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With so many great travel rewards cards on the market, it can be difficult to find a starting place when you’re new to the hobby. TPG Points & Miles Editor Sarah Silbert takes a look at two Chase products that make a powerful duo for those getting started with earning and redeeming transferable points.
If you’re just getting started with earning points and miles, you’ll quickly find that transferable points are incredibly valuable for earning and redeeming with a wide variety of travel partners. American Express, Chase, Citi and Starwood Preferred Guest all offer transferable point programs, but today let’s focus on Ultimate Reward, since there’s an exciting new product in Chase’s lineup.
Ultimate Rewards points routinely rank highly in TPG’s monthly valuations, currently holding steady at 2.1 cents apiece. The only transferable currency to top that is SPG’s Starpoint (with a valuation of 2.5 cents), but the straightforwardness of Chase’s Ultimate Rewards could make this program a better place to start for points and miles newbies. Plus, with the recently introduced Chase Freedom Unlimited Card offering a solid return on everyday spending, learning to maximize your UR points earnings can definitely come in handy. Read on for details on why this card and the Chase Sapphire Preferred make a powerful duo that can jump-start your award travel.
Why These Two Cards?
I’ll break down the full benefits of each product below, but here’s a quick explanation of why you’ll want to start with these two cards in particular. The number one reason is that Chase limits the number of credit cards you can successfully apply for with its “5/24 rule” — basically, if you’ve opened five or more accounts in the past 24 months, it’s very unlikely you’ll be approved for several of the most popular cards in Chase’s portfolio, including Freedom Unlimited and Sapphire Preferred.
If you’re just starting out, though, this likely won’t be a problem. Still, it’s best to cover the most important bases first. When it comes to Chase cards, Sapphire Preferred should probably be your first application, since it earns you a very valuable 2 points per dollar on dining purchases and a wide variety of travel spending — equal to a 4.2% return based on TPG’s valuations. It also allows you to transfer points to a variety of travel partners.
As for the Chase Freedom Unlimited card, it makes a good second application because of the high return you’ll get on everyday, non-bonus-category spending. The card offers an uncapped 1.5% cash back on all purchases, but as I’ll discuss that can equate to 1.5x Ultimate Rewards points per dollar — a great earning rate for a card with no annual fee.
Chase announced this no-fee cash-back card last month and it’s gained plenty of attention for good reason: It earns a flat, uncapped 1.5% back on all purchases. Here’s a full rundown of the product details.
Current Bonus: $150 back after you spend $500 in the first three months of account opening.
Benefits: Unlimited 1.5% cash back on every purchase. 0% intro APR on purchases and balance transfers for 15 months (after that 15.49%-24.24% Variable APR applies).
Annual fee: $0
Reasons to get it: The ability to get 1.5 cents back for every dollar spent is nothing to sneeze at, but other cash-back cards like the Citi Double Cash get you a better return 1% cash back per dollar spent, and then offers another 1% cash back as you pay down your balance. What really makes this card worthy of a slot in your wallet is the fact that you can redeem your cash back as Ultimate Rewards points, which get you a better return than 1.5 cents per dollar spent since TPG rates them at 2.1 cents apiece. That means 1.5% cash back becomes 1.5x points on all purchases — a return of 3.15%!
Current bonus: 50,000 Ultimate Rewards points after you spend $4,000 in the first three months. Earn another 5,000 points when you add an authorized user and they make a purchase in the first three months.
Benefits: 2 points per dollar on travel and dining, no foreign transaction fees, primary auto rental insurance, trip cancellation coverage and the ability to transfer to 10 travel partners, including British Airways, Hyatt, Marriott, Southwest and United.
Annual fee: $95 (waived the first year)
Reasons to get it: Earn 2 points per dollar on all dining purchases and 2 points per dollar on all travel spending — equal to a return of 4.2%. As TPG explained, the great thing is that a wide variety of items fall within the travel category — from airline purchases, taxis and tolls to parking lots and travel agencies. So even if your day-to-day travel is limited to transportation, you can rack up bonus Ultimate Rewards points pretty quickly. As for using those points, you have 10 travel partners to choose from, and you can also redeem UR points directly for airfare at a rate of 1.25 cents apiece.
Using the Cards Together
How does this work, you ask? To redeem rewards earned with the Chase Freedom Unlimited — or its sibling, the original no-fee Chase Freedom Card — as points that can be transferred to partners, you need to hold a higher-tier card like the Chase Sapphire Preferred that earns Ultimate Rewards points outright. (Another option is the Ink Plus Business Card, which can be a great alternative — or addition — for small business owners.)
Essentially, you can’t translate your cash back into Ultimate Rewards points unless you have one of these UR-earning cards, both of which carry a $95 annual fee (waived the first year for the Chase Sapphire Preferred). So unless you simply want cash back — in which case you should check out some other cards with higher returns — you should really be pairing the Chase Freedom Unlimited with a card that unlocks Ultimate Rewards redemptions. For more information on how this setup works, see Jason Steele’s post on why the Chase Freedom isn’t just another cash-back card.
Speaking of the Chase Freedom, you may be wondering how it fits into the picture — especially given that it’s the Freedom Unlimited Card’s predecessor and another no-fee cash-back option. This card is particularly valuable due to its rotating quarterly bonus categories, since you can earn 5% cash back (or 5x points) on up to $1,500 in combined purchases every three months. It’s definitely worth applying for the card and maximizing these bonus categories if you can, but considering Chase’s restrictions on applications and the Freedom Unlimited’s higher earning rate for everyday spending, it’s not necessarily as high of a priority.
Simply holding and using these two cards puts you in a good position for earning and redeeming valuable travel rewards, but using some strategy will up your game even more. For starters, all travel and dining purchases should go on the Chase Sapphire Preferred or another card that offers bonus points for this category. Since the Freedom Unlimited doesn’t offer any bonus categories, it’s your best bet for everyday spending that wouldn’t otherwise earn you more rewards with another card. The TPG To Go app can be a great resource here, letting you know which card to use for any given transaction. And when it comes time to redeem your hard-earned points, see this guide to getting the maximum value out of your awards.
The recently introduced Chase Freedom Unlimited Card and the Chase Sapphire Preferred Card make a great UR points-earning team, since the former offers a great return on everyday spending and the latter gets you 2x rewards on dining/travel and opens up some great transfer partner options. If you’re just getting started in this hobby, these two cards should be your top priority when it comes to card applications — just make sure to pay attention to the issuer’s 5/24 rule to optimize your chances for getting approved.
What are your favorite cards for getting started with points and miles?
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