Check out our five-card strategy.
CARDS MENTIONED IN THIS EPISODE, IN ORDER: http://www.moneywithkatie.com/2023travel
If you’ve ever wanted to take a more intentional approach to your credit cards and travel (or just tune up an existing approach!), this week’s episode is a must-listen.
File “travel rewards” under the “sounds too good to be true but isn’t” category, with the major caveat that it’s a little like playing with fire: As long as your spending habits aren’t flammable, you stand to gain a lot.
We called in travel rewards pro Benét Wilson—former senior cards editor at The Points Guy and freelance aviation journalist—to weigh in and pressure-test our Money with Katie strategy, because this landscape is always changing—and the episode made me realize there’s at least one hotel card I need to consider adding to my wallet lineup.
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Katie:Welcome back toThe Money with Katie Show, Rich People. This week's episode is a treat, okay, because judging by the title, you would almost certainly think that it's gonna be a bad imitation of a timeshare presentation you were suckered into, 'cause you booked the cheapest room available at the Maui JW Marriott. But fortunately for you, it is nothing of the sort. Instead, it's a 2023 rendition of my favorite travel rewards strategy, featuring Benét Wilson, former senior credit cards editor at The Points Guy and freelance aviation journalist. I think her perspective is going to lend a super balanced and nuanced take here. So I'm really, really excited for you to hear her ideas about some of my strategic concepts.
Every card that we're gonna be talking about today can be found atwww.moneywithkatie.com/2023travel. We’ll also link that in the show notes. If you apply for a card using the links on that landing page,The Money with Katie Showwill receive a commission, but we have not been compensated to include the cards that we are talking about today. So if you wanna support the show, we would appreciate it.
Now, I originally published my personal travel reward strategy in 2020, but I figured it was worth revamping, for two reasons. Number one, credit card offers and rewards programs change, and it's always good to revisit our plans. And number two, the travel rewards episodes we've done on the show in the past tend to be among our most popular, which signals to me and my crack analytics team, aka Henah, that y'all are very interested in this topic.
My best points redemption to date was transferring 40,000 AmEx points to Air Canada and then redeeming them for a trip from Copenhagen to Denver, which I then promptly upgraded to Polaris business class for $500. So this means I got a $15,000 seat for 40,000 points and 500 bucks, which is not bad. Henah’s best redemptions to date have been 20,000 points for a round-trip flight to Portugal, 30,000 points to French Polynesia, and one out-of-pocket mistake fare for $197 from NYC to Milan, Prague, and Amsterdam.
So the very brief explanation of travel rewards as a concept is that credit card companies will give you points or miles—the terms are often used interchangeably—in exchange for spending money using your credit card, as an enticement to get you to use the card. What do they get out of it? Well, businesses pay transaction fees to credit card companies every time you swipe. So the credit card companies get a small cut of every purchase you make, and the more you spend, the more they make. It's in their best interest if you do your regular spending on their credit card.
So the credit card company may also charge you an annual fee to offset some of their costs and increase their profits, but it's a quid pro quo, 'cause the thinking goes, this is money you'd be spending anyway, theoretically, so let us take a cut of it and in exchange, we'll give you additional benefits. And when used strategically, a good points and miles strategy can cover a lot of your travel. Cynically, though, it's fair to say the entire credit card system is, at best, effectively designed to make money as the middleman, and at worst, to take advantage of people who get in over their heads financially by charging exorbitant interest rates and fees. So engaging with the credit card world is a little bit like hanging out with the popular kids despite your face full of cystic acne and crippling insecurity. Overall, they're probably not going to lose, and things can go really sideways, but if you play your cards right—pun intended—there are a lot of benefits to reap, like free rides to cool parties. Though I highlight those ethical concerns because, well, let's call it for what it is: a mildly predatory system that you can play to your benefit if you know what you're doing.
The Points Guy has a great guide, “10 Commandments of Credit Card Rewards,” that can help keep you on the straight and narrow. So we'll link that in the show notes. We'll be right back after a message from the sponsors of today's episode.
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Katie:Because traveling is expensive, but it's also one of the greatest joys in life. And even if you're not a cut-rate, wanderlust, walking Tumblr page, most of us will need to travel at some point every year, even if we don't want to, and there's basically no way to get on a plane and stay in reasonable accommodations for less than several hundred dollars. If you really like to travel but you're not yet in a place financially where you can bankroll frequent transatlantic flights, traveling a lot can threaten your financial freedom and security in the future, but it doesn't have to.
I estimate that my husband and I have gone on around 25 trips over the last four years using points and miles as our primary means of purchasing airfare and hotels, and I estimate the out-of-pocket costs that we would've paid are somewhere in the ballpark of between $20,000 and $40,000. So how did we do it? I have a very specific strategy that I employ that I’d like to share with the Money with Katie community, because A, it is decently beginner friendly, and B, it is, in my mind, the ultimate 80/20 solution, where you're gonna get 80% of the value on 20% of the cost. This is because not all points programs are created equal, and it's actually surprisingly easy to make bad redemptions or not get a lot of bang for your buck.
