Should you use Pay Yourself Back with the Chase Sapphire Preferred?
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In May 2020 — when the travel industry barely had a pulse — Chase began offering the Pay Yourself Back program to its popular Chase Sapphire Preferred Card and Chase Sapphire Reserve credit cards. This feature allowed cardholders to redeem their Ultimate Rewards points towards statement credits to pay for select non-travel purchases.
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This offer was originally announced to last until September 2020, but it's now been extended multiple times and is currently scheduled to expire in September 2021. And when virtually no one was traveling, this option appeared to be a very attractive use of points. But with new travel reservations surging, it's now time to ask: should you still be using Pay Yourself Back with Sapphire Preferred?
How Pay Yourself Back works
Under this program, Sapphire Preferred cardholders can redeem their Ultimate Rewards points for purchases made within the previous 90 days from grocery stores, home improvement stores and dining, including restaurants, takeout and eligible delivery services. As with travel reservations made through Chase, Sapphire Preferred cardholders receive 25% more value, 1.25 cents per point, when they use their points this waes
And through the end of 2021, you can also use your points to pay for your annual fee or to make a contribution to a dozen select charities, including Habitat for Humanity, the NAACP Legal Defense and Educational Fund, the National Urban League, the United Negro College Fund, the American Red Cross and the United Way and more.
Another option is to use your points to fund a Lyft ride for someone to get vaccinated.
Related: Chase’s Pay Yourself Back feature gets even better with a new option
Times when should you use Pay Yourself Back
According to TPG's latest monthly valuations, Chase Ultimate Rewards points are worth 2.0 cents each, while the Pay Yourself Back feature only offers 1.25 cents in value for Sapphire Preferred cardmembers. But there are times where it may make sense to use the Pay Yourself Back feature.
When you aren't traveling internationally
There are several times when Pay with Points is a good use of your rewards. For example, some travelers like myself are flush with points and miles from all the trips they've had to cancel in the last year. That combined with all of the numerous ways there have been to earn bonus points during COVID, and you may have plenty of points, with very limited award travel needs. If this sounds like you, then you could have a good reason to use the Pay Yourself Back option and receive 1.25 cents in value per point redeemed.
There are simply some times when cash is king, and points and miles are not as important to you, especially when you're not traveling much. That's why TPG executive editor Scott Mayerowitz decided last year to use Pay Yourself Back to cash in 322,121 Ultimate Rewards points for $4,831.82 in statement credits to cover meals and groceries.
When you aren't redeeming your points for high values
The TPG valuation of 2.0 cents per point is based on using your points to get the most value out of them. These high-value redemptions typically include transferring points to airline miles in order to book premium class international travel. But with international travel severely limited, that might night be an option for some cardholders for some time.
When it comes to hotels, Ultimate Rewards points are very valuable when transferred to the World of Hyatt program and redeemed for award nights. But when rates are generously low, it doesn't make sense to redeem your points to stay there if you aren't even getting 1.25 cents in value per point. Likewise, you may not even get 1.25 cents in value from your airline miles when you can find some great airfare deals compared to the least expensive alternative.
When you can earn valuable points from your purchase, and credit towards elite status
Sometimes, it makes more sense to pay for your travel with the dollars you save on other purchases using Pay Yourself back. For example, if you pay for your travel directly with a travel provider using cash (not points), then you'll earn points and miles on your credit card and always be eligible to earn credit towards elite status. When you transfer your Ultimate Rewards points to airline miles, you don't earn either (although Hyatt credits award night stays towards elite status). With Pay Yourself Back, you can redeem points for dollars used to pay for other purchases, and use those dollars to pay directly for your travel reservations, and reap the benefits of doing so.
Related: Chase Sapphire cards make it easier to use annual travel credit and points into 2021
When you should avoid using Pay Yourself Back
As of this writing, 58% of US adults have had at least one shot of a COVID vaccine, and there are clear signs of a travel surge on the horizon for this summer. If you're eager to resume traveling, and you have a nice balance of Chase Ultimate Rewards points, then now is not the time to cash them in for just 1.25 cents per point. If you're able to redeem your rewards for award flights and hotel stays while realizing significantly more than 1.25 cents per point in value, then your rewards are most valuable when transferred to travel partners and used to book valuable award flights and hotel stays.
Related: How to maximize your Chase Ultimate Rewards points
It's great that Chase has responded to the COVID crisis by introducing its Pay Yourself Back feature, but it's not the best use of points for everyone. By examining your upcoming travel plans and your current balance of points, you can redeem your points in a way that makes the most sense for your needs.