Want to travel the world for free? There are a gazillion resources online that will pump you full of information about how to maximize credit card points in order to do just that. If you’re willing to dedicate loads of time reading, applying, spending and tracking, you’ll be able to rack up so many points you won’t know what to do with them all.
I’ll admit, the idea does sound enticing, and there are countless stories out there of everyday folks taking full advantage of what the credit cards are offering.
I, however, am not one of those folks.
Credit cards, when used responsibly (and that is a very important part of all this!), can give you something in return for your everyday spending. When you think of getting 1% or 2% cash back on most of your purchases, you’re ultimately cutting your expenses by that amount. Pretty neat concept.
Mrs. Benjamins and myself have been aiming to take a dream vacation to some faraway land, flying in first class, staying in luxury hotels; a trip we would never shell out the cash for. We have decided that using Chase’s Ultimate Rewards will be the easiest way to accomplish this.
We’ve employed a strategy using multiple Chase cards, some free, some not, in order to maximize our point accrual. Since Samuel L Jackson asked, “what’s in your wallet?”, I’ll go ahead and answer.
What are your free options with Chase?
Chase has a number of no-fee card options that will let you accrue cash back that you can use to apply to a statement credit, gift card purchase or a check in the mail. Points accrue for every dollar spent and be redeemed for one cent per point.
- The Chase Freedom card gives you 1 point per dollar and 5 points per dollar in different categories each quarter (up to $1500 in purchases). These vary from grocery stores to gas stations to Amazon, etc.
(Click here to sign up and receive a $150 bonus. Note: I’ll get a small bonus for referring you. It’s a win-win!)
- The Chase Freedom Unlimited gives you 1.5 points per dollar you spend at all times on every purchase.
Using these two cards along are a nice way to earn a few bucks back on your everyday purchases. However, if you’re wanting to save for travel, you’ll also need one of their premium cards.
What are the Chase premium cards?
There are cards for both business and personal, but I’m going shy away from discussing the business cards and focus on personal cards, which is applicable to me, and I assume, most of the every day users.
Chase has two premium cards, the Sapphire Preferred and the Sapphire Reserve.
- The Sapphire Preferred comes with a $95 annual fee and will earn 2x points on travel and dining and points can be redeemed for travel in the Chase portal, where they’ll be worth 25% more than if you opted for cash back.
- The Sapphire Reserve is the top-of-the-line offering from Chase and comes with a hefty $450 annual fee. It will earn you 3x points on travel and dining and comes with a slew of other perks (like an annual travel credit of $300, essentially making the annual fee a mere $150). Points can be redeemed for travel in the Chase portal, where they’ll be worth 50% more than if you opted for cash back.
(Click here to learn more or sign up and receive a 50k point bonus. Note: I’ll get a small bonus for referring you. It’s a win-win!)
The real value from having either of these cards is that you can transfer your Ultimate Rewards points to a number of airline and hotel loyalty programs. This makes luxury, international travel within reach for average consumers!
Which premium card is right for you?
Not everyone likes the idea of paying an annual fee for a credit card, so you have to determine if your spending habits make it worth the cost. Even if you’re not hoarding points like we are, saving for your dream vacation, one of these two cards might still be worth the cost.
The Sapphire Preferred math
The Sapphire Preferred card has an annual fee of $95 and earns you 2x points on travel and dining. For this to pay for itself, you’d have to spend enough in those two categories to cover your costs. Since you can redeem your points for a minimum of one cent cash back, you’d need to 9,500 extra points to cover the annual fee.
For every hundred dollars you spend traveling or dining, you’d earn 200 points with the Sapphire Preferred vs. 150 points using the free Chase Freedom Unlimited. To earn those 9,500 extra points, you’d need to spend $19,000 on travel and dining in one year. Ouch!
$19,000 x 2 = 38,000 points
$19,000 x 1.5 = 28,500 points
Difference = 9,500 points
If you’re using your points to purchase travel through the Chase portal, you’d only need about 6,300 extra points, lowering your spending threshold to about $12,666. Still a lot more than most of us probably spend.
The Sapphire Reserve math
The Sapphire Reserve has an annual fee of $450, but comes with $300 in travel credit each calendar year, essentially making the annual fee $150. There are other perks as well, but the value of which might be different for different people. It comes with airport lounge access, for example. While nice, this isn’t something I would normally pay for, so I don’t attach a dollar value to it.
To pay for itself, you’d need to earn an extra 15,000 points in the dining and travel categories to cover the $150 annual fee. Quite a bit more than the Preferred.
However, for every hundred dollars you spend traveling or dining, you’d earn 300 points with the Sapphire Reserve vs. 150 points using the free Chase Freedom Unlimited. To earn those 15,000 extra points, you’d only need to spend $10,000 on travel and dining in one year.
$10,000 x 3 = 30,000 points
$10,000 x 1.5 = 15,000 points
If you’re using your points to purchase travel through the Chase portal, you’d only need about 10,000 extra points, lowering your spending threshold to about $6,666.
While the Reserve has a higher annual fee, you’ll need to spend less to recoup the cost, so don’t let that $450 price tag scare you off.
What’s in your wallet?
How do they all work together? Receiving either of the Sapphire cards gives you access to the Chase travel portal as well as the option to transfer your points to participating airlines and hotels. You’ll also receive bonus points on travel and dining. Including the Freedom card in your wallet gives you 5x points in their quarterly categories. Adding in the Freedom Unlimited card will give you 1.5x points on all other spending.
These points never expire so long as your account is open and in good standing.
How do you use your points?
There are some great resources to help you maximize using your points, first and foremost being The Points Guy. You’ll find that first or business class flights from the US to Europe can be had for under 100,000 points. First class suite on Emirates that usually runs some $19,000? Yep, that’s within reach too! All you need are some ideas, set a goal, and watch your point balance grow.
Lastly, a warning
Credit cards can be a dangerous game. It can cause some of us to spend more than we should. Using credit card points to enhance your life is only a worthwhile endeavor if you pay your balance off each month. Paying interest to the big banks is not a fair trade off for what you’ll get in return. Spend no more than you would otherwise and pay off your balance.
Please remember, too, that every time you swipe that card, the merchant is eating the cost. When shopping at your favorite local mom and pop shops, cash is king. Keep it local.