Upgrade to the Chase Freedom Unlimted and Sapphire Credit Cards
A good first step is to upgrade the credit card you use for most of your purchases.
We highly recommend most people switch to the Chase Freedom Unlimited and the Sapphire Reserve cards to earn more valuable rewards on your credit card spending and gain access to several valuable travel benefits (such as free access to thousands of airport lounges and "primary" rental car insurance).
Unless you travel a lot for work, it can take a long time to build up a meaningful quantity of travel reward points. But, if you get a good rewards credit card and use it whenever you can, you'll slowly and surely accumulate enough points to get free hotel nights or airplane tickets.
By simply upgrading your current credit card, you'll earn more valuable rewards over the course of the year—which translates directly into more free travel.
Benefits of upgrading your existing credit card to these two cards
We highly recommend that you switch over to using the "Chase Unlimited combo"—a combination of the Chase Freedom Unlimited card and the Chase Sapphire Reserve card (that are designed to work together). You'll reap the benefits for years to come.
- For most people, these cards are the best option for earning rewards on your credit card purchases. The reward value you receive from any credit card is the combination of the number of points you receive per dollar and the value of each of those points. The Chase Freedom Unlimited and Sapphire Reserve shine because they earn the best type of points for anyone who isn't an expert at using frequent flyer programs—Chase's Ultimate Rewards points.
- The Freedom Unlimited card is the best option for everyday spending. It earns 1.5 Ultimate Rewards per dollar on any purchase. As discussed in more detail below, Ultimate Rewards points are typically worth at least 1.75 cents each. So, you'll be typically earning at least the equivalent of 2.6 cents per dollar spent.
- The Sapphire Reserve card earns fantastic rewards on your travel and restaurant spending. On these common spending categories, it earns 3x Ultimate Rewards points, typically worth at least 5.25 cents per dollar.
- When you use your Sapphire Reserve for travel purchases, you'll not only receive a great reward rate, you'll get the best free travel insurance benefits of any card. The Sapphire Reserve is one of the few cards that offers "primary" rental car coverage. Unlike most other credit cards, if you damage your rental car, you don't need to involve your personal auto insurance company.
- The Sapphire Reserve provides free access to over a 1,000 airport lounges. It entitles you to a free Priority Pass Select membership that provides access to airport lounges located all around the world (for you and up to 2 guests). While you won't have access to the most luxurious airport lounges, and there won't always be a lounge in the same terminal you'll be using, you'll have access to nice lounges located all over the country and around the world. You'll often be able to spend the time waiting for your flight in comfortable chairs—enjoying free drinks and snacks, high-speed Wi-Fi, and abundant power outlets. And at dozens of airports, you can use your membership for $28 per person of free food at participating airport restaurants. For more details, see:
- The Sapphire Reserve even provides free towing and roadside assistance and a number of other "premium card" benefits. For roadside assistance, Chase will pay $50 to cover the cost of towing, jump starts, etc. (up to $200 per year). You just need to call 855-860-7978.
- You'll receive over $1,000 worth of points just for signing up for these cards (and meeting the minimum spending requirement). When you spend $500 in the first three months with the Freedom Unlimited card, you'll earn 15,000 bonus points (the offers will say "$150", but you'll actually receive 15,000 points). Then, when you spend $4,000 with the Sapphire Reserve card, you'll earn another 50,000 points. (To make meeting the spending requirements easier, get one card first, and then once you've earned the signup bonus, get the other card.)
You'll also get free lost and delayed baggage insurance, free trip cancellation and interruption insurance, and free flight delay coverage, when you use the card to pay for any portion of your flights. For more details, see:
Some other benefits include a $100 credit for Global Entry / TSA Precheck fees (every 4 years), access to valuable extra perks via Chase's Luxury Hotel and Resort Collection, and an upgrade to National Emerald Club Executive status.
65,000 Ultimate Rewards points can be used like $975 in cash, but you'll probably get more value when you use it for a free flight to Europe, 2.5 flights within the United States, or 5 to 8 nights at a downtown Hyatt hotel (in many major cities).
