At first, I dismissed the Chase Freedom cards. The sign-up bonus was ok, but nothing spectacular (15,000 Ultimate Rewards points when you spend $500 in 3 months). The 5x points in rotating categories sounded ok, but did I really want to mess with that? The Freedom Unlimited card has a flat 1.5x points on all purchases, so at least there’s no categories to keep track of. But, is 1.5x all that special, especially when I can get 1.75% on my PNC Visa?
Oh, self. I should have grabbed the Freedom card years ago.
For starters, these cards have no annual fee, so it makes sense to get them, keep them, and use them long-term.
On their own, they are decent cards. But when you also hold a premium Chase card (so yes, that means a card with an annual fee), you can get some crazy high redemption values out of your spending. Even when you factor in the annual fee, this combo gets you a much higher rate of return than you could get with no-fee or straight cash back cards.
I basically blogged in the comments section at Miles for Family, but I want to flesh out those examples here to demonstrate why the Freedom cards are so much better than even a 2% card.
Let’s say I spend $1,200 in three months on groceries during the 5x bonus period quarter (coming up this April-June). At 5x per point, I would get 6,000 Chase Ultimate Rewards points for that grocery spending. I could cash it in for $60, but I wouldn’t do that.
Since I also now have a premium Chase card, a Sapphire Reserve, I can pool all of my Ultimate Rewards points across my cards. I can also then transfer my points to participating partners. Let’s look at the Southwest points I needed to book a round-trip ticket to D.C.
I needed 5,997 Southwest points (which I had on my account already). If I didn’t have those points, thanks to having the Reserve I could transfer 6,000 Ultimate Rewards points to my Southwest account at a 1:1 ratio.
The cash fare for the same flight was $118.
So, a flight for $118 could be mine for spending $1,200 on groceries. $118/$1200 = 9.83% value back on that spending. Wow!
For the Unlimited, to get enough points for that $118 airfare, I’d need to spend $4,000 on something (4,000 x 1.5= 6,000). That puts the rate of return at 118/4000= 2.95% which is still pretty good. $4k in a year is pretty much my electric, gas, water, cell phone, and internet bills.
Let’s look at what I might get if I want to book a free night at a category 1 Hyatt. I chose a Hyatt Place near the airport and picked a weekend night in April for my example. I’d need 5,000 Hyatt points to book a room with several room types available, or I could pay $203 for the cheapest room available.
To get 5,000 Ultimate Rewards points to then transfer 1:1 to Hyatt, I’d need to spend $1,000 on 5x bonus categories on my Freedom card. That’s $203/1000 = 20.3% return on that spending. TWENTY PERCENT. What in the world! If you wanted to factor in the annual net fee of the Reserve, that’s still getting 17% on that redemption ($203/1141 = 17.7%). I’m figuring a $141 net fee in that calculation, assuming you use the $300 travel credit in full.
For Freedom Unlimited, I’d need to spend $3,333 to get 5,000 points. $203/3333 = 6% return.
Depending on how you redeem your points, you can spend very little and still get tremendous value. Would I spend $203/night at a Hyatt? No, I’d pay less at some other hotel or shift my dates perhaps. But sometimes, you need to stay at a certain area on specific dates. Sometimes your options are limited, and if you have 3 kids sometimes cheaper hotels in your path simply won’t fit a family of 5. That leaves you with getting two rooms, or get a room that can fit you all.
Would I redeem 5,000 points to stay at a Hyatt? Yep. Getting those points for spending only $1,000 during the grocery quarter? Easy decision.
Do you have these cards? Did I help persuade you of their potential? Do you see why the annual fee is worth it? Let me know if I can send you a referral :)
We’ve added two more cards:
Chase Freedom Unlimited
We’ve finished the minimum spend for my husband’s Chase Sapphire Reserve, and the points posted when the statement closed. He is keeping this card long-term as long as the perks don’t go away, and he recently opened a Chase Freedom Unlimited as well. The Unlimited card will give 1.5x points on all purchases and has no annual fee, so it also is a long-term keeper card. When paired with a Sapphire Reserve and used in the Ultimate Rewards portal, it becomes an effective 2.25% back. Further, the points he earns on the Unlimited can be transferred to partners since he has the Reserve. Without it, nope.
The Unlimited comes with a sign-up bonus of 15,000 points when you spend $500 in three months. Easy (and let me know if I can send you a referral!).
So now, all of his travel and dining purchases will go on the Reserve, and his other purchases will go on the Unlimited.
