TPG credit card reader question: Do cash back cards offer perks like lounge access?
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Editor’s note: This article is part of our weekly column to answer your credit card questions. If you would like to ask us a question, tweet us at @thepointsguy, message us on Facebook or email us at email@example.com.
Finding the right mix of credit cards that best suits your lifestyle and needs can be complicated. While sticking with a certain family of cards can be helpful for beginners as they learn rack up points, eventually, it’s a good idea to start diversifying your rewards portfolio.
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Hi! Long-time reader, first-time emailer. For the longest time, I’ve paid for our household expenses and small business expenses with separate Chase Southwest Cards. Southwest is the largest airline at our airport, and I travel a lot for business. The companion pass really made it a great value for our family of four to travel together. We’ve gotten to the point where my business generates more points than we can use. I’d like to get a card that offers perks, such as lounge access when flying, etc. Is there a cash-back card that offers access to stuff like that? Or am I only going to find it with a travel rewards card?Collin S
There is a lot of value in having cash-back cards in your wallet — whether your goal is to save money on travel or on everyday expenses. But unfortunately, cash-back cards rarely offer perks like lounge access or complimentary elite status. Those benefits are generally saved for more premium travel-focused cards that charge higher annual fees.
However, there are travel credit cards that do come with these perks that allow you to redeem points as a statement credit, making them function essentially like a cash back card. The best choice in this scenario? The Chase Sapphire Reserve.
The Chase Sapphire Reserve is one of the best travel cards out there even though it charges a steep $550 annual fee. Still, you’re getting an up to $300 annual travel credit, Priority Pass lounge access, top-tier travel protections, up to $100 in application fee credits for Global Entry/TSA PreCheck and more.
The card earns 10x on Lyft, 3x on dining and travel and 1x on everything else. We recommend using your Ultimate Rewards points for travel most of the time since you can get a 50% redemption bonus when you book through the portal and transferring to partners can sometimes mean even more value. But you can also redeem points as cash back or through the Pay Yourself Back program.
When you redeem your Ultimate Rewards points for cash back, you’ll get one cent in value from each point — the same redemption rate as standard cash-back credit cards. Cash back can be redeemed as a statement credit or deposited into a connected bank account.
The Pay Yourself Back program allows you to redeem points at the same 50% redemption bonus as you get through the travel portal for eligible non-travel expenses up to 90 days after purchase. Through Sept. 30, 2021, eligible purchases include dining, groceries and home improvement stores.
Chase also lists Southwest as a transfer partner, which means you could easily transfer points to Southwest if you ever need to top off your Rapid Rewards account.
The Chase Sapphire Reserve is a great option to pair with Southwest credit cards that provide an avenue to redeem points for cash back while also offering the perks like lounge access.
Related: Chase Sapphire Reserve review
Pairing it with the Chase Freedom Unlimited
Another benefit to Chase credit cards is that you can pair them and pool points between your accounts.
The Chase Freedom Unlimited earns 5x on travel booked through the Chase portal, 3x on dining and drugstores and 1.5x on everything else. Those points are essentially cash back because you only get 1 cent of value from them. Still, if you also have the Chase Sapphire Reserve, you can pool your points into your Reserve account to use them as full-fledged Ultimate Rewards points (which means they’d be eligible for the 50% redemption bonus when using Pay Yourself Back).
The Chase Freedom Unlimited is a great card for everyday spending because you get 1.5x on everything. And it doesn’t charge an annual fee, so it doesn’t cost anything extra to have in your wallet.
You often hear redemption options for travel credit cards as limited to just airfare, hotels and miscellaneous travel expenses.
But the truth is that you can oftentimes redeem your points for more than just travel with these cards. While you may get the most value by redeeming for travel, if your family finds the most use in redeeming points at a fixed value for cash back, then that’s still a solid redemption in my book.
Just keep in mind with Chase credit cards that they do adhere to the 5/24 rule. If you’ve applied for five or more credit cards in the past two years across issuers, you’ll likely be denied a new Chase credit card.
Related: How to calculate your 5/24 standing
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