not purchase bandwidth, but rather liquidation bandwidth, you should look long and hard at whether manufacturing cheap spend at 2.625% is better than manufacturing potentially-expensive grocery store spend at 6 HHonors points per dollar.

Conclusion: running the numbers

As longtime readers know, the principle way I decide whether manufacturing spend on a co-branded credit card, instead of earning cash back, is worthwhile is through imputed redemption values like those I showed in the introduction. Here are those values for our newly-established points of comparison:

As you can see, for 50,000-to-70,000-point redemptions (which make up the bulk of my stays), with a 3%-cashback alternative Hilton properties go from $176-$246 (compared to using a post-devaluation 2.105% cashback Arrival+ card) to $250-$350.

Those values aren't outrageous, but would certainly require you to be much more diligent about pursuing the highest-value redemptions in order to make it worth manufacturing HHonors points instead of bonused cash back.