Consult with Cards: Shifting from cash back to travel credit cards
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Editor’s note: Consult with Cards is a weekly series where the TPG cards team helps our readers decide what their next card should be. If you would like to be a part of this series and receive a personalized consultation, email us.
Whether you’re a newbie or an expert in the points and miles game, there are always opportunities to improve and find new credit cards that fit into your award travel strategy.
TPG reader Rebecca Grekin takes about a dozen trips per year and has recently learned how to maximize her travels, shifting away from cash-back cards and honing in on travel credit cards — and she wants our help figuring out what her next card should be.
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Rebecca is currently 24 and is a PhD student working on sustainability research in the Bay Area.
“I travel quite often compared to my peers, about 10-15 times a year,” said Rebecca. “Mostly with friends or to see family in Brazil and Chile. I did my undergrad on the East Coast and went to Europe a lot. Now that I’m on the West Coast, I’m hoping to visit Asia.”
Current credit cards
Rebecca has just recently gotten into the points world, opening the Chase Sapphire Preferred Card for its historically best 100,000-point sign-up bonus.
That said, here are the three cards Rebecca has opened in the last 24 months:
|Card||Welcome bonus||Rewards rate||Annual fee|
|Chase Sapphire Preferred Card||Earn 100,000 bonus points after spending $4,000 or more in the first three months of account opening.||5x on Lyft (until March 2022) and travel purchased through Chase Ultimate Rewards, 3x on dining, select streaming services, online grocery store purchases, 2x on all other travel purchases, and 1x on all other purchases.||$95|
|Blue Cash Preferred® Card from American Express||Earn a $300 statement credit after you spend $3,000 in purchases on your new card within the first six months of card membership.||6% on U.S. supermarkets (up to $6,000 per year) and select U.S. streaming service subscriptions, 3% on transit and at U.S. gas stations, and 1% on all other eligible purchases.
Cash back is received in the form of Reward Dollars that can be redeemed for statement credits.
|$0 intro annual fee for the first year, then $ 95 (rates and fees)|
|Costco Anywhere Visa® Card by Citi||N/A.||4% on eligible gas (for the first $7,000 per year, then 1%), 3% on restaurants and eligible travel, 2% on Costco purchases, and 1% on all other eligible purchases.||$0 (must have a Costco membership to apply)|
Besides this, the only card she has is an entry level Wells Fargo credit card that she opened as an undergraduate student and only keeps open to preserve her credit history.
Card recommendations for Rebecca
Before learning about the power of credit cards, Rebecca would focus on finding great cash deals for her and her group of friends. Now, she’s excited to do the same with her credit card points.
As Rebecca has two open slots in her 5/24 status, a no-brainer card to add is one of Chase’s no-annual-fee offerings: either the Chase Freedom Unlimited or the Chase Freedom Flex. Or, she could certainly apply for both — though it’s important to think about if that’s the best use of these final two slots.
First, we’ll talk about the Chase Freedom Unlimited. Even though it’s a cash-back card, it earns rewards in the form of Ultimate Rewards points that can then be transferred to her Sapphire Preferred to use for travel. The Freedom Unlimited is also a popular option since it offers at least 1.5% (or 1.5x) on all purchases:
- Enjoy 5% cash back on travel purchased through Chase Ultimate Rewards®, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more;
- 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service
- 1.5% on all other purchases
This is our initial recommendation to Rebecca, as she doesn’t currently own a flat-rate rewards card yet. It pairs well with the Sapphire Preferred, as she’ll earn 1.5x on non-bonus purchases. There’s a sign-up bonus of $200 after spending $500 on purchases in the first three months of account opening, and the ability to earn 5%/5x on grocery store purchases, not including Target or Walmart on the first $12,000 spent in the first year.
That $200 sign-up bonus equates to 20,000 points, which TPG values at $400.
Eventually, Rebecca can apply for the Chase Freedom Flex for the opportunity to earn 5%/5x on rotating purchases on the first $1,500 each quarter you activate. While this card can take a bit of legwork, there are useful categories that can truly be maximized. For example, Q4 of 2021 offers 5% on Amazon.com, Target.com, and Walmart.com purchases, handy for everyday purchases or if you want to get ahead of presents this holiday season.
In addition, the benefit of opening the Chase Freedom Flex is for the sign-up bonus — which is the same as on the Freedom Unlimited. Attaining both sign-up bonuses offers you 40,000 bonus points without an annual fee. Both cards play well into the Chase Trifecta strategy that many award travelers use to help them accrue the most Ultimate Rewards points possible. We’ve also published the 10 best ways to use 100,000 Ultimate Rewards points, whether Rebecca wants a dream first class redemption to Asia or wants to take multiple economy trips to Hawaii or Europe.
Since Rebecca flies United often and is currently a Silver Elite member, she could also open a United cobranded credit card to fast-track her to higher elite status levels. Our recommendation? The United Quest Card.
The $250 annual fee is definitely considerable, but there are plenty of ways to make the card work for you. For starters, there’s an 70,000-mile sign-up bonus after spending $4,000 in the first three months of account opening. Since we peg United miles at 1.3 cents each, Rebecca is looking at $791 in total value. The card will also make up for the annual fee from the ongoing benefits:
- Up to $125 in annual statement credit for United purchases charged to the United Quest card, from United airline tickets to in-flight snacks and drinks.
- Up to two 5,000-mile anniversary award flight credits after taking a United award flight — worth $130 according to TPG’s valuations.
- Up to $100 Global Entry or TSA Precheck reimbursement, every four years.
- 3x on United Airlines purchases (after the $125 credit), 2x on other travel, dining, and select streaming services, 1x on all other eligible purchases.
- 25% back on inflight purchases with your United Quest card.
The United Quest also comes with two checked bags free, although this won’t exceptionally be useful as this benefit already comes with Silver Elite status.
Plus, this card will help Rebecca with her elite status goals. She’ll earn 500 Premier qualifying points (PQP) for every $12,000 in purchases in a calendar year — for up to a maximum of 3,000 PQPs. Combined with flying, the additional PQPs from spending on the Quest card could help Rebecca earn United Gold status, which will get her upgrades that clear 48 hours before departure, Star Alliance Gold status that offers lounge access, complimentary Marriott Gold elite status, and so much more.
Just note that the Quest is also a Chase-issued card, so Rebecca will have to apply while she’s still under 5/24.
Since Rebecca already has her preferred travel brands nailed down (Hyatt and United) and has recently opened a Chase Sapphire Preferred, the goal now is to keep earning transferable points and improve her elite status standing when possible. Fortunately, these aforementioned cards play well into her strategy without adding too many new annual fees into the mix.
For rates and fees of the Amex Blue Cash Preferred, click here
Featured photo by Witthaya Prasongsin for Getty Images.
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