Doctor of Credit (H/T) has announced today that the Capital One Venture Card has a new sign-up bonus offer. Capital One is doubling its sign-up bonus from 50,000 points to 100,000 points. This is the biggest sign-up bonus Capital One has ever offered for the Venture Card. But that does not mean you should apply for the Venture right away.
The big caveat with this offer is an exorbitant minimum spend requirement of $20,000. At least Capital One gives you 12 months to hit the minimum spend. But that’s like spending $5,000 within the first three months, four times in a row. This is a huge requirement for many people.
Furthermore, Capital One will give you their regular sign-up bonus of 50,000 points if you spend $3,000 within the first three months. This is a much better offer because of the more attainable minimum spend requirement.
Capital One did not say whether this new offer is permanent or available for a limited time. But I predict the latter because such a massive bonus might not be financially sustainable for Capital One.
Capital One Venture Card Overview
Moreover, the Capital One Venture Card has a high and flat earning structure. It earns 2x points per dollar on all purchases. It also earns 5x points on Uber and Uber Eats purchases until January 2021. The Venture is a great card for those who want simplicity and like Capital One’s transfer partners.
Furthermore, the Venture also comes with Visa Signature benefits and no foreign transaction fees. It also has a $95 annual fee (NOT waived the first year).
The Venture Card is a newbie in the world of transferrable points. Capital One partnered with a plethora of international airlines in 2017 to compete with Chase, American Express, and Citi. But Capital One made the Venture Card a terrible option for transferring points to partners. This is because four Capital One points are worth just three partner points for most partners. In essence, Capital One is reducing the value of their points by 25% for those who decide to transfer them. None of their competitors do this! And Capital One is doing themselves and their cardholders a disservice by keeping this rule in place.
Why This Offer Is Not Worth It
In economics, there a concept called “opportunity cost” (H/T to Investopedia) that is relevant to this Capital One offer. Opportunity cost refers to the potential benefits that a person or business misses out on by taking an offer instead of alternative offers.
Capital One is offering 100,000 points for a minimum spend of $20,000 within the first 12 months. The factors to consider here are the minimum spend and the 12-month period. $20,000 could net you a lot more value than 100,000 Capital One points over the course of 12 months.
Some of the most valuable sign-up bonuses have minimum spend requirements of $4,000, which is 20% of what Capital One wants. You can earn five sign-up bonuses (each with minimum spend requirements of $4,000) within 12 months for the same $20,000. These bonuses together can net you several thousands of dollars in value. On the other hand, the Capital One offer will net you $1,500 in value, assuming the points are transferred to partners at a value of 1.5 cents per point (CPP). This is reduced to $1,000 if you cash the points out at a rate of 1 CPP.
Therefore, you could be losing out on thousands of dollars in value if you accept this Capital One offer. The opportunity cost in this instance is gigantic. And it is powerful and valuable enough to run away from this offer.
Capital One shocked me today when I found out about this offer. And I was inspired to write about it when I saw the $20,000 minimum spend requirement. Take this offer as a cautionary tale and/or a brief economics lesson if anything.
But do not apply for it because you can realize thousands of dollars in value from signing up for other credit cards and earning the bonuses over the course of one year. Similarly, you can earn over $1,500 in value from selecting one excellent credit card, getting approved, and earning the sign-up bonus. Doing so will save you over $15,000 and net you similar value to what Capital One is currently offering.