Credit Card Series: Chase Sapphire Preferred

Awhile back now, I started my credit card series which was going to lay out my travel hacking progression so that others could follow my thought process with my credit card selections.  Well this plan was placed on the back burner as other articles took precedent but I think it’s about time to bring it back. 

Recap

So let’s recap my credit card journey up to this point.  I started out my credit card hacking journey like anyone else, clueless and a little fearful of credit cards.  So like many people, I made some credit card mistakes and ended up with a call from a collection officer. Not a good start.

Eventually, I learned about the power of credit card hacking when done with a plan while listening to the ChooseFI podcast.  I learned a lot, but wasn’t ready for some of the more advanced hacking strategies.

So I opened my first travel hacking card, the Capital One Venture Card, which turned out to be my favorite card for anyone just getting started due to its simplicity and large bonuses.   With the Erase feature, you can simply wipe out travel charges from your credit card statement. It makes the card very user friendly and less intimidating than some of the other cards or reward programs that are offered. 

Chase Sapphire Preferred Credit Card

This brings me to my second card, the Chase Sapphire Preferred.   This card earns you Chase Ultimate reward points and is often viewed as one of the favorites for many in the travel hacking community due to the power it holds when transferring points to it’s participating partners.

With this card, it proves that not all points are created equal.  Meaning that often times through transferring Chase Ultimate Reward points you are able to improve the normal 1 cent:1 point ratio to upwards of 2 cents:1 point which doubles the value of your points. With some finding deals up to a 5:1 ratio when utilizing sweet spots.  

But let’s back up.  We are getting ahead of ourselves.  The things that make this card amazing like the transfer portal, sweet spots, and improved redemption rates are also the reason it makes this card sightly more confusing and less user friendly.  Which is why I usually start people out with the Venture Card first so they can learn the ropes credit card hacking. 

The Basics

The Chase Sapphire Preferred card is a credit card that offers ultimate reward points which are used to redeem travel, merchandise, gift cards, experiences, and cash back.  However, we are focusing primarily on travel as it offers the best value amongst the categories.

Reward Bonus: Earn 60,000 points when you spend $4,000 in the first 3 months.  

*This Bonus varies throughout the year

Annual Fee: $95

Recommended Credit Score: 700+

How to Earn Points: 2x points per dollar spent on credit card for travel and dining.  1x for everything else. (however, we focus on bonuses as this is where the major points come from)

Points Expire: Your points won’t expire as long as your credit card is open.  You are able to transfer your points to a transfer partner or another Chase card if you want to cancel the current card.  This will maintain these points. 

Other Perks

1:1 Point Transfer: Chase points transfer to participating partners at a 1 point to 1 point ratio. I plan to break down transferring points later on in more detail.

5x Points on Lyft:  Earn 5x the reward points when using you Chase card on Lyft rides. 

$0 Doordash Delivery Fee for One Year: Eliminates the Doordash delivery fee on purchases over $12 for up to a year with purchase of Doorpass.  Doordash subscription service.  

Tip Cancelation/Interruption Insurance: If your trip is canceled or cut short by sickness, severe weather and other covered situations, you can be reimbursed up to $10,000 per person and $20,000 per trip for your pre-paid, non-refundable travel expenses, including passenger fares, tours, and hotels.

Primary Rental Car Insurance: Deny the insurance at the rental car company saving you $15+ dollars per rental and if you are involved in an accident or theft you are covered both domestically and abroad.  Simply submit the claim through Chase and receive reimbursement a few weeks later

Baggage Delay Insurance: Baggage delays over 6 hours qualify you for up $100 dollars per day in reimbursements for up to 5 days to purchase clothing, toiletries, etc. 

Trip Delay Reimbursement: When your flight is delayed for over 12 hours, you can submit reimbursement for up to $500 back per ticket for lodging, food, transportation, etc. 

No Foreign Transaction Fees: If traveling abroad, it’s a must to have a card without fees over you are paying 3% or more each time you use your card.

Purchase Protection: New purchases on your card are covered for damage or theft up to $500 per claim and $50,000 per account. Although there are exclusions such as used items or vehicles so read the fine lines.

Extended Warranties: Extends the warranties on purchased items by one year on top of the warranty already in place on items with warranties less than 3 years. 

*Must make purchase with Chase card to qualify for the above Perks

Point Redemption

Cashback: With your 60,000 points you would be able to cash out roughly $600 with this feature.  But as I mentioned above, this is strongly not recommended as these points can be used for well over $600 in free travel. 

Book Travel Through The Chase Ultimate Rewards Portal:  The Chase ultimate rewards portal is basically an interface that allows you to search your own flights/trips as you would on Google maps.  For example, you would type in your flight plans and it would give you the cost of the trip in ultimate rewards points. 

With the Chase Sapphire Preferred card, you are able to get 1.25 cents per point in this portal which turns 60,000 points to $750.

