The Ritz 140K offer. Should you take it?

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The usual offer for the Ritz Carlton Rewards credit card is 70,000 bonus points after spending $2,000 in three months.  The annual $395 fee is not waived the first year.  That fee sounds awfully steep, but it includes some really nice perks such as 3 club level upgrades; Gold status, first year (and each year thereafter when you spend $10K or more); $100 hotel credit for each 2 night or longer stay; complimentary Lounge Club membership; and $200 annual credit for airline incidentals.

A reader has alerted me to two even better targeted offers.  Via the MyFico forums, this thread details two offers: One for 70K bonus points with the first year fee waived, and the other for 140K bonus points, but the first year fee is not waived.

I called the number listed in the MyFico thread (1-888-846-7004) to see if the codes listed there could be used by people who were not targeted.  The phone agent I talked with wasn’t aware of the 140K offer, but she was able to find it when I gave her the promotion code (F5BP).  I was completely honest in explaining that I didn’t receive the code personally, so she did some digging to see if I could use it anyway. Finally, she apologized and told me that no, since I had admitted that I wasn’t targeted to receive the offer, I wasn’t qualified for it.  I didn’t ask her to check the other promo code (F53K), but I’m pretty sure I would have gotten the same answer.

Now, this is just a guess, but I’m betting that if you get targeted for either offer, you could successfully call and ask to be switched to the other one.  So, which is better?

The difference between the two offers is simple: with one offer you save $395 and with the other offer you get an additional 70,000 points.  Choosing the 140K offer is equivalent to buying 70,000 points for $395.  If those additional 70,000 points are worth more than $395, then the 140K offer is the better one.  If the points are worth less than $395, then the 70K, first year free offer is better.

How much are those 70,000 Ritz Carlton points worth?

In this context, when I ask how much Ritz Carlton points are worth, I mean “how much would you / should you pay for them?”  That is very different from asking how much value can you get from the points.  Let’s say, for example, that you use those 70,000 points to stay a night in a top tier Ritz property (see award chart below).  And, let’s say that the property would have cost $500 per night if you had paid cash.  In that case, you could argue that you got $500 in value from those 70,000 points.  That does not mean, though, that 70,000 points are worth buying for $500.  Not at all.  Why buy points for the chance of redeeming for the same amount?  The only reason to buy points is to get more value from the points than you could have gotten with cash.  It only makes sense to buy 70,000 points for $395 if you know for sure that you’ll get significantly more than $395 value from those points.

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Marriott Connection

Ritz Carlton points are essentially the same as Marriott Rewards points.  Ritz Carlton points can be used to book not just Ritz Carlton properties, but Marriott properties as well.  Gary, at View from the Wing, covered the topic in detail here.  So, if we can estimate how much Marriott points are worth, we can estimate Ritz points’ worth as well…

Fair Trading Price

My Fair Trading Price page estimates the opportunity cost per point of various loyalty programs when people choose to use certain credit cards or stay in certain hotels instead of choosing other options.  The current estimated Fair Trading Price of Marriott points is shown as .5 cents per point.  Since Marriott and Ritz points are essentially the same, we can say that Ritz points also have a Fair Trading Price of a half cent each.  So, we can further say that the Fair Trading Price of 70,000 points is $350.  In other words, based on the Fair Trading Price, 70,000 Ritz Carlton points are not worth $395 (but it’s close!).

Conclusion

If you have the opportunity to pick one of the special Ritz Carlton credit card offers, think carefully about how much you would be willing to pay for points.  If the 140K offer will get you closer to a valuable award, then it may be worth paying $395 (.56 cents per point) for those extra points.  If you’re simply collecting points for someday, I’d say that the first year free offer is probably the better option.

What do you think?  If given the option, which offer would you choose?

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