My Chase Sapphire Reserve
I opened my own Sapphire Reserve card. I went to a Chase branch because the in-branch sign-up offer is still 100,000 points when you spend $4k in 3 months (good through March 11 for the in-branch offer). It is 50,000 if you sign up online. This card gives you 3 points per dollar on dining and travel, and travel seems to be a broad category. It is 1 point per dollar on all other spending.
For reference, 50,000 points can be redeemed for $500 cash, or you can use it for 1.5x the value when booking something in the Chase Ultimate Rewards portal if you have the Reserve. 50k points = $750 value in the portal. 100k points = $1,500 in the portal. You can also transfer your points 1:1 to many travel partners. If we transfer, it will most likely be to Southwest, Hyatt, or Marriott.
I plan to get TSA Pre-Check with my card (an $85 expense fully reimburseable by Chase). My husband already has TSA Pre-Check, so our whole family will be able to go through the Pre-Check line since my kids are all under age 12. There’s a Global Entry option, but I’m not going to get it since we aren’t likely to go overseas much in the next 5 years (if at all?) and we’d need Global Entry for each family member.
I’m planning to cancel my AAA auto club membership if they will issue a pro-rated refund. The Sapphire Reserve roadside assistance is just as good or better than my AAA basic membership, and I don’t seem to get much in the way of discounts with AAA.
The trip cancellation/interruption, emergency evacuation, primary rental car insurance (so, you wouldn’t need to get your own auto insurance involved in a claim!), baggage delay perks for a 6-hour delay, trip delay reimbursement for a 6-hour delay, Priority Pass airport lounge access…the benefits of this card really are something to look at if you are a business traveler or travel a few times per year. These card benefits are better than the Sapphire Preferred. The Reserve is a better card, all-around.
Thanks to the huge sign-up bonus, the $300 calendar year travel credit (I can double-dip this for $600 in travel credit before my next annual fee is due!), and the general perks of the card, the math makes sense for me to keep this card for awhile, despite the annual fee.
Annual Reserve fee, not waived: $450 (gulp, right?)
Subtract $300 travel credit, good each calendar year brings the effective annual fee to $150. (Note that the $300 in travel spending to earn the travel credit will also net 3x per dollar, so that us 900 points or $9.) That puts it at $141.
Subtract $85 value of TSA Pre-Check and we’re at $56 for the first year
Pro-rated AAA refund ought to be about $50-60, so I could argue that my first year’s fee is basically zip. Feel free to disagree if you don’t think the AAA should be a factor.
I figure the minimum spend at just 1 point/dollar will get me to 104,000 points, but likely I will have some 3x per dollar for dining or travel in that first $4k. This is $1,040 if cashed out.
The total value of our points won’t be realized until we actually book trips, but the cash value of the Ultimate Rewards points is just a minimum of what we might see. At minimum, the sign-up bonuses with minimum spend for those two cards will be $1,200, but I think we can get it closer to $2,000 in value, if not more. So excited at the possibilities! Though some people cancel a card before the second annual fee hits, I will keep this one unless they strip the benefits. I could be an authorized user for $75/year on my husband’s card, but I’m planning on keeping it for at least two annual fees as a “thank you for the ton of points and upgraded vacations you’re giving me!”
A few weeks ago, I debated doing my own Reserve vs. branching out and trying another premium card to diversify our household points options. I considered the AmEx Platinum, but the recent changes to the card are not appealing to me for my travel purposes. The Citi Prestige or Chase Ritz-Carlton cards were also on my radar, but for now I am really happy with this combination of Chase cards that we hold.
I still have and use my AmEx Starwood card, and I won’t be surprised if the card goes away in 2018 when the Marriott merger is finalized. Just a wait-and-see.
Unless something changes, I think that’s it for new card applications for awhile. Between my husband and I, we have the Chase trifecta I’ve been seeking to maximize our regular spending (Reserve, Freedom, and Freedom Unlimited). For now, the aim is to just bank up Starwood points and Chase Ultimate Rewards points.
Eventually, I will likely add some hotel cards for the discounted annual night certificate and sign-up points (Marriott, Hyatt, and IHG are contenders). With Alaska Airlines coming to my home airport in Indianapolis, it is possible they will target Hoosiers for better sign-ups for their card. I signed up for their airline loyalty program to let them know I exist.
(Current Chase Freedom bonus promo: 10% back on hotels and car rentals booked through the Ultimate Rewards portal through the end of March. Makes sense for certain hotel bookings, especially if you aren’t trying to rack up hotel loyalty points (I don’t think you can do both, but maybe I’m wrong). However, if my husband needs to rent a car, he needs to stick with the Reserve thanks to the primary insurance offered on the card. Way better than getting our own car insurance involved, should it come to that.