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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 continue my series looking at how easy it is to earn rewards by opening and using even a single card for one year.
In previous posts, I’ve looked at the the Citi Hilton HHonors Reserve Card, the Chase Ink Plus Business Card, the Citi ThankYou Premier Card, the Wyndham Rewards Visa Card, the Marriott Rewards Premier Card, the SPG American Express, the Southwest Premier Card, the Amex EveryDay Preferred Card, the Alaska Visa Card and the TD Aeroplan Visa Card. Today, I’ll go back and do a refresh on my very first post of the series by looking at a revised analysis of one of my favorite cards out there: the Chase Sapphire Preferred.
Let’s start with a quick overview of the card and why it’s such a solid product. Just last month, Chase announced an increased 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 $1,155 based on TPG’s most recent valuations.
The card is quite valuable for everyday use, as you earn 2x points on all dining and travel expenses (including services like Uber), 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, giving you 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.
Recent reports indicate that now may be the best time to apply for the card, as applicants with multiple hard inquiries within the last 24 months have been having a hard time getting approved. The card is also losing the First Friday bonus of 3x points on dining purchases at the end of the year, and Chase recently made a minor change to Ultimate Rewards transfers (in addition to losing Amtrak as a transfer partner later this month). That being said, the Sapphire Preferred is still a terrific option as a starter card, and it happens to be the card that TPG swipes most frequently.
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||$2,625||2 points/$||
|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 91,073 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 90,000 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 is a dream for many, and 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 or 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 were completely unaffected by April’s devaluation.
Korean Air can also get you three tickets to Hawaii (potentially). Since the airline is 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 US and Canada to Hawaii.
Other transfer options that would get you two tickets from other destinations in the US include:
- Singapore Airlines for 35,000 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.
2. Three nights at a top-tier Category 7 Hyatt property — Hyatt Gold Passport is the Ultimate Rewards transfer partner that I utilize most frequently, as it’s a great way to top off my account for terrific redemptions like the Andaz Wall Street and Park Hyatt Zurich (review to come soon!). Hyatt currently has seven top-tier Category 7 properties, including luxurious hotels like the Park Hyatt Tokyo and Park Hyatt New York. A free night at these locations will set you back 30,000 Gold Passport points per night, so the sign-up bonus is enough to get you three free nights. I’ve seen nightly rates at these properties get near $1,000 per night during peak season, so this can be a terrific use of a year’s haul of Ultimate Rewards points.
If you do go the Hyatt route, you may want to consider adding the Hyatt Credit Card to your wallet as well. The current sign-up bonus is two free nights at any Hyatt property worldwide after you make $1,000 in purchases in the first three months after account opening. This can extend your stay to five nights, and the best upgrade I’ve ever received happened when I was a Platinum Gold Passport member (a benefit included on the card) visiting the Park Hyatt Paris during a whirlwind fifth-anniversary trip. Just be sure that the property at which you’re trying to redeem points follows the rules when it comes to the Gold Passport program’s blackout dates policies!
3. Ten short-haul flights on British Airways or its Oneworld partners — As I reference above, British Airways can be a very lucrative program thanks to its distance-based award chart, and one of the best values is for flights of 650 miles or less at just 4,500 Avios each way. Unfortunately, this option is being discontinued for flights to, from and within North America starting February 2, 2016, but you can still lock in these redemptions until then and use them in other regions as well. I recently redeemed Avios for short-haul flights within Europe, and availability tends to be fantastic. This is a great way to find flights into or out of Oneworld hubs.
4. First class on Singapore Airlines — One of the most luxurious redemptions for award travelers out there is Singapore Airlines first class. Since KrisFlyer is a 1:1 transfer partner of Ultimate Rewards, and since the program restricts first-class redemptions to members of its own frequent flyer program, this sign-up bonus is good for a one-way redemption in first class on a variety of routes:
- New York-JFK to Frankfurt (57,375 miles): TPG flew this route earlier this year, and though it’s a relatively short flight, it’s easily one of the most comfortable ways to get to or from Europe.
- Los Angeles to Tokyo-Narita (74,375 miles): TPG Contributor John Walton recently took this flight and believes it’s one of the best flights on which to redeem miles departing from the US (I’m inclined to agree, though I don’t have any first-hand experience).
- San Francisco to Seoul (74,375 miles): While this flight is operated by the carrier’s 777-300ER aircraft (without the renowned Suites Class), it’s still a great option.
The KrisFlyer program also gives you the option to waitlist for an award flight if saver inventory isn’t available at the time of booking, and there are many other credit cards that can help boost your account balance even more (like the Citi ThankYou Premier Card and the American Express Premier Rewards Gold Card). Note that flights from Singapore to Zone 11 or 12 on the KrisFlyer award chart will set you back 91,375 miles, so you’d be just a few purchases away from redemptions out of cities like Barcelona or Zurich.
For additional information on reserving these tickets, be sure to check out Eric Rosen’s post on How to Fly Singapore Airlines First Class for (Almost) Free.
5. Airfare and three nights at Universal Studios Orlando for a family of four —This final option is relatively specific, but it shows the power of earning just one credit-card sign-up bonus. 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 67,073 remaining.
Since transfers must be in increments of 1,000, you can transfer 67,000 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. Unfortunately, the program did undergo a devaluation in April that resulted in a more obscure pricing structure for award tickets. Jason Steele analyzed these changes shortly after they took effect and found that new redemption rates varied from 1.25 to 1.9 cents per point. This means that 67,000 points should get you anywhere from $837.50 to $1,273 worth of Southwest flights — as long as you book in advance (especially if you are visiting Orlando in season).
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?
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