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Update: As of April 2013, Chase Ultimate Rewards has added Virgin Atlantic as a new airline transfer partner.
Maximizing credit card rewards is kind of like coaching a basketball team. You put certain players into action when it makes the most sense and pull them out when they just aren’t performing as well as others (or they simply need a break). There are a lot of cards that I get for the sign-up bonus and then close out (fire) or downgrade to no-fee versions (make them towel boy) once I’ve extracted the maximum value possible. Many people ask if this hurts your credit and the quick answer is: nominally, but if you have other lines of credit and pay your bills on time and have some fee-free cards that you keep open for years, your score will be just fine. The main components of your FICO score are: 35% payment history, 30% amounts owed, 15% length of credit history, 10% new credit, 10% types of credit. So if you pay on time and keep your balances low, you should be good to keep getting the most lucrative credit card offers on the market and manage your “team” as necessary.
The points that I’ve been focused the most on accruing this year are Chase Ultimate Rewards points, which I think are the most valuable, flexible points currency on the market today. They transfer 1:1 to United (my favorite transfer partner), Southwest, British Airways, Korean Air, Hyatt (second favorite), Ritz-Carlton, Marriott, Priority Club and Amtrak. The key cards that allow me to rack up UR points are the Chase Sapphire Preferred® Card (my original workhorse card that has been getting a little bit of rest lately), Ink Bold and Ink Plus (my two new stars) and the Freedom (my quarterly player I put in strategically to hit that needed 3-point shot).
My Ink Strategy
The Ink Cards have seen a ton of play-time recently because I can purchase Vanilla Reload cards at Office Depot and essentially turn every single dollar I spend into 5 Chase points per dollar. I’ve been writing about the whole Bluebird strategy a lot lately, so I won’t preach any more about it in this post. But that’s not the only reason I use the card. Frankly I think it’s risky to just use them to purchase Office Depot gift cards and I personally can’t buy enough Vanilla Reloads to cover every single dollar I spend, so I also use the card to get 5x points on cell phone/internet/landline/TV spend and 2 points per dollar on gas stations. They also offer 2x on hotels, but I’d rather put that spend on my Sapphire Preferred because you get 2.14 points per dollar on all travel with no limit (2x base plus a 7% year-end dividend).
The Bold and Plus are nearly identical, with the main difference being that the Bold is a charge card which means no preset spending limit, but you need to pay it off in full every month. The Plus is a credit card, which means you have a preset credit line, but have the flexibility to pay over time (albeit with interest fees).
Why get both?
The 5x categories are limited to 50,000 points a year, so if you have both cards, that amount goes to $100,000 collectively, which at 5x is some pretty serious point earning potential. I also got both because they each come with 50,000 point sign-up bonuses (25,000 after first purchase and 25,000 after $10,000 spent within 3 months), so I banked 100,000 points together just on sign-up.
But I Don’t Have a Business!
I’ve gotten a lot of emails and comments around the whole Bluebird/Ink Bold strategy and most center upon the fact that people can’t get the Ink Bold card because they don’t have a business. Even the smallest of businesses – or potential future businesses – can get business credit cards because they are guaranteed by your personal credit line. So even if you want to create a business in the future, you can get a business card now so that when you do need to start spending, you can keep your finances separate. You simply apply as a sole proprietor and use your Social Security Number on the application. Chase looks at your total relationship with them when deciding whether to approve you and even if you are denied or given a pending status, you can close or shift personal credit lines in order to open up your Ink card, which I what I did in August to get the Ink Plus (after I already had the Ink Bold and old Ink Bold with Business Exclusives that has since been discontinued).
I love my Sapphire Preferred and use it for its 2x categories: dining and travel (hotels, taxis, parking) because I get 2.14 points per dollar. However, I put airfare on my American Express Premier Rewards Gold card because I get 3x points per dollar and I don’t want to put all of my eggs in the Chase basket.
I use my Chase Freedom to max out the $1,500 in 5x quarterly bonus spend categories (which are currently hotels, airlines, Best Buy and Kohl’s) as well as for most regular, non-bonus category spend that I can’t put on Bluebird/Vanilla because I get a 10% bonus and 10 point per transaction bonus for being a Chase Checking customer.
Update: The Chase Freedom card no longer offers a bonus of 10% on all purchases plus a 10 point per transaction bonus. Instead, both of those benefits have been replaced with a 10% annual bonus at the end of the year on all purchases.
Normally Freedom points can only be used as “cash back” at 1 cent per point, but since I’m a Sapphire Preferred/Ink customer, I can instantly transfer my Freedom points into my other accounts and then transfer them out to partners like United and Hyatt. While the max bonus is 30,000 points a year from 5x categories, that’s not so shabby considering the Freedom has no annual fee and I get the 10% bonus and 10-point transaction bonus on small expenditures. I’ve heard that the Chase Exclusives program is ending, but the website still touts a 10% bonus on points for Chase Checking customers who have a Freedom card, so I bet you’d still be able to join the program since it’s being advertised. The current sign-up bonus is only 10,000 points, but they’ve routinely run 20,000-30,000 point offers (marketed at $200 or $300 cash back), so you might want to wait to see if it gets better.
Do the Math For Yourself
While my wallet is chock full of Chase cards, this may not be the best strategy for you. I’d recommend analyzing your spending patterns and then seeing which cards would help you maximize the most amount of points. To be honest, the Ink/Bluebird strategy isn’t going to work for everyone – especially if you aren’t close to an Office Depot that sells Vanilla reload cards (you can still buy other reload cards, but the game becomes less lucrative and more time-intensive if you can’t leverage Bluebird’s low fees). At a very minimum, Chase is leading the pack with sign-up bonuses and I don’t see them going up anytime soon since American Express and Citi have not been extremely competitive in the sign-up bonus space.
There’s a myth going around that you need to wait a certain amount of time between applications to get approved for Chase cards, but it’s wrong. The fact is, Chase will decide how much credit they want to give you as a customer. Once you reach that max credit, you’ll be declined for new cards unless you call the reconsideration line at 1-888-245-0625 and offer to either close out current cards or shift credit lines. I’ve never been turned down by the reconsideration line and they’ve even let me shift around personal lines to open business cards and vice versa. Bottom line is that Chase is investing a ton into their Ultimate Rewards program and if you maximize the cards you use you can rake in tons of valuable Ultimate Rewards points. As with all good deals, they don’t last forever, so evaluate whether the current cards you use on a daily basis are providing you the maximum possible return and if not, step up as the coach of your own points team and make some substitutions!
If you’re looking to up your Ultimate Rewards game, you can actually get two cards in one day (of course depending on your credit worthiness). I’d recommend getting the Ink Bold and Freedom first to get in on those respective deals (Vanilla Reloads at Office Depot and Chase Exclusives for Freedom) before they possibly go away, then the Sapphire Preferred and the Ink Plus in the future.
Even after the introduction of the Chase Sapphire Reserve, the Chase Sapphire Preferred is still a fantastic choice if you want to avoid the Reserve’s $450 annual fee, earn 2x on all travel & dining and earn a 50,000 point sign up bonus.
- Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
- Named Best Credit Card for Flexible Travel Redemption - Kiplinger's Personal Finance, July 2016
- 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
- Earn 5,000 bonus points after you add the first authorized user and make a purchase in the first 3 months from account opening
- No foreign transaction fees
- 1:1 point transfer to leading airline and hotel loyalty programs
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
- No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards