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Pointers on Chase Ultimate Rewards

My favorite types of credit card rewards are those are transferable to airline and hotel points program. Of all the different rewards programs, Chase’s Ultimate Rewards is currently my favorite program in which to earn credit card miles and points. Ultimate Rewards points can be transferred to various airline and hotel programs, including valuable partners such as United Airlines, British Airways, and Hyatt. Each partner gets points transferred at a 1:1 ratio.

What you can do with these points:

United Airlines is a member of the Star Alliance, which includes US Airways, Air Canada, Lufthansa, SWISS, Asiana, ANA, Singapore, and Thai. United has great partners and doesn’t charge fuel surcharges, so my family uses them a lot for award tickets to India, which are just 80K roundtrip in coach, 120K in business, and 160K in first class. To put that in perspective, a coach ticket can cost around $1,800, while a business class ticket is 120,000 miles, meaning these miles are worth just about 1.5 cents each, yet also buy a much nicer experience in the air and on the ground. Even a coach ticket has miles worth 2.25 cents each for an equivalent product.

British Airways is a member of the OneWorld Alliance, and whose miles are powerful for domestic awards on American Airlines and intra-South America awards on LAN. British Airways charges fuel surcharges for flights to Europe, but not for flights in the Americas. This program is now distance-based, which means that it offers spectacular value for short flights. If you’re on the west coast, you can get to Hawaii on AA for 25K miles round-trip, cheaper than what AA charges. If you’re in NYC, you can head down to South Florida for just 15K miles round-trip, again cheaper than what AA charges. In February, 2012, I used 9000 Avios points to book a roundtrip on LAN between Lima and Cuzco in Peru; although only a few hundred miles, the flight would have otherwise cost me $357 roundtrip. That mean my points were worth 25 cents per mile. You can check the prices for various routes by using this calculator, built by the Wandering Aramean.

Hyatt has some fantastic points redemptions, such as 22000 points for a room at a Category 6 hotel, such as the Park Hyatt Vendome in Paris, which goes for $720/night. I studied abroad in Paris a few years ago, and really want to head back there. 22000 points for a 5-star hotel on Rue de la Paix sounds pretty amazing.

How to get these points:

So how do you earn Chase Ultimate Rewards points? Simple – get a Chase card! There are two Chase cards that participate in the full Ultimate Rewards program that allow you to transfer to valuable airline and hotel partners – the Chase Sapphire Preferred and the Chase Ink Bold Business Charge Card. There’s also the Chase Freedom, which I’ll explain a little bit later. Here’s an overview of the cards:

Sapphire Preferred – $95/year, waived first year. Current signup bonus of 40,000 points after $3000 spending in 3 months.

I got this card when it came out in early 2011 and offered a 50,000 point bonus. The bonus has since come down to 40,000 points, but I still believe this is a great card to have on hand. The benefits:

  • 2x earning on all Dining & Travel (pretty much anything that you can consider travel, except for gas).
  • 7% bonus points every calendar year (including the signup bonus), effectively making the 40000 bonus = 42800 points and 2x earnings equal to 2.14x.
  • No foreign transaction fees (other cards charge upwards of 3%).
  • Access to the Ultimate Rewards Shopping Portal, where you can earn tons of points for purchases you make anyway (such as 12 extra points per dollar for Groupon!).

Ink Bold – $95/year, waived first year. Current signup bonus of 50,000 points after $5000 spending in 3 months.

I actually think this is a better card than the Sapphire Preferred. However, it’s a business card and Chase does ask to see that you are applying for it for business reasons. If you run any sort of operation that can be considered a business, you could qualify for a business credit card.

  • 5x earning on all Office Supplies, Wireless & Landline Expenses, Cable & Satellite TV, up to $50,000 each year.
  • 2x earning on Gas and Hotels, up to $50,000 each year.
  • No foreign transaction fees.
  • Increased bonuses on several merchants at the Ultimate Rewards Shopping Portal. For example, OfficeMax.com offers an extra 1 UR point/$ with an Ink Bold than with the Sapphire Preferred, which is added on top of the 5x points you earn by using the Ink Bold at an Office Supply store!

Having either of these cards allows you to transfer Chase points to their transfer partners.

How to earn even more points:

Another lucrative card to have paired with either the Sapphire Preferred or the Ink Bold is the Chase Freedom card.

Chase Freedom – no annual fee. Current signup bonus of $250 cash back (25000 points) after $500 spending in 3 months.

This is a great card that I have added to my Sapphire Preferred. Its benefits:

  • 5x Quarterly Bonuses, for up to $1500 of spending (7500 points). Every quarter, Chase offers 5x points for different categories, such as Grocery + Movie Theaters (Q2 2012), Gas + Restaurants (Q3 2012), and Hotels + Airlines + Best Buy + Kohl’s (Q4 2012).
  • When combined with a Chase checking account, earn 10 points per transaction + 10% extra points on the base spending. This is great for small purchases: if I spend $4 at a coffee shop then $6 at a convenience store, I’ll earn 31 points – 10 points for spending $10, 20 points for 2 transactions, and 1 point for 10% bonus. That’s 3x as much as the 10 miles I’d earn on a regular airline-branded credit card.

Combining these two benefits, let’s say I have Chase checking and buy $20 of gas during a time when gas is a 5x category. I’ll earn 5x points for 100 points. I’ll then earn 10 points for the transaction. Lastly, I’ll earn 2 points as a 10% bonus for spending $20. That comes out to 112 Chase UR points, or 5.6 miles/$ (which I value more than 5.6% cash back). As long as I have a Sapphire Preferred or Ink Bold, those points can turn into miles or hotel points.

I actually use my Freedom at more places than I do my Sapphire. With the bonuses, I earn 1.1 points/$ as opposed to 1.07 points/$ on the Sapphire for normal purchases. For travel & dining under $10, it makes better sense to use my Freedom – if I buy a $5 footlong at Subway, I’ll earn 10.7 points with the Sapphire, but 15.5 points with the Freedom.

The Chase Freedom is also great if you have multiple members in your family who can sign up for credit cards. Our family has 3 Chase Freedoms. Since each card has a maximum of $1500 spend for 5x bonuses each quarter, we actually have a total maximum spending limit of $4500 each quarter. We have one Sapphire Preferred (mine), but Chase allows us to transfer points from each Freedom to my Sapphire Preferred, making those points useful for transfers to miles and hotel points.

I can even transfer from my Chase Ultimate Rewards account to anyone’s United, British Airways, or Hyatt account. It’s a great level of flexibility to have, and allows us to have only one card with annual fee each year, saving us even more money.

Before you apply for any credit cards, it’s important to take stock of your credit situation and credit report. See my pointers for beginners (step 3) for more information.

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