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TPG contributor Jason Steele gives us his take on the Chase Ink Bold’s lucrative spending category bonus at office supply stores and how you can make the most of it without getting red flagged. For more analysis on how to maximize points via gift cards, check out the Frequent Miler who operates a “laboratory” of experiments.
One of the great features of Chase Ultimate Rewards credit cards is their category spending bonuses. Cardholders of the Sapphire Preferred earn 2x points on travel and dining, while Chase Freedom cardholders earn 5x bonuses on up to $1,500 of spend in categories that change quarterly.
However, one of the more lucrative Chase credit card spending bonuses comes with the Ink Bold charge card for business, which gives cardholders 5 points per dollar on the first $50,000 spent each calendar year at office supply stores and on cellular phone, landline, internet, and cable TV services. The card also earns 2 points per dollar on the first $50,000 spent each calendar year at gas stations and hotels.
Maximizing The Office Supplies Bonus
To maximize that lucrative 5x category bonus on office supplies and other work expenses, every Ink Bold cardholder should be paying their cellular phone, landline, internet, and cable TV bills with this card.
As nice as it is to score the 5x bonus on telecommunications services, however, it is the office supply store bonus that is most important to note. Visit any Office Depot, OfficeMax, or Staples and you will find several racks full of gift cards surrounding the cash registers. Gift cards can be purchased here for home improvement stores, airlines, restaurants, and for many other categories of merchants. For example, OfficeMax carries gift cards for Southwest Airlines, Home Depot, Lowes, Starbucks, and Amazon. In fact, many of these stores even sell cards from Visa and American Express that can be used anywhere those cards are accepted, so buying these cards is just sort of like pre-paying a credit card you plan to use for purchases…only you’re getting 5x points to do so.
Purchasing Visa Gift Cards
For example, $500 Visa gift cards sell for $505.95 at these stores, earning Ink Bold cardholders 2,530 Ultimate Rewards points. Since you’ll be using that $500 on your expenses anyway, you’re essentially getting 2,530 points for a cost of $5.95, or 0.235 cents each.
If you were to earn 100,000 Ultimate Rewards points, you could then transfer that to an airline partner of the program—British Airways, United, or Korean Air—for a roundtrip ticket to Europe in business class worth thousands of dollars with an out-of-pocket expense $235 (based on that 0.235 cents calculation above).
If you use these types of cards to pay taxes, it is treated as a debit card and assessed only a $3.49 fee, raising your cost per point to 0.373 cents each. This can be done at sites such as payusatax.com and valuetaxpayment.com.
Granted, both these scenarios require a significant outlay of cash at the start—you do have to pay off your Ink Bold statement in full each month as it is a charge card not a credit card—but remember, you’ve got a year to hit that $50,000 sum, and if you know you’ll be using these cards for your expenses anyway, you might as well get the 5x bonus.
Purchasing American Express Prepaid Cards and Reloads
Another option is to go with American Express prepaid cards, which can be ordered for free. Office Depot sells a product called Vanilla Reload that can be used to add value to American Express prepaid cards, as well as some others, and can be purchased for $3.95 to add up to $500 at a time to these cards.
The advantage here is that the reload fee per card is slightly less than a new Visa prepaid card ($3.95 vs. $5.96), and you can add up to $2,500 in a 28 day period. However, transactions processed with the Amex prepaid cards are treated like credit card transactions, not debit cards. This makes it much less profitable for paying taxes since credit card transactions are charged a percentage (2.29% for Amex at Valuetaxpayment.com, for example) rather than a flat fee. Still, on regular credit card purchases, you can use these cards just like you would a normal Amex.
Chase Freedom: This card offers one point per dollar spent on most purchases, with five points per dollar spent up to $1,500 on bonus categories of spending that change each quarter. Points are only transferable to airline and hotel partners when cardmembers also hold a Sapphire Preferred, Ink Bold, JP Morgan Select, or Palladium card. There’s no annual fee on this card.
American Express SimplyCash Business: Update – This offer has expired. This product offers 5% cash back at grocery stores on purchases of up to $12,000 per year. While one cent in cash back is not worth as much as an Ultimate Rewards or Membership Rewards point could potentially be worth, customers looking to earn statement credits rather than travel rewards might find this offer appealing. There’s no annual fee on this card.
: This card offers 3x bonus points on airfare, and 2x points gas and groceries. Many grocery stores sell gift cards and prepaid cards so there is an opportunity to earn some marginal returns with this method. The best strategy is to buy merchant gift cards with no fee in order to extend the 2x bonus to other merchants. The annual fee is $175.
American Express Blue Cash Preferred: This card offers 6% cash back at grocery stores up to $6,000 in purchases, presenting an opportunity to earn significant cash back. This card has a $75 annual fee.
An offer like this is a loss leader for a company like Chase as there is no way the bank earns enough merchant fees on each dollar to cover the value of the five Ultimate Rewards points they are giving out. Furthermore, Chase can and will suspend the accounts of cardholders that they believe to be “abusing” these offers. For example, there were many people who reported their accounts being closed after charging tens of thousands of dollars to their Chase AARP card when it offered 5% cash back on all purchases made within the first six months of opening an account.
Here are my recommendations to avoid this problem:
- Use your Ink Bold card as much as possible at non-bonus merchants. Those who only use their card to make purchases at office supply stores risk raising a red flag and damaging their relationship with one of the most important issuers of reward cards.
- Go easy on spending. The $50,000 annual limit makes it futile to purchase much more than $4,000 a month from merchants in the 5x bonus categories, so don’t try to burn through tens of thousands of dollars each month in the first few months since that’s sure to draw some attention.
- Take advantage of Chase’s Ultimate Rewards online shopping mall. Not only are there many good deals that return 5-10x bonus points or more, but these deals are a money maker for Chase that will help to keep you in their good graces.
- Keeping your debt level low. This is generally a good idea and will help you avoid any unnecessary scrutiny, and will be helpful when you want to apply for future Chase cards.
- Maintain a retail banking relationship with Chase. The more you can show that you are a loyal customer across many of Chase’s product lines, the less likely you to be seen as someone who is just trying to abuse their benefits.
There are a lot of great credit cards out there that offer bonus points on category spending, but Chase’s Ink Bold card presents one of the most lucrative opportunities out there thanks to its 5x category spending bonus at office supply stores. Just be careful to use this card wisely and pay attention to how you allot your spending so you can maximize the Ultimate Reward points that you receive without being perceived to be abusive.
Ink Plus® Business Credit Card
|Intro APR||Regular APR||Annual Fee||Foreign Transaction Fee||Credit Rating|
|N/A||15.49%-19.49% Variable||$95||0%||Excellent Credit|