# What is the Barclaycard Arrival card’s rebate really worth?

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Barclaycard Arrival Plus® World Elite Mastercard® has an unusual rewards scheme.  All purchases earn 2 points per dollar.  If you redeem those points for cash, all you get is half a cent per point.  In that case, this card is nothing but a 1% cash back card.  When you redeem points for travel, though, things get interesting.  When redeemed for travel, points are worth a penny each, plus you get a 10% rebate on all points used.  Because of that rebate, many people (including me) have suggested that this card earns 2.2% back towards travel.  Of course, when you redeem the 10% rebated points, those points earn a 10% rebate as well, so some say the card earns 2.22%.  Others take it further and will put a bar over the second number in “2.2%” in order to indicate that the 2 repeats forever (the only thing stopping me from doing so is my lack of knowledge of how to do that within my blog authoring tool!).  Anyway, for the rest of this post let’s use the simpler 2.2% to represent the conventional wisdom of the value of this card’s travel rebate.  Is that number correct?  One can logically argue that the real rebate is higher.  And, at the same time, one can argue that the real rebate is lower.  Let’s look at each argument…

### More that 2.2%

Bill, at MileValue, recently wrote that Barclaycard Arrival World Mastercard points were worth 1.14 cents each.  If he’s right, then that would mean that purchases made with the Barclaycard card earn 2.28% towards travel.  How could this be?

Bill points out that the way travel redemptions work is as follows: you pay for travel with your Barclaycard and then you apply your points as a statement credit towards those travel purchases.  Because the awards work this way, you earn points for the same travel that you’ve redeemed points for.  Let’s make up an example:

Suppose you have 35,000 points and you want to get a \$350 hotel stay for free.  You would simply pay for your hotel stay with your Arrival card, and then log into your account to redeem 35,000 points for that purchase.  Now, two things happen: 1) You earn your 10% rebate on points used = 3,500 points; and 2) You earn points for the \$350 purchase just as you would any other time: \$350 x 2 points per dollar = 700 points.  So, after your “free” \$350 hotel stay, you will have earned back 4,250 points.  In other words, your net loss of points is only 30,750 points.  And, since you got \$350 worth of travel from those points, we can calculate the value per point: \$350 / 30,750 = 1.14 cents per point.

My take: I agree with Bill that it is theoretically possible to get 1.14 cents per point in travel value from your Barclaycard points.  However, this same logic can be applied to any card that offers rewards in the form of statement credits.  With all such rewards, you earn points and redeem rewards at the same time and so the effective value of your reward is arguably higher.  In fact, one could take the same logic and say that a hundred dollar bill is worth more than \$100:

1. Buy something with your rewards credit card (let’s say you have a 2% cash back card).
4. Notice that you get back 2 dollars from your credit card!

So, in the example I just gave, my \$100 bill is actually worth \$102!  But since, by the same logic, \$2 is worth more than \$2, the total value of my \$100 bill is approximately \$102.04.

While I agree with Bill’s overall analysis, I think Bill would agree that it would be ludicrous to say that \$100 is worth \$102.04.  So, I’d rather think of the way Barclaycards’ rewards work as a virtue: it’s a good thing that you can earn rewards for travel redemptions.  With some other programs such as Citi’s ThankYou points, you use points directly to pay for travel and so you lose out on the opportunity to earn credit card rewards from those purchases.  Let’s agree to keep in mind that difference between programs, but not overcomplicate things by overstating or understating the point values.

### Less than 2.2%

Recently, a reader named Max wrote the following comment in one of my posts:

I used Barclaycard’s Arrival redemption process recently, and can share a few annoying features. First, redemptions for any individual travel expense must be in increments of \$25. So in most cases, there can be no redemption in full. Second, unredeemed parts (even when over \$25) can not be submitted again. And finally, the 10% travel bonus miles are awarded after a redemption.

So the net result of the above, there will always be unredeemed expenses and leftover miles. The promised 110% travel redemption value is not really possible.

Max is right.  Because Barclaycard doesn’t allow redemptions of less than \$25, and because the 10% rebate occurs after your redemption, you will always have extra points in your account (assuming you only redeem points for travel).  Let’s take an example.  Suppose you start with 40,000 points and you redeem all of those points at once for \$400 towards travel.  You would then get back 10%, or 4000 points.  This will always happen with travel redemptions and it is therefore impossible to use up all of your points.  And, as long as some number of points go unused forever and ever, those leftover points are worth nothing to you.  So, Max is right: it is impossible to get exactly 1.11…% value from each point (notwithstanding Bill’s opposite argument covered above).

That being said, the more points you earn and redeem, the closer you will get to earning the ideal value from your points.  Eventually, having an unusable balance of less than 2,500 points will be no more than a rounding error.  Let’s assume for example, that you use all 40,000 points from your signup bonus for travel redemptions.  You would get back 4000 points (10%).  Now, let’s say that you use 2500 of those points for a travel redemption.  You would get back 250 points which would increase your remaining balance to 1750.  Those points can’t be redeemed until you reach \$25 worth of points, so we’ll say that you have 1750 orphaned points.  In total, you would have received \$425 value from 40,000 points.  That’s a per point value of 1.06 cents each.

Now, let’s scale up the example to 400,000 points.  At that level, if you redeem all at once for travel, you will get back 40,000 points, and the rest of the math will work the same as above.  In other words, you would end up with 1750 orphaned points.  In this case, you will have received \$4,425 value for 400,000 points.  That’s a per point value of 1.1 cents per point.

Yes, you can logically and convincingly argue that Arrival points are worth more or less than their apparent value of 1.1 cents each towards travel.  In the end, though, the difference from 1.1 cents per point is small.  Bill, at MileValue, argued for 1.14 cents per point.  And, when you orphan 1750 points from a starting balance of 40,000 points (as in my example above) you may end up with 1.06 cents value per point.  In each case, the difference from the conventional wisdom is extremely small.  So, I’m happy to stick with the conventional wisdom: in my mind, Arrival points are worth 1.1 cents each, and because the Arrival card earns 2 points per dollar on all purchases, it earns 2.2% towards travel.  Good enough.

For reference, Barclaycard defines travel purchases as: “Airlines, Travel Agencies & Tour Operators, Hotels, Motels & Resorts, Cruise Lines, Passenger Railways and Car Rental Agencies.”