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One of InsideFlyer UK’s newest contributors, Miles Hunt, wrote a great post the other day about the Hilton Honors Barclaycard. He makes an excellent point about how the free hotel night is a very good starting point for newcomers to travel hacking. An easy win is a great way to see the benefits of this hobby without it seeming too difficult or expensive. After that easy win, you unquestionably will be keen for more of the same!
But once you get beyond the free hotel night, is it sensible to keep and use the Hilton Barclaycard? My eyes were drawn to the possibility of earning Honors Gold status by spending £10,000 during a calendar year. Tom wrote a great post last year about the value of Hilton Honors Gold, so I suggest that you re-read his post. But the summary version is that Gold status gets you free breakfast at full-service properties and a good chance of a room upgrade (outside of everybody-has-status North America at least).
So, is this particular credit card a good way to obtain Hilton Honors Gold? Well, here are a few basic assumptions before I do some math…
- You stay enough at full service Hilton Honors properties to receive benefits from the Gold status, but not 20 times / 40 nights per year (as you would simply qualify for Gold through the usual method)
- You don’t fancy paying £450 per year for the American Express Platinum charge card (which comes with complimentary Gold status with Hilton Honors)
- Spending £10,000 per year on a credit card is relatively straightforward and you pay off your credit card each month to avoid paying interest
- You aren’t really a “card churner”. If you are, then you certainly are going to be allocating your credit card spend to the cards with the best sign-up bonuses.
- Like me, you’ve used up all of your allowed opportunities for Honors status matches or fast track offers
So, if you would like to obtain (or retain) Hilton Honors Gold status, but can’t get it another way, you might want to consider the credit card route. But, what is the “opportunity cost” of spending £10K on the Hilton Barclaycard versus spending £10K on a different UK-issued credit card?
The Value of £10K Spend on the Hilton Barclaycard
- You are going to receive 2 points per £ for regular spend, and 3 point per £ spent at a Hilton hotel, making a total of 20,000-30,000 Honors points (depending on how much of your spend is made at a Hilton hotel). At my valuation of 0.4p per Honors point, that’s a return of £80-£120. Not bad for a free card…
- Honors Gold status that you might use during 15-25 nights per year. (not everybody is a 1-night-per-stay-to-chase-status travel hacker like yours truly…) If I were to hazard a guess, I might value 20 breakfasts at £200 and those possible upgrades at another £200. And that’s just me traveling alone. Of course, if you are planning to visit the Maldives or Bora Bora with your family, those figures will increase exponentially!
The Opportunity Cost of £10K Spend on the Hilton Barclaycard
The most obvious comparator is a cashback credit card, the American Express version of which will offer 1% cashback for the first £10K of spend. That £10K would accordingly earn you £100. Cash is certainly more valuable in principle than Honors points, but I would gladly trade that £100 for Honors Gold status and Honors points worth close to that amount…
There are several other credit cards I could mention, but in general you are unlikely to receive more than £100-150 in value from spending £10K on a free card, and £200+ from a card with an annual fee (but then you need to either be a heavy spender or include the fee in your calculation of “net return”). Again, the Hilton Barclaycard is looking attractive…
Many readers will have the Premium Plus card from American Express and British Airways, where £10K will earn you a companion voucher. I intend to analyse this card in detail in the coming weeks, but for now it’s fairly obvious that you are paying the annual fee with the intention that your first £10K in credit card spend per year will go towards obtaining the companion voucher (rather than chasing Hilton Gold status). But what about a second £10K per year? Well, this card offers 1.5 Avios per £ spent, so £10K of spend would earn 15,000 Avios. At our standard valuation of 1p per Avios, this works out to £150. Let’s ignore for now that you’re probably desperate for every Avios you can get, in order to use the companion voucher properly, but again I would gladly trade 15,000 Avios (which I can easily buy from Groupon or in an Iberia Plus sale) for those Hilton points and Gold status.
What About Manufactured Spend?
Ahhh… the Holy Grail of travel hacking… The UK is unfortunately NOT an MS paradise (in the traditional sense of paying for a cash equivalent product with a credit card). However, the most industrious British travel hackers have taken my “think Avios” exhortation to heart, and have figured out how to pay (or prepay) practically every household bill with a miles or points earning credit card. Looking for a common feature of “pay your bills with a credit card”? Visa is much more widely accepted than American Express, which is why pushing £10K through the Hilton Barclaycard isn’t necessarily an outrageously difficult task…
For a Visa credit card with no annual fee, you might be tempted to enjoy the free night then stick the card, nearly forgotten, in a drawer. But thanks to the decline in the value of sterling, the Hilton Barclaycard’s earning ratio of 2/3 Honors points per £ isn’t all that bad, especially for a Visa / Mastercard, and spending £10K per annum offers an alternative route to Gold status. Perhaps I should have left it in the drawer until I rediscovered its value, instead of cancelling it…