car vs credit card vs free flights

[medhead]

But this is exactly my point because while each point is worth 1.38 cents via redeemption, it is false to compare that value to the cost of getting the points via credit card spend. If using the ANZ visa then the points cost 200 cents each. If it isn't worth spending 4 cents per point on the surcharge then it sure as hell ain't worth spending 200 cents per point. Of course, if using the ANZ Amex then the cost of a point gets down to 82 cents (odd) including surcharge. Still not worth it using your method. But you know I'd rather pay 82 sents per point than 200 cents. In either case one is still buying the same item.

I have to disagree. The points do not cost 200 cents each on the ANZ, because if they do, then the car is free You are confusing the cashflow needed versus the "cost" of the components.

In this "transaction" you are acquiring two distinct items - points and a car. To really compare costs of each component, you need to factor in the real base cost of the car, then any difference is the cost of the points.

I think I picked up on this matter as highlighted by the emphasis above. While what you're saying is true. It is impractical to even consider the point as I, as a consumer, have no way of determining the costs of each component. In theory, we know there are components of the cost but knowing that fact doesn't actually allow me to determine the "true" incremental cost. Sure assumptions can be made, but that is not telling me anything concrete

I'd also say that I'm not confusing cash flow at all. As I tried to indicate previously, a car purchase is a really bad example, because it is possible to get a better price for cash.

But in general when buying an item I will get points. The next person, who might pay with a different method may get no points but will spend the same money. So there are no components. The same item costs the same for all people (except for a car). I get points as a bonus. (really everyone who purchases that item is paying a small cost to cover my points) The only way I can equally value the earning of my points is by comparison to the cash outlay - because that is a constant.

Take my phone bill, I'd much rather get 459 points for a $306 outlay, than pay no surcharge and get 0 points for $300.

If the lowest possible cost for the car by any payment method is $50,000, then 25,000 QF points are free when obtained via the ANZ (no incremental cost). Using AMEX (assuming a platinum or black at 1.5 points per dollar), then the $1,500 surcharge results in a total of 77,250 points. You can cost these in two ways. Each of those points has cost 1.942c (for the lot) as your car was worth $50,000, and the remaing cost covered the points. When comparing to the ANZ earn, however, you have earn't an "extra" 52,250 points over the 25,000 free ones, at an incremental cost of $1,500, so those 52,250 cost you 2.871c each.

No, the remaining cost covers more than just the cost of the points. The extra AMEX merchant fees for a start.

Things are different if the dealer has built in a margin to cover the card use in the first place. If you asssume you could actually get the car for $49,000 cash (only 2% off), then the 25,000 points via ANZ are costing you $1,000, or 4c each. The 77,250 points from AMEX are costing you $2,500 or 3.236c each.

It is this true incremental "cost" of points that you should compare against the value you place on "spending" them to determine what is worthwhile. The amount of cash you need to flow through the payment mechanism is only relevant with respect to how much you can expend for the tangible items (other than points) that you are acquiring.

The OP clearly refers to a GOld ANZ card, so the earning is probably 1.25 points/$. So the AMEX will get 62500 points. If we revisit the calculation based on your assumptions, then the 62500 points cost 4 cents per point. The cost is the same but by paying the surcharge one would end up with 37500 more points. (Lets not even mention that if we follow your calculation that the points cost less if paying the surcharge :shock

As I said I'd use the AMEX and pay the surcharge.