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I often discuss how helpful credit card sign-up bonuses and spending can be for earning award travel, but some readers are intimidated by the idea of opening too many new accounts. So today, TPG Senior Points & Miles Correspondent Nick Ewen demonstrates how even a single card can give you access to free flights, hotel nights, and more.
Award travel can be a daunting hobby to take up, especially when it comes to credit cards. If you don’t travel regularly for work, your everyday spending habits play a huge role in earning (and then redeeming) points and miles. However, with so many options, you may not know where to start. In this post I’ll kick off a new series that shows just how easy it is to earn rewards by opening and using even a single card for one year. My subject today is one of my favorites: the Chase Sapphire Preferred Card.
Let’s start with a quick overview of the card and why it’s such a solid product. Right now, the card comes with a sign-up bonus of 50,000 Ultimate Rewards points when you spend $4,000 in the first three months from account opening. You’ll also earn an additional 5,000 bonus points when you add the first authorized user and make a purchase in that same time frame. If you meet both of these requirements, the sign-up bonus alone is worth $945 based on TPG’s most recent valuations.
In addition to these one-time bonuses, the card is quite valuable for everyday use, as you earn 2x points on all travel and dining expenses, and 1 point per dollar spent on all other purchases. All of these points can be redeemed directly for travel, or can be transferred to a variety of airline and hotel partners, including Hyatt, British Airways, and Southwest Airlines, giving some great ways to maximize your points. Other benefits include no foreign transaction fees, primary auto rental collision damage waiver, and trip cancellation/interruption insurance. The $95 annual fee is waived for the first year.
So if you open the card, earn the sign-up bonus, and use the card exclusively for the first year, where does that leave you? Obviously the answer depends on your spending patterns, so for this analysis I used data on consumer expenditures from the Bureau of Labor Statistics for 2013 and 2014 to estimate what an “average” household would spend (and thus earn) on the Chase Sapphire Preferred.
In doing so, I utilized the following assumptions:
- 60% of “Housing” expenditures cover mortgages or rent, and thus can’t be paid with a credit card.
- “Transportation” expenditures are split evenly between car payments (can’t be paid with a credit card), gasoline, and other transportation costs (parking, tolls, train/subway/bus tickets, etc.).
- All “Healthcare” and “Other” expenditures can be paid with a credit card.
- All “Personal insurance and pensions” expenditures can’t be paid with a credit card.
Again, your situation may differ substantially, so feel free to adjust these assumptions in order to calculate your own earning potential.
Here’s a quick table that shows how these spending patterns in the first year of cardmembership translate to Ultimate Rewards points:
Authorized user bonus
|Food – At home||$3,977||1 point/$||
|Food – Away from home (all other days)||$2,494||2 points/$||
|Apparel and services||$1,604||1 point/$||
|Transportation (other)||$3,001||2 points/$||
All other expenditures
As you can see, the “average” American consumer would earn 81,204 Ultimate Rewards points in the first year alone. Not too shabby!
What Does This Get You?
Earning points is one thing; knowing how to redeem them for maximum value is an entirely different story. Because Ultimate Rewards points are so flexible, the program has almost unlimited reward opportunities, and banking over 80,000 points makes many of them available to you. Here’s a sampling of what you can do with this first year’s haul:
1. Two (or three) round-trip tickets to Hawaii. Visiting the Hawaiian islands can be a dream for many, but with these points, you have enough to book two (or in some cases, three) economy class awards. Even better? There are many different options for doing so with the various Ultimate Rewards partners.
Transfers to British Airways are particularly attractive for awards from the West Coast, as you can use Avios for flights on American from Los Angeles, US Airways from Phoenix, and Alaska from numerous western cities (including Seattle, Portland, Oakland, and San Jose). All of these flights fall under 3,000 miles in length, meaning that round-trip tickets are just 25,000 Avios, a great use of the program’s distance-based award chart. These awards are also completely unaffected by the upcoming devaluation scheduled for later this month.
Korean Air can also get you three tickets to Hawaii (potentially). As a member of SkyTeam, you can use Korean SkyPass miles for round-trip flights on Delta from North America to Hawaii at just 25,000 miles per person (assuming you can find Level 1 availability). This isn’t distance-based, so a flight from the East Coast would require the same number of miles as one from the West Coast.
Korean also partners with Alaska Airlines, but you’ll need to burn 30,000 SkyPass miles for each economy award from the U.S. and Canada to Hawaii.
Other transfer options that would get you two tickets from other destinations in the U.S. include:
- Singapore Airlines for 40,000 miles per person (on United);
- Virgin Atlantic for 40,000 miles per person (on SkyTeam).
United is also a great transfer option for inter-island flights, as it partners with Hawaiian Airlines. Remember too that United awards to Hawaii are currently on sale; instead of 45,000 miles per person, you need just 36,000 miles.
2. Two nights in the Park Hyatt New York plus airfare or train tickets from several East Coast gateways. As the flagship property of the Park Hyatt brand, the New York location is a top-tier Category 7 property in the Hyatt Gold Passport program, requiring 30,000 points for a free night. TPG stayed there last year and had a terrific experience, so check out his review to see what makes this a great redemption.
To get to New York, you can transfer 18,000 points to British Airways for two round-trip coach flights on American or US Airways from any city within 650 miles (including Boston, Washington, Toronto, and Charlotte). You could also transfer points to Amtrak Guest Rewards. Round-trip coach tickets in the Northeast are just 8,000 points, giving you plenty of options for traveling to the Big Apple.
3. Five nights in a Category 4 or 5 Marriott property. Marriott may not be as “valuable” as Hyatt when it comes to transferring your points from Ultimate Rewards, but the program does give you the fifth night free on all award redemptions, and provides discounts of up to 5,000 points per night through PointSavers Rewards. You can even book these stays before you earn the points needed!
A five-night stay at one of the 517 worldwide Category 5 properties with PointSavers (or a “regular” five-night stay at one of the 676 Category 4 properties) costs 80,000 points. You may have to search hard for Category 5 PointSavers availability; one example I was able to find for next month is the J.W. Marriott Beijing for next month.
4. Airfare and 3 nights at Universal Studios Orlando for a family of four. This final option is relatively specific, but it shows the power you’d get from just one card. The Hyatt Place Orlando/Universal is a Category 2 property, requiring just 8,000 points for a free night. If you transfer 24,000 points from Ultimate Rewards, you’ll have 57,204 remaining.
Since transfers must be in increments of 1,000, you can transfer 57,000 to Southwest Rapid Rewards and then use those to book your flights. Southwest has a big presence at Orlando International Airport, with nonstop flights to over 40 destinations. Since you currently need to redeem 70 points to cover each dollar of a flight, this transfer will give you over $800 toward your family’s flights. That should be enough to cover at least 3 fares, and maybe 4 if prices are low.
As I said earlier, there’s an almost unlimited number of ways to redeem your Ultimate Rewards points. As you saw in the last example, opening one card can cover two of the biggest expenses on your next family vacation. Keep in mind too that this calculation may be a bit conservative:
- The calculation doesn’t include any online shopping portal bonuses.
- The calculation assumes that you’re the average consumer. If you typically spend more in some of the bonus categories each year (I definitely do at restaurants), then your point earnings will be even higher.
- The calculation assumes that you ONLY open one card. Other products (like the Ink Plus Business Card or Chase Freedom) can be opened and used right alongside the Sapphire Preferred for even more earning potential.
These items notwithstanding, I hope I’ve illustrated that one card (especially in the first year) can open up a wealth of redemption possibilities.
How would you redeem one year of Ultimate Rewards points from the Chase Sapphire Preferred?
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|