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For many newbies in the points and miles world, getting a grip on the ins and outs of the hobby can be challenging (to say the least). Your best bet is to start simple with one of the most important decisions you can make: selecting a travel rewards credit card. While you may not be ready to carry an arsenal of cards in your wallet, choosing a lucrative one to use exclusively can be very rewarding. In this post I’ll look at how easy it is to earn rewards by opening and using just a single card for one year.
In previous posts, I’ve looked at a variety of cards like the Chase Sapphire Reserve, the SPG American Express, the Southwest Premier Card, the Amex EveryDay Preferred Card and the Alaska Visa Card. Today I’ll update one of the first posts I did by analyzing how rewarding the Chase Sapphire Preferred Card can be in your first year of cardmembership.
Sign-Up Bonus and Benefits
Let’s start with a quick overview of the card and why it’s such a solid product, especially for first-time cardholders. This card currently offers 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 after 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 at a rate of 1.25 cents apiece or can be transferred to a variety of airline and hotel partners, including Hyatt, British Airways and Southwest, giving you some great ways to make the most of 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 the most recent year (2016) to estimate what an “average” household would spend (and thus earn) on the Chase Sapphire Preferred.
In doing so, I utilized the following assumptions:
- Only the “Other lodging” category under “Shelter” can easily be paid with a credit card (since you’ll pay a fee for paying most mortgage and rent payments with credit cards).
- The “Vehicle purchases” category under “Transportation” can’t be paid with a credit card, but all other transportation expenses can.
- 50% of the “Healthcare” category consists of premiums via payroll deductions and thus can’t be paid with a credit card.
- All “Personal insurance and pensions” expenditures can’t be paid with a credit card.
- All other expenses (including “Entertainment” and “Education”) can 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:
|Food at home||$4,049||1 point/$||4,049|
|Food away from home||$3,154||2 points/$||6,308|
|Alcoholic beverages||$484||1 point/$||484|
|Housing (other lodging)||$798||2 points/$||1,596|
|Utilities, fuels and public services||$3,884||1 point/$||3,884|
|Household operations||$1,384||1 point/$||1,384|
|Housekeeping supplies||$660||1 point/$||660|
|Household furnishings and equipment||$1,829||1 point/$||1,829|
|Apparel and services||$1,803||1 point/$||1,803|
|Transportation (gasoline)||$1,909||1 point/$||1,909|
|Other vehicle expenses||$2,884||1 point/$||2,884|
|Public and other transportation||$623||2 points/$||1,246|
|All other expenses||$6,363||1 point/$||6,363|
As you can see, the “average” American consumer would earn over 91,000 Ultimate Rewards points in just the first year of carrying the card in your wallet. That’s quite a haul!
What does this get you?
Of course, earning points is one thing, but knowing how to redeem them for maximum value is a completely different story. Fortunately, the Ultimate Rewards program has a variety of valuable redemptions, most of which involve transferring points to the program’s 13 airline and hotel partners.
Here’s a sample of what you can get from one year of using the Chase Sapphire Preferred:
1. Up to Three Round-Trip Tickets to Hawaii
Planning a trip using points and miles to the Aloha State isn’t always the easiest goal in this hobby. However, you have a couple of options at your disposal through the Ultimate Rewards program. My personal favorite is for West Coast residents. By transferring points to British Airways, you can take advantage of the carrier’s distance-based award chart to book tickets from several gateways to Hawaii for just 25,000 Avios per person, including Los Angeles (LAX) and Phoenix (PHX) on American or San Diego (SAN), Oakland (OAK), Portland (PDX) and Seattle (SEA) on Alaska. The year’s worth of points from the Sapphire Preferred would get you three round-trip tickets, and you’d even have over 16,000 Ultimate Rewards points leftover!
For those readers on the East Coast, you also have options to redeem this haul of points for up to three tickets to Hawaii by transferring to Korean Air SkyPass or Flying Blue, the loyalty program of Air France and KLM. Since the carriers are a part of SkyTeam, you can redeem their miles on Delta flights, assuming you can find availability. Korean has the slightly better rate at 25,000 miles per person for a round-trip economy award ticket, though the carrier’s booking process can be a bit cumbersome. Flying Blue allows these awards to be booked online, though you’ll need to redeem 30,000 miles for the benefit.
Finally, if you’re limited to United-operated flights to Hawaii, you can transfer your Ultimate Rewards points to Singapore KrisFlyer. However, these round-trip economy tickets will set you back 35,000 miles apiece, which means that you’d only have enough points to cover two of them after a year of using the Sapphire Preferred.