The different ways that Ultimate Rewards can be used
To understand more about why it makes sense to get cards that earn Ultimate Rewards points, you need to understand more about the different ways that they can be used. Then, you'll understand why the Chase Ultimate combo is usually a better option than using an airline, cashback, or other type of reward credit card.
- You can covert your Ultimate Reward points into "miles" with about a dozen different frequent flyer programs. Using these programs, you can book award tickets on almost 100 different airlines. For example, you can convert your points to United miles to book flights on United or Singapore airlines, to British Airways points to book flights on American Airlines or JAL, or to Air France miles to book flights on Delta or Aeromexico. For more details, see:
- This makes them much more valuable than any particular type of frequent flyer mile. Instead of being locked into a single program, you can transfer them at the last minute to whichever program works best for your upcoming trip. That opens up more availability and, in many cases, allows you to choose a program that has a lower award cost or fees. So each Ultimate Reward point is better than a frequent flyer mile, and instead of earning only 1 mile per dollar, you will be earning 1.5 or 3.
- If you find it difficult to find frequent flyer tickets when you need them, there are other good ways to use your points. Even with the extra flexibility of getting to choose between a dozen different types of frequent flyer miles, it can still be difficult to find award availability when you need it. The beauty of Ultimate Reward points is that you still have other good options to use your points.
- One of the very best ways to use your Ultimate Rewards points is for free hotel nights at Hyatt hotels. For example, you could transfer 8,000 Ultimate Rewards points to Hyatt to book an award night at a nice Hyatt hotel, where the room rate might be $160 for a regular reservation. In this example, you'd be getting 2 cents in value for your points.
- If you are having any trouble getting good value from your points for frequent flyer tickets or Hyatt award nights, you can always simply "cash them out". You can use your Ultimate Rewards points to purchase any hotel, flight, cruise or rental car (and some other types of travel purchases) through the Chase website (powered by Expedia) at 1.5 cents each. Buying airplane tickets is a particularly good option, because the same fares and terms are usually the same everywhere. (If you frequently fly Southwest, you don't need to worry. You also have the option to get about the same value per point by transferring your points to Southwest Airlines's reward program.)
- Ultimate Rewards points are the best of both worlds. You can easily use them like cash at 1.5 cents each, while retaining the upside of occasionally being able to get values of 2 cents, 3 cents, or even more per point on high-value frequent flyer and hotel awards. They are a great gateway to the wonderful world of award travel, while giving you a (still lucrative) way to cash out if you find you never wind up using your points.
Amex and Citibank operate programs similar to Ultimate Rewards points, where you can transfer your points to many different types of frequent flyer miles. We recommend Chase's Ultimate Rewards because these other programs don't have great options for using your points other than for frequent flyer miles. They can be great for people with a lot of flexibility and expertise, but can be frustrating for many others.
When hotel prices are sky high for holidays and special events, having a stash of points you can use for hotel rooms is extremely valuable. For example, hotels in Hawaii, Ski Resorts, and Times Square require about the same number of points during Christmas break or New Years Eve as they do every other day of the year. And you don't have to worry about black out dates and availability. If a standard room is available, you can always book it with points. On many trips, you'll have good opportunities to get 1.75 to 2.5 cents or more per Ultimate Rewards point when you use them via the Hyatt program.
You'll usually get more value by saving your points for frequent flyer tickets or award nights, but you never need to worry about not being able to use your points. In the worst case scenario, if you choose to simply cash out, the Freedom Unlimited card is still earning 2.25 cents per dollar, more than most cash-back options. And the Sapphire Reserve is earning 4.5 cents per dollar on restaurants and travel.
We don't just recommend the Sapphire Reserve card because it provides valuable travel benefits and extra rewards on restaurant and travel spending. You need it to unlock the value of the Unlimited combination.