Strategy matters. I have friends with 25 cards who have their strategies just optimized to the hilt, but frankly, that level of dedication takes more time and energy than I'm willing to spend. So my core strategy involves five cards, but ever since my husband became active duty military, I have added a couple more bonus cards since our annual fees are waived while he is in the service.
Before I give you the rundown on the strategy and how it works, there are a few important prerequisites. Number one, you need to have good credit already. If your credit score is low or if you have a history of spending recklessly and getting into credit card debt, this might be a fire that is not worth playing with. If you're trying to repair your credit so you could eventually graduate into a more convoluted system, consider a secured card. Henah and I recently did a Rich Girl Roundup on credit that you might like, so we'll link that in the show notes.
Number two is that you'll also need to be fairly organized, or willing to cosplay as an organized person, because credit card points take a little bit of finesse. You're gonna need to track cutoff dates, make sure you're not letting perks expire, and flex your logistical muscles when you're booking travel and comparing your best options. If you're gonna sign up for six cards and then lose track of all of them, not hit the spend thresholds, and then deploy your points willy-nilly, I honestly wouldn't bother. There's a guide from The Points Guy staff that offers some really great tips on how to keep track of everything, so we will also link that in the show notes.
And number three, try to get clear on your travel goals and your circumstances first. You'll need to know these preferences before you're gonna be able to pick the best cards for you. Are you an aspiring high roller who wants to fly business class? Do you like five-star resorts? Do you want to travel as cheaply as possible for months at a time? These preferences will affect your credit card end game.
There are a few other FAQs, like whether or not this is gonna hurt your credit, and what to do if you don't want to keep paying annual fees, but we will cover those at the end so we can get into the meat a little bit faster. Okay, let's dive in.
The first overarching truth that I'd like to offer in the travel rewards world as I conceive of it, is that Chase and American Express are really the only two carriers worth their salt, and I probably would not waste my time with a lot of other programs; at least, that is how I’ve felt for the last few years. That said, Capital One is another popular bank that's ramped up its travel rewards presence in recent years with the introduction of the Venture X card. So I asked Benét to weigh in on the Chase and AmEx club, or if Capital One was worth considering, especially in light of the Venture X addition to the premium card lineup. And her answer actually surprised me, and may give you another premium option to consider at a lower price point.
Benét Wilson:Back when I started writing about credit cards, there were three premium cards that were the big ones: the Citi Prestige, the AmEx, and the Chase Sapphire Reserve. And then Citi, for whatever reason, downgraded that card so much that you can't even get it anymore. So that left Chase and AmEx, and I think that Capital One saw an entry. I think that the Venture X is a game-changer because it's cheaper than the other two; it comes with a lot of good perks, including transfer points; and you can get into Priority Pass Lounges, you can get your TSA global entry fee. That's the next card on my list.
Katie:Now, I can't speak to the Venture X card. I don't have it; neither does anyone on my team, so I am gonna continue to focus on Chase and AmEx for this breakdown. We basically need to understand how to operate within the Chase and AmEx worlds, and there's one major rule to be aware of, known as the Chase 5/24 rule. In an effort to prevent people from churning cards, aka, just repeatedly applying for new credit, collecting the sign-up bonus, and then canceling the card and reapplying, Chase has a rule that only allows you to be approved for five credit cards in every 24-month period, regardless of issuer. This is why people often suggest getting cards issued by Chase first, and then moving on to other banks like AmEx, who have drawn no such hard line in the sand.
The good news is our core strategy involves acquiring five cards over the period of 15 months, so one every 90 days or so. So the 5/24 rule should not burn you. When you're in Chase and AmEx world, you are basically playing in two different sandboxes. The Chase world's travel portal and points are called Ultimate Rewards. The AmEx world's portal and points are called Membership Rewards. Generally speaking, Ultimate Rewards points are more valuable point for point than Membership Rewards points, but having access to both programs is key if you are looking for the ultimate flexibility. You got all that?
