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Credit Card Churn-i-versity, Part 2: Chase Ultimate Rewards

On the last day of this week I’ll present some ideas about how to decide which credit cards to get, but I think it first makes sense to take a deeper dive into the primary rewards programs out there in the marketplace. We’ll look at 2 programs run by banks that offer considerable flexibility because the points transfer into a number of different airline and hotel partners. Tomorrow we’ll look at Amex Membership Rewards. But let’s start with Chase Ultimate Rewards.

Q: Why do bloggers talk about Ultimate Rewards all the time?
A: It’s a favorite for a few reasons: First, the points transfer into a bunch of programs. Second, the points transfer into the incredibly flexible Mileage Plus program run by United Airlines (and Membership Rewards points do not transfer into United). Third, there are lots of ways to earn Ultimate Rewards points through credit cards.

Q: What programs do they transfer into?
A: For airlines they transfer 1:1 into United, Southwest Airlines, Korean Airlines, Virgin Atlantic, and British Airways. For hotels, they transfer 1:1 into Marriott, Hilton, Hyatt, and Priority Club. They will also let you use the points to purchase travel with a 25% bonus; meaning, if you buy a ticket (or a hotel room; or a car rental) for $625, you can pay for it with 50,000 miles.

Q: Are all of those transfer partners equally valuable?
A: There’s some controversy about how to use Ultimate Rewards points. I believe there is no bad way to use your points (except not using them). Some people only like to use points to fly first class internationally. Great. Some people never travel internationally, and find it better to use the miles for a ticket on Southwest. Fine.

Personally, I’ve used the points to transfer primarily to United because (as we’ll see tomorrow) of the flexibility and award availability offered by the program. But I’ve also used the points to pay for travel. There are times where it would require fewer points to just pay for a ticket or a hotel room than to transfer the points to a Hotel program and reserve a room that way. Some folks disagree with me about using points this way, but they are wrong ☺

For hotels, I think that transferring points to Hyatt is a good idea – their top tier hotels only require 22,000 points a night, where Hilton, for example, charges 95,000 points. Hm – where would I rather transfer points?

Q: Alright, let’s get to it: How do I earn these points?
A: Chase offers 3 primary cards that earn Ultimate Rewards points.

-The Chase Sapphire Preferred card earns 2 points for travel and restaurant spend, and 1 point for everything else. It’s $95/year, though the first year is free. They also give you a 7% point bonus at the end of the year, so you’re effectively earning 2.14 points for every dollar spent on travel and restaurants. There’s no fee for using the card overseas, either. They will give you 40,000 Ultimate Rewards points after you spend $3,000 in 3 months.

– The Chase Ink Bold and Chase Ink Plus are both Business cards, with the only difference between them that you can pay charges off over time with the Ink Plus. You’ll earn 5 points for every dollar you spend on your cable, phone, internet, and cellular phone bills; as well as 5 points for every dollar spent at office supply stores. You’ll get 1 point for just about everything else. It’s also $95/year, with the first year free. You’ll get a 50,000 point bonus after you spend $5,000 on the card in 3 months.

Q: Great, I’ll take all of those cards.
A: Slow down, hoss. I generally only suggest getting 1 Chase personal card and 1 Chase business card per churn. And Chase offers a bunch of great cards tied to airlines (United, British Airways) and hotels (Hyatt, Priority Club), among others.

If you do decide to get the Sapphire Preferred card and you have a spouse, I generally recommend getting a card for yourself (or your spouse) and adding yourself (or your spouse) as an authorized user. You’ll both be putting spend on the card so you can hit the minimum spend faster. And you are still eligible for the bonus if you’ve been an authorized user.

I would do the same with the Ink Bold or Ink Plus (it doesn’t really matter which you get first). Get 1 card and add your spouse as an authorized user.

Also, Chase does not seem to allow you to get a bonus on the Ink Bold or Ink Plus if you have the other card opened. To get that 2nd bonus, you’ll need to close down one account (say, the Ink Bold) to be able to earn the 50k points for the Ink Plus.

Q: Oh good, so I should just get the cards and cancel them after I get the bonus?
A: This is a key point about churning: ALWAYS keep your cards open for at least 11 months. Never cancel a card right after you earn the bonus. Banks have been known to take back points for doing that. Keep the cards open 11 months. Repeat that to yourself.

Q: Can my spouse and I combine Ultimate Rewards accounts?
A: Good question. You’ll actually have separate Ultimate Rewards accounts for the business cards and for the personal cards. You can move points freely between those accounts. You can also move points between your accounts and your spouse’s accounts, no problem. You can also transfer your points to a spouse’s frequent flyer or hotel loyalty program account. Chase frowns on transferring points to someone else’s Ultimate Rewards accounts, and they’ve been known to shut down accounts for doing that.

Q: What happens to my points if I cancel my credit cards?
A: The points will disappear. You should always transfer your Ultimate Rewards points to your spouse or to an airline or hotel partner before closing down a card.

Q: What about these other Chase cards I’ve seen: The regular Chase Sapphire, the Chase Ink Classic, and the Chase Freedom cards? Are they worth getting?

A: The primary difference between those cards and the others mentioned here is that those cards all earn cash back rather than Ultimate Rewards points. EXCEPT, if you have EITHER a Sapphire Preferred card, an Ink Bold card, or an Ink Plus card: if you do, then you can transfer those “cash back points” (100 points = $1) you earned with the regular Sapphire, Ink Classic and Freedom cards and move them to your Ultimate Rewards account.

Q: Why would I do that?
A: Because those cards all have no annual fee. You may remember from yesterday’s post that having long-term open credit is good for your credit score. An easy way to accomplish that is to open a no-annual fee card (like the Freedom, regular Sapphire, or Ink Classic) and just keep it open forever.

Here’s my strategy with those cards: Once my wife received the bonus for the Sapphire Preferred and kept it open a year, we closed her card. We will then get her a regular Sapphire card — because she has an Ink Bold, she’ll be able to use the Sapphire card (which also earns 2 points for dollar spent at travel and restaurants) to earn Ultimate Rewards points. In other words – she’s getting the benefits of the Sapphire Preferred without paying an annual fee.

You can do the same with the Ink Bold – if you close that account and keep your Sapphire Preferred card open, you can “downgrade” to the Ink Classic and still earn 5 points per dollar on the bonus categories without paying for an annual fee.

Q: Can’t I just churn these cards, re-opening them after I close them so I can keep getting bonuses?
A: Unfortunately not – unlike some other issuers, Chase does not let you churn cards. I know, bummer.

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  1. Are you positive that I can transfer ultimate rewards points to my spouses Mileage Plus account? Thanks.

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