The other day I shared how I started earning points and miles through credit card spending and sign-up bonuses. I decided to share my start to show readers how my wallet has evolved from when I first started. That post also highlights some of the mistakes I’ve made over the past few years. Hopefully anyone new to the points/miles hobby won’t end up making the same mistakes I did when I started. Today I want to expand on the topic of how I got my start to explain how I wish I would have started.
Step 1: Open The Chase Freedom Card
Assuming you’ve never had a true rewards credit card before, I think the Chase Freedom card is among the best starter credit cards on the market today. Chase Freedom card holders earn 1% points cash back on all purchases and 5% cash back on rotating categories throughout the year. I love this card for anyone starting out because transactions earn cash back rather than points. Points are amazing, but if you have no interest in maximizing them you may end up getting terrible value. Cash back on the other hand is simple to understand and you know how much value you’re getting back from your everyday spending.
I also love the Chase Freedom card because of the lack of an annual fee. Anyone new to the points/miles game may not end up getting enough value from a more expensive card to justify paying the annual fee. The Chase Freedom card represents a low risk way to get into the world of credit cards, points, and miles.
Another reason I highly recommend the Chase Freedom card is the flexibility of points pooling among the Chase ecosystem of cards. Chase offers some of the best rewards credit cards on the market today and Chase Ultimate Reward points are among the most valuable. Assuming after a few months with the Chase Freedom card you find yourself wanting more from your hard-earned points, you can open a Chase Ultimate Rewards credit card and convert your Chase Freedom cash back into Ultimate Rewards points!
Step 2: Open The Chase Sapphire Preferred Card
That brings us to step two. For a long time I’ve openly dismissed the Chase Sapphire Preferred card. While I still believe there are more “valuable” rewards credit cards available I’ve since realized the value of carrying a Chase Sapphire Preferred card. No Chase didn’t get in touch with me and pay me to promote this card. Instead, I’ve began to see how flexible Ultimate Rewards points truly are. Ultimate Rewards points transfer to Southwest Airlines, British Airways, Singapore Airlines, United Airlines, Virgin Atlantic, Marriott, Hyatt, and IHG among many others. With all of those transfer opportunities even the most novice points collector could find a valuable way to use Ultimate Rewards points for a future trip. The Chase Sapphire Preferred card also comes with a nice sign-up bonus of 50,000 Ultimate Rewards points after spending $4,000 in the first 90 days following account opening to help get you started.
At this point if you have the Chase Freedom and Chase Sapphire Preferred (an Ultimate Rewards card) you can transfer Chase Freedom “points” to the Ultimate Rewards program at a rate of 1:1. I personally love this feature because of the flexibility and further points earning potential. By carrying both cards you’re getting 2X points on Travel and Dining with the CSP and 5X points on rotating categories with the Chase Freedom card. Additionally, you’re getting 1X points on all other purchases with both cards.
Step 3: Explore The Chase Ultimate Rewards Program
Now that you have a “portfolio” of Chase credit cards, it’s time to begin getting even more value from the Ultimate Rewards program. One of my favorite features of the Ultimate Rewards program is the Chase Shopping portal. There are countless online and brick and mortar retailers which offer additional points on all purchases. Sephora for example is currently offering 10X points per $1 spent at the retailer. To earn bonus points UR members must click-through the Chase Shopping portal to the online retailers website and complete their purchase. I’ve noticed on more than one occasion that in-store purchases at retailers I’ve previously clicked through to also earn the bonus points.
As you continue to earn Ultimate Rewards points you can then start to plan ways to use your points. I find I get the most value from transferring points directly to a loyalty program (Singapore Airlines) and paying for flights with points. If you’re not interested in taking the time to research ways to maximize points you can always redeem points for travel through Chase Travel at a $0.0125 value or use points as cash back at a $0.01 per point value. Whatever you do, please don’t use points to pay for merchandise as this typically represents the worst use of points out there.
Step 4: Open The Chase Sapphire Reserve Card
By now you should have a fairly good idea if you’re enjoying the points/miles hobby or not. If you find yourself wanting more perks from your credit card such as Priority Pass Lounge access, higher points earning potential, travel credits, global entry or TSA PreCheck credits, and access to enhanced concierge services I’d recommend opening the Chase Sapphire Reserve card ($450/year). Chase is currently offering a 50,000 sign-up bonus for this card which is a fantastic way to earn even more Ultimate Rewards points quickly. Additionally, you can transfer all of your points from the Chase Freedom and Chase Sapphire Preferred card directly into the Sapphire Reserve’s Ultimate Rewards account.
