For the frequent traveler, hotel rewards cards are a valuable asset. In the hands of the savvy consumer, hotel rewards credit cards earnings can be redeemed at some of the highest redemption rates among rewards cards, in some cases as high as 5 to 6 cents per dollar spent. Here is our pick for the best hotel rewards credit cards for 2010:
American Express’s Starwood Preferred Guest Credit Card
The Amex Starwood Preferred Guest card continues to be one the most attractive rewards credit cards of its category. It takes some digging to find the true value of the rewards earnings, however, once you do, it becomes obvious why this rewards card has long been the darling of credit card forums and why it has been rated the Best Affinity Credit Card at the annual Freddie Awards.
The card earns 2 points per dollar on Starwood hotel stays and purchases and one point per dollar on all other charges. The Amex Starwood rewards card does come with a $45 annual fee, but it is waived the first year.
The Amex Starwood rewards card offers one of the highest redemption values among rewards cards. The exact value of the Starpoints depends on where you stay and how earnings are redeemed. For 2,000-3,000 points, cardholders can stay for free on weekends (weekday nights require 1,000 extra points) at mid-priced Starwood airport hotels in most major non-Coast cities, including Chicago, Detroit, Dallas, Denver, and so on. At current online room rates, that translates into a redemption value of 3 to 3.5 per point, or in cash back terms, 3 to 3.5 cents per dollar charged to the card.
Similarly, for 10,000 points, cardholders can stay at Sheraton or Westin hotels in major cities like New York, Boston, or Los Angeles, which at current average online room rates translates into a redemption rate of 2.5 cents per dollar charged. Compare that to the average rewards credit card point value of 1 cent per dollar.
But it gets better. Cardholders who opt for paying part of their stay with points and part cash can up the redemption value considerably. For example, for $60 a night plus 4,000 points, cardholders can stay in places like the Sheraton Carlsberg Resort or the Sheraton LaGuardia in New York. Based on current online hotel rates, this type of redemption ups the point value to 5 to 6 cents per dollar spent.
The real clincher of this card is the sign-up bonuses. People who apply online for the American Express Starwood card currently are eligible for up to 25,000 bonus Starpoints. New cardholders get 10,000 bonus points after their first purchase; to get the last 15,000 bonus points, you’d have to spend $15,000 within the first six months.
With a little bit of research to optimize redemption value, you can redeem the 10,000 bonus points for $250 to $600 worth of hotel stays; with the extra bonus points the value of the sign-up rewards can run as high as $625 to $1,500 in free hotel stays. The Starwood Preferred Guest website makes it easy for cardholders to research hotel rewards redemption options, another plus of the card.
The Starwood hotel chain operates over 940 hotels over the world, including brands like Westin Hotels, Sheraton and Four Points by Sheraton, and more. Rewards earnings can also be transferred at a 1:1 ratio to over 30 frequent flyer programs. Point transfers of 20,000 automatically come with 5,000 bonus miles, which means that cardholders can earn an extra 25 percent on rewards just by transferring.
American Express’s Hilton HHonors Credit Card
Another good hotel rewards card on the market is American Express’s Hilton HHonors card, particularly for people who stay frequently at Hilton Hotels worldwide.
Cardholders earn 3 points per dollar on most charges, so to find the comparative redemption value of the Hilton Hhonors rewards earnings, divide all point requirements by 3. For example, a category 3 redemption requiring 25,000 Hilton Hhonors points would be earned after about 25,000/3, or $8,333 in charges. Most category 3 stays are valued at $90 to 125, so the redemption value translates into a little over one cent per dollar charged.
The card offers the best value in large cities. For example, for 40,000 Hilton Hhonors points you can stay at the Hampton Inn Times square, a $300 value. At 3 points/dollar charged, it would take 40,000/3, or $13,333 in charges to earn those points, meaning that the redemption rate for a $300 hotel room translates into about 30000/13333, or 2.25 cents per dollar spent.
Applicants can choose between the regular and “Surpass” versions of the card. The regular version comes fee-free and offers 20,000 bonus points after the first purchase. For consumers comfortable with an annual fee of $75 dollars, the HHonors Surpass card offers new cardmembers up to 40,000 bonus points after the first purchase. For the $75 annual fee, HHonors Surpass cardholders also get access to HHonors Gold VIP and airport lounge at $27 per person per visit. Please note that rewards points expire if no points are earned on the card for a year.