The Freedom Unlimited card earns 1.5 Ultimate Rewards points per dollar on every purchase, regardless of category. All other Chase cards (except the nearly identical Ink Unlimited card for small businesses) only earn 1 point per dollar on basic spending. Since, it doesn't have an annual fee, we recommend using it alongside the Sapphire Reserve to earn the extra .5 points per dollar on your non-restaurant and non-travel spending.
But on its own, the points from the Freedom Unlimited card are only worth 1 cent each. You need to have the Sapphire Reserve, the Sapphire Preferred, or the small-business Ink Preferred card to transfer your points to frequent flyer programs, use them for Hyatt hotels, or get more than 1 cent each when purchasing travel through the Chase website. Once you have any of these cards, it makes the points you earn from all other Ultimate Rewards cards more valuable. Of these cards, we usually recommend the Sapphire Reserve for its bonus categories and benefits.
You need the Freedom Unlimited card to get the higher point earning rate on everyday purchases, and you need one of the other three cards to get full value from the points you earn.
Now for the bad new, the Freedom Unlimited card doesn't have an annual fee, but the annual fee for the Sapphire Reserve is a massive $550. Before you get scared away by the fee, you need to know that your real out-of-pocket cost will be much lower:
- The Sapphire Reserve comes with a $300 travel credit. In other words, you don't need to pay for the first $300 of travel spending you make each year. The credit works on any kind of travel purchase and works completely automatically—any travel purchases are taken off your credit card bill until you've hit the $300 limit. Since, you'll be naturally using this card for all your travel spending, you should easily be able to take full advantage of the credit, dropping your out-of-pocket expense to a more manageable $250 per year.
- The Sapphire Reserve also comes with $60 of automatic credits for Door Dash you can use use in 2020, and another $60 to use in 2021. Like the travel credit, the credits will be automatically taken off your bill just by using the card to make the purchase. You'll also get a complimentary membership to DoorDash's free delivery program. Depending on how much you expect to order from Door Dash, these credits can offset even more of the annual fee.
- The rewards you earn from the Sapphire Reserve's Travel and Restaurant categories add up fast. For example, for every $1,000 per year you spend in these categories, you'd earn an extra $17.50 in rewards compared to Chase's $95-per-year Sapphire Preferred card. Spend $5,000-10,000 per year between these categories, and you'll earn enough in extra rewards to make up any difference in out-of-pocket costs between the cards, and you'll still get all of the nice travel benefits of the Sapphire Reserve card.
However, if you don't put much value on the airport lounge access, don't spend much money on travel and restaurants, and/or won't get much value out of the Door Dash credits, Chase's $95-per-year Sapphire Preferred card may be a better option. If your credit isn't great, it may also be the only option you can get approved for.
(Almost) never use cash—earn rewards instead
Your goal is to collect as many miles or points (or as much cash back) as you can. That means that you should use your reward credit cards whenever possible, rather than paying with cash, a debit card, or a check. Start putting everything on your cards, and your rewards will build up quickly.
- Every time you use cash, a check, or your bank card (when you could have used your credit card), you are missing out on reward points. Each individual transaction may not seem like much, but it adds up over time.
- Using a credit card (instead of cash) has some other benefits as well. You’ll have better records of your spending, build up your credit history, and make fewer trips to the ATM (paying less in ATM fees). In addition, your credit card will often give you some protection if something you buy breaks, is stolen, or even drops in price. Automatic Protection for the Things You Buy with Your Credit Card.
- While we strongly recommend using your credit card for as much of your spending as possible, you don’t have to take it to an extreme. If you are making a small purchase and paying cash will speed up the process for everyone, don’t worry about a few cents worth of points. If you are under the store’s minimum for taking credit cards, don’t make a fuss, just pay with cash. And you usually don’t want to use your credit card with any business that will add an extra "convenience" fee.
- Many of the bills that you pay each month can be paid with a credit card, rather than with a check or automatic bank withdrawal. For example, pretty much every wireless and cable company accepts credit card payments, as do many utilities, insurance companies, and gyms. Go back over a few months of bank statements, and see who you are paying on a regular basis. Then check which of these companies you can switch over to a credit card (without any extra fees).
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