By pooling all of your points in the CSR UR account you get even more value from each point. CSR points are with $0.015 each when redeemed for travel through Chase Travel. At this point you’d have a minimum of 100,000 UR points worth at least $1,500! You’d also be earning 3X points on Travel and Dining, 5X points on the rotating categories from the Chase Freedom card, and 1X points on all other purchases.
Although the card comes with a $450 annual fee, card holders receive $300 back in annual travel credits which are automatically applied as statement credits to offset charges. Assuming you follow these steps you’re still only paying $545 in annual fess.
Step 5: Downgrade The Chase Sapphire Preferred Card
If you’ve made it this far you now have two Chase Sapphire credit cards, but unfortunately there is a ton of redundancy in your card portfolio. Alone each Chase Sapphire card is fantastic, but together there really isn’t a ton of value in having both. After holding the Sapphire Preferred card for a year you can typically downgrade the card to the Chase Freedom Unlimited card. The Chase Freedom Unlimited card earns 1.5% cash back on ALL purchases and also comes without an annual fee. The best features is that Chase Freedom Unlimited points also transfer to the Ultimate Rewards program. By carrying the Freedom, Freedom Unlimited, and Sapphire Reserve cards from chase you’re earning 1.5 points on all purchases, 3X points on travel and dining, and 5X points on quarterly rotating categories.
Step 6: Open Cards From Other Issuers
The reason I recommend opening cards from Chase first is the new 5/24 rule. A few months ago Chase unofficially revealed a rule which automatically declines credit card applicants who have opened more than 5 cards in the previous 24 months. Chase introduced the rule to prevent people from churning Chase’s credit cards simply to earn the lucrative sign-up bonuses. While I think Chase Ultimate Rewards is an overall fantastic place to earn and hoard points, opening Chase cards first is also a great way to avoid an application denial due to this rule. When Chase introduced the Sapphire Reserve card many credit card churners missed out on the 100,000 Ultimate Rewards sign up bonus because of the 5/24 rule.
At this point in time there are no other card issuers with such a limiting rule in place. Of course some issuers deny applicants with poor credit scores, but I don’t know of any other major issuers which deny applicants because they’ve opened too many cards in the past 24 months.
After opening Chase credit cards you can then expand your credit card portfolio to match your needs. People who frequently stay at Marriott properties will find excellent value from the Marriott Rewards Premier or Ritz Carlton Rewards credit cards. American Airlines frequent flyers may find a co-branded AAdvantage credit card is best for them. In theory the possibilities are nearly endless.
Step 7: Protect and Improve Your Credit Score
When dealing with credit cards always make sure to use cards responsibly. Never spend more money than you can afford to. Sure credit card sign-up bonuses are enticing, but the points are not worth spending beyond your means and putting yourself in poor financial shape. When using credit cards make sure to always pay your balance in full to avoid paying interest on the outstanding balance. Over time your credit score will actually improve if you use credit responsibly.
Final Thoughts
I think Chase currently has the best credit card portfolio of any card issuer for novice and experienced points hobbyists. Also, Chase’s 5/24 rule is one of the most limiting rules out there when it comes to opening cards and I would had to see someone miss out simply because they opened the wrong cards at the wrong time. I also love Chase Ultimate Rewards because of how flexible the points are. Co-branded credit cards are simply entirely too limiting when it comes to earning/redeeming credit card rewards.
When I started out I earned a ton of AAdvantage miles from co-branded credit cards and flying, but rarely found a reasonable opportunity to use miles. Chase Ultimate Reward points transfer to so many different loyalty programs easily which allows card holders to customize their redemptions to fit their individual needs.
Lastly, there are many other credit cards out there which are worth looking into earlier in the process depending on each individual’s needs. Anyone who frequently travels with Delta will find great value from the American Express Platinum card. Consultants may find a ton of value in the Citi Prestige card and the 4th night free benefit. People who simply want cash back and nothing else could earn more from the Citi Double Cash card.
