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Update: As of July 20, 2014, the Chase Sapphire Preferred Card no longer offers the 7% annual points dividend. View the current sign up offer here.
I generally don’t pay much attention to cash-back cards, because I find more value in earning points and miles that can be used for travel. With travel cards I generally get at least 3 cents per point in value, versus 1 cent usually earned with cash-back cards.
However, several readers have recently tipped me off to a lucrative way to earn 5+ points per dollar with the Chase Freedom card. And get this – if you have the Chase Sapphire Preferred® Card as well, those Freedom points can be transferred to the Ultimate Rewards partners at a 1:1 ratio (United, British Airways, Korean Air, Southwest, Hyatt, Priority Club, Marriott, Ritz-Carlton and Amtrak).
Let’s take a look at the basics of the Freedom card.
Annual fee: $0
Sign up bonus: 10,000 points or $100 cash back with $500 spend within 3 months
Earning: 1 point per dollar spent (or 1% cash back), with rotating categories that allow you to earn 5 points per dollar (5% cash back), up to $1,500 in spend per quarter
For 2012, the 5 points to $1 spend for up to $1,500 cash-back categories so far are:
Gas Stations and Amazon.com
Grocery stores and movie theaters
Additionally, if you are a Chase checking customer, you will earn a 10% bonus on all points earned each month, plus 10 points per purchase (even if the purchase is 20 cents). The example in the Chase material from this Fatwallet thread is:
Update: The Chase Freedom card no longer offers a bonus of 10% on all purchases plus a 10 point per transaction bonus additional 10% Cash Back. Instead, both of those benefits have been replaced with a 10% annual bonus at the end of the year on all purchases.
Example: make 16 purchases spending $400 in a month
400 points: standard $1/1 point Freedom reward
+40 points: 10% bonus points
+160 points: 10 pts per transaction (16 transactions)
400+40+160=600 pts for $400 worth
So now you have a bunch of these Freedom points for cash back, but if you also have the Chase Sapphire Preferred® Card, instead of liquidating these points for a penny each, you can transfer them to any of the Ultimate Rewards partners at an instant 1:1 ratio!
So this 20,000 points (Update: bonus is now 10,000 points) on a fee-free card will almost get you a free night at any Park Hyatt, including the Maldives, which goes for over $1,000 a night (free nights are 22,000 Hyatt points).
So let’s say you only use your Freedom card on the spend categories each quarter. That would be $6,000 in spend and you’d get 30,000 points (5%) plus 600 for the 10% checking bonus and let’s say there were collectively 60 purchases, so add on an extra 600 points. 31,200 Continental/British Airways/Hyatt/Marriott/Priority Club/Amtrak points for a mere $6,000 in spend is pretty darn good. Plus factor in the 20,000 sign-up bonus points and we are talking enough for a round-trip coach ticket to Asia on Cathay Pacific using BA miles! Or you could simply take the cash back and put $510 in your wallet – still not a bad option.
I have to admit, I haven’t done this yet, but the wheels are in motion and I’ve confirmed this strategy with multiple people. And while the general rule is to wait 1 month between Chase applications, a reader recently emailed me that he applied for two in one day and got declined for both initially, but got them approved when he called the reconsideration line. Not bad, since two applications from the same issuer will only be 1 hard inquiry on your credit. I don’t think this will work for everyone, but if you have strong credit and a good relationship with Chase, I suspect its more than possible. I think the argument could easily be made to get a Freedom card for everyday spending (in the categories) and to use the Chase Sapphire Preferred® Card for international travel since it doesn’t have a foreign transaction fee (plus it looks really, cool as Ben from One Mile at Time recently wrote about).
Does anyone here have experience leveraging the Freedom and Chase Sapphire Preferred® Card (and even Chase checking) to max out point earning?
Chase Sapphire Preferred® Card
|Intro APR||Regular APR||Annual Fee||Foreign Transaction Fee||Credit Rating|
|N/A||16.24%-23.24% Variable||Introductory Annual Fee of $0 the first year, then $95||0%||Excellent Credit|