Transfer Points to Participating Transfer Partners:  This is where the real magic happens.  With Chase Ultimate rewards points, you are able to transfer these points to their participating partners which at the time of writing this are as follows:

Airlines:

• Air Lingus AerClub
• British Airways Executive Club
• Emirates Skywards
• Flying Blue Air France KLM
• Iberia Plus
• JetBlue True Blue
• Singapore Airlines Krisf\Flyer
• Southwest Airline Rapid Rewards
• United Mileage Plus
• Virgin Atlantic Flying Club

And remember each of the above airlines also partners with other airlines. So for example, if you transferred your ultimate rewards points to British Airways Avios points because British Airways is part of One Alliance you could use these points on other airlines such as American, Cathay Pacific, Finnair, Japan Airlines, Qatar Air, Sri Lankin Airlines, Qantas, LATAM and several others.  It also partners with Alaskan Air, Air Lingus, and Iberia. 

So it’s important to map out your trip before you transfer your points so you can best decide which transfer partner to utilize. 

Hotels:

• IHG Rewards Club
• Marriott Bonvoy
• World of Hyatt

Which again all have common hotels in their umbrellas that you can book at once you transfer your Ultimate Reward points to one of the above hotel programs.

Note: It’s important to point out, that once you transfer your points from your Ultimate Rewards portal to one of the above transfer partners, you cannot transfer them back.  So only transfer the exact amount of points you need for your particular trip you are planning. 

Sweet Spots

Now comes the fun/hard part.  You need to play around with the sweet spots to truly maximize your redemption power.  Sweet spots are just a travel hacking definition used to describe airlines/transfer partners that offer very low point totals required to travel to different destinations. Basically allowing your Ultimate Reward points to go further for you.

Each destination has unique sweet spots which lowers the amount of points that you would typically need to use to get there. Or the inverse, is that each airline reward program has certain destinations that they offer very low point redemption values to travel to.  And this varies on time of year, peak vs off peak times, and class level on the airplane (i.e economy, business, first etc).

This seems again overwhelming but thankfully others on the internet have done the research for us and we can find these sweet spots laid out for us simply by Google searching the location we are trying to travel to, followed by sweet spots.

Example: Round trip Ticket to Hawaii

For example, if you wanted to go to Hawaii, you would search “Hawaii Sweet Spots” and countless articles on “point blogs” will show up helping you to best map out your trip.  There are numerous sweet spots to Hawaii so you would need to use your unique circumstances such as location, airline preferences, seat class preference, and time of year to best decide which option is best for you to utilize.

So using Chase Ultimate Reward points, let’s continue this example of getting to Hawaii from the United States with one of the most common redemption plans.  To get to Hawaii for example, requires 12,500 Avios points each way, so round trip would cost 25,000 Avios points.  

But we don’t have any Avios points, so you would need to transfer 25,000 Ultimate Reward points to British Airways Avios points via the portal. With these 25,000 Avios points, you would be able to buy a round trip ticket to Hawaii from the West Coast on American Airlines as they are a partner of British Airways.  

And that’s it, you are now flying for free (with the exception of paying tax) to Hawaii just for using your Chase Sapphire Preferred Card smarter than the average person. And the best part, is that you still have 35,000 Ultimate Reward points still to use to travel to wherever else you want.

Calculating Your Redemption Rate:

Now, the fun part is calculating the actual redemption rate you were able to get.  Basically, you then need to look up what the same flight that you booked would cost if you paid cash.  So looking up a flight from the West Coast to Hawaii during the off season typically ranges from around $500 to $750 dollars round trip but can get up to $1000 for peak season when traveling weekend to weekend.

25,000 Ultimate Rewards Points, which as mentioned above, would equate to $250 dollars cash value or with the Chase Sapphire Preferred Card would equate to $312.50 dollars due to the 1.25:1 ratio of this card.

However, when we perform the above transfer you can get $500-$1000 worth of round trip airline tickets for just 25,000 points.  Which would equate to up to a 4 cents:1 point ratio, quadrupling the already great value of this card.

Conclusion

I know that’s a lot of numbers so let’s simplify it.  With the Chase Sapphire Preferred card, once you reach your bonus by using your card for your normal spending, and most importantly paying your card off responsibly.  You are able to get between $1,200 to $2,400 dollars or more of free travel once you get good at the redemption process.

That’s over $1,000 given to you for free, just for being responsible with paying off your credit card on time.  And I get it, this feels like a trap. There has to be a catch, right? 

Well if you remember back to when I first introduced credit cards you’ll remember that the average American has over $6,000 dollars in credit card debt at a 20-30% interest rate.  So by the time this consumer pays this debt off, it ends up being quite the pay day for the credit card company. 

These credit card companies are willing to bet $1,000 dollars that you are going to fall into the same trap that everyone else in America seems to fall into and end up in credit card debt.  So by being the financially responsible group of people that we are, we win this bet every time and let the our over extended friends, neighbors, and colleagues fund our free trips to Hawaii.

To get started, feel free to follow my link below:

Chase Sapphire Preferred Credit Card Sign Up

This can be a confusing game at time, let me know if you have any questions or concerns.  Feel free to comment below or email be directly at fiscaltherapist1@gmail.com