Of course, you could also book just one or two tickets and have money left over to cover your hotel stay through the next option…
2. Up to 18 Free Nights in Hyatt Properties
One of my favorite ways to use Ultimate Rewards points is transferring them to World of Hyatt. The program has very reasonable redemption rates that start at just 5,000 points per night for a Category 1 property, though you can get some extreme value by using points at top-tier locations like the Park Hyatt Zurich for just 30,000 points per night. Here’s a breakdown of how many nights you could get across the program’s property spectrum:
- Category 1 (5,000 points/night): 18 nights
- Category 2 (8,000 points/night): 11 nights
- Category 3 (12,000 points/night): 7 nights
- Category 4 (15,000 points/night): 6 nights
- Category 5 (20,000 points/night): 4 nights
- Category 6 (25,000 points/night): 3 nights
- Category 7 (30,000 points/night): 3 nights
I’m particularly intrigued by the option to book a week-long stay at a Category 4 property like the Andaz Peninsula Papagayo Resort in Costa Rica with a year’s worth of points from the Ink Business Preferred. A quick search of dates for this spring shows some rates at over $500 per night, giving you over $3,500 of value. Remember too that this doesn’t even consider the program’s Cash + Points option, so if you’re willing to spend some additional money out of pocket for your stays, you can extend the value of these earnings even further.
3. Up to 20 Short-Haul One-Way Flights
As noted above, one of the best aspects of the British Airways Executive Club program is the distance-based award chart it uses. On short-haul flights of 650 miles or less, you’ll need just 4,500 Avios for a one-way ticket (or 7,500 Avios if the flight is from, to or within North America). This means that you can get up to 20 one-way flights that cover these short distances. Alternatively, you could expand your search to flights that are 1,151 miles or less and snag 12 of these one-way award tickets through the Executive Club program.
Since this is a great option for flights into (or out of) Oneworld hubs, let’s take a look at a sample of how wide this will go across a few key cities in the Oneworld network. The following maps show the states/countries within 1,151 miles of the given airport, thus requiring just 7,500 Avios for one-way flights:
American’s hub in Miami (MIA):
British Airways’ hub in London-Heathrow (LHR):
American’s hub in Chicago-O’Hare (ORD):
As you can see, you have a lot of options that fall within this range.
4. Airfare and Four Nights at Universal Studios for a Family of Four
This final option is very specific but goes to show that if you play your cards right (pun intended), you can actually unlock an “all-inclusive” vacation with enough points to cover both award flights and free hotel stays. The Hyatt Place Orlando/Universal is a Category 2 property in the World of Hyatt program, requiring just 8,000 points for a free night. A four-night stay would thus require 32,000 points, leaving you 59,701 Ultimate Rewards points in your account.
For flights, you have a couple of different options. The first carrier to investigate would be Southwest, which offers extensive service into Orlando (MCO). Since Southwest uses a revenue-based approach to award tickets, you’ll want to find an inexpensive itinerary for your family. Fortunately, booking far in advance certainly helps. After just a few minutes of searching, I came across this itinerary from Atlanta (ATL) that fits the bill:
At the time of writing, these flights would cost just 56,412 points total for four passengers.
Here’s another itinerary over the same dates from Baltimore-Washington (BWI):
This one is currently priced at 56,192 points for four passengers.
The Ultimate Rewards program is typically viewed as one of the most lucrative ones out there, thanks in large part to its fantastic transfer partners. The Chase Sapphire Preferred Card has been around for quite some time, but as you can see from above, you can unlock some terrific value by opening and using the card exclusively for just one year.
Keep in mind too that the above calculation may even be a bit too conservative:
- The calculation assumes that you’re spending what an average consumer would. If you typically spend more in a year or have more purchases in different bonus categories, then your earnings will be even higher.
- The calculation assumes that you don’t make any purchases through an online shopping portal. The Ultimate Rewards shopping portal allows you to earn bonus points at close to 300 online retailers, a nice way to boost your earnings even more.
- The calculation assumes that you only open one card. There are many others that will earn you bonus Ultimate Rewards points in certain categories, including the Chase Freedom Unlimited (1.5 points per dollar spent everywhere) or the Ink Business Cash Credit Card (5x points at office supply stores and on telecommunication purchases). You could even consider a card outside of Ultimate Rewards, like the IHG Rewards Club Select Credit Card or the Marriott Rewards Premier Credit Card. These will unlock additional perks and earning opportunities to extend your travel options even more.
Regardless of these last few details, I hope this post has demonstrated just how rewarding a single travel rewards credit card can be, especially in the first year.
For more information on the Chase Sapphire Preferred Card, be sure to check out the following posts:
- 5 Reasons Chase Sapphire Preferred Should Be Your First Card
- Credit Card Review: Chase Sapphire Preferred
- Why Chase Sapphire Preferred and Freedom Unlimited are the Perfect Beginner Combo
- 5 Reasons to Consider the Chase Sapphire Preferred Over the Sapphire Reserve
This cash back card has a focus on dining and entertainment where you can earn unlimited 4% cash back in those spending categories. You can also earn 2% cash back at grocery stores and 1% cash back on all other purchases.
- Earn a one-time $500 cash bonus after you spend $3000 on purchases within the first 3 months from account opening
- Earn unlimited 4% cash back on dining and entertainment, 2% at grocery stores and 1% on all other purchases
- No rotating categories or sign-ups needed to earn cash rewards; plus cash back won't expire for the life of the account and there's no limit to how much you can earn
- No foreign transaction fees
- Access to premium experiences in dining, entertainment and more
- $0 intro annual fee for the first year, $95 after that