Okay, so we're gonna start broad with card one, and then we're gonna narrow in on specific programs and carriers. Card number one is a bit of a stand-in. It's the card that establishes that you have credit already. It's your no annual fee cashback card, like a Discover It, Chase Freedom, or AmEx Blue Cash everyday card. You may also consider a Bilt card, which is a new offering on the market that allows you to earn points on rent. There's no annual fee or additional percentage points tacked on, so if you have expensive rent, it may be worthwhile. Henah has accumulated around 40,000 points in six months from paying for rent on her card and other bonus categories. You'll only need to start with a card like this first if you don't already have credit cards, because typically it's very difficult to be approved for more premium credit card products first. If you are getting your first cashback card to work your way into the system, I think the Chase Freedom Unlimited card is probably the most sensible. You'll immediately begin earning Ultimate Rewards points on your spending, and when you level up later to a Sapphire product, so a card with an annual fee, the points you've already earned will become more valuable. The Freedom Card is marketed as a cashback card, but its mechanism for distributing the cash back is points. So it's kind of the same thing. As of April, 2023, this card comes with a $200 bonus after you spend $500 on purchases in the first three months, and generates an unlimited 1.5% cash back on all purchases, with added perks for dining and travel. Like I said, though, if you already have a basic credit card, there is no need to get another, so this is either card number one or skip, in my opinion.
The second card you're going to get, or if you already have a basic card, this would be your first premium card, is the Chase Sapphire Preferred card. Now, if you listened to Henah and me debate AmEx Platinum versus Chase Sapphire Reserve in our Rich Girl Roundup a few months ago, you know this is a hotly contested inclusion, but I will tell you why I like it best, and a bit later I'll tell you the opposite approach that Henah uses, in case you would rather do that.
The Sapphire Preferred card is one of the most valuable cards out there, because you get a lot of bang for your buck. The annual fee is $95, and you get $50 of it back in an annual hotel credit when you book through the Chase Ultimate Rewards portal. Plus, Chase has a very broad definition of what counts for travel, including airlines, hotels, motels, timeshares, car rental agencies, cruise lines, travel agencies, discount travel sites, campgrounds, passenger trains, buses, taxis, limousines, ferries, toll roads, and parking lots or garages. Okay? So you'll also get a 10% points bonus annually based on your card spending, earned after you renew and pay your annual fee.
Here's why I think Preferred is so valuable. You'll get an 80,000 point sign-up bonus at the time of this recording, after you spend $4,000 in the first three months of the account opening, which can easily be worth a thousand dollars or more in free travel when you transfer the points to a partner. Now, transferring points is something we'll mention throughout this episode, as it tends to be the most lucrative way to use benefits across the board. For example, you may transfer your Chase Ultimate Rewards points to Hyatt or United, where they'll go further than if you book directly in the Chase portal. Those are two of my favorite transfer partners, but there are many. We're gonna come back to this in more detail after we finish running through our major players. I think of the Chase Sapphire Preferred card as the basic travel awards product that every person should have, because even if you only get one free trip out of the sign-up bonus and then you downgrade it to a Chase Freedom, you've basically paid $45 for a vacation thanks to the hotel credit; it is effectively no lose. Moreover, Chase limits your ability to get the Sapphire sign-up bonus to once every 48 months. I opened mine in 2018, so I'm about five years out, which means I can now downgrade my Sapphire Preferred card to the free Freedom card and reapply for a Chase Sapphire product again, and get another sign-up bonus. This is a very light version of churning, since we're not closing a line of credit but rather downshifting it to a free product and then reapplying for the premium product to score another sign-up bonus, but several years later. I asked Benét for her thoughts on the Ultimate Rewards portal and what is, in her mind, the most effective way to deploy Chase points, and she was mostly on the same page.
Benét Wilson:You can book on just about any airline in the portal, whether you have status with them or not. So you've got a wider variety of hotels and airlines that you can choose from. You can also use your points to pay for partial or all of your fare, and it includes all fees, so you don't have to worry about all the taxes and everything. The number that you see is the number that you get. I also think that it's good because if you use points, it's just like you're using money, so you're going to earn points or miles for whatever flight or points for whatever hotel you book. You also get a bonus when you're using your Chase card. It's 1.5 for the Reserve and 1.25 for the Preferred. Again, it allows you to stretch your points a little more, and those award flights, they're redeemable and they do count toward elite status, too. You can also use the portal to book events and concert tickets: Cirque du Soleil. You can use the portal to do that. Now, the downside with the portal is it's really hard to get upgrades. You want to get the biggest bang for your buck, so you want to use your points for upgrades instead of buying your premium fares through the portal. So by not using the portal and just booking directly and redeeming your points, it's a better deal.
Let's say you had 100,000 Chase points. You can transfer those Chase points to one of the 11 airline or three hotel partners, and then you can use those points to book your fares and upgrade and do all that. You can't do that in the portal.
Katie:The Chase Ultimate Rewards portal and more broadly, Ultimate Rewards points, are some of the most valuable and flexible in the travel rewards world. So getting access to them in some way is a must in any strategy. We'll be right back after a message from the sponsors of today's episode.
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Katie:All right, cards three through five. So wherever you maneuver next for card three, or number two if you're not starting from the cashback card, will largely depend on your travel priorities and if you have any travel coming up that you are trying to plan for. If you prioritize flexibility most, I would say get the AmEx card. It's a competitor that also complements the Sapphire line, because it's gonna give you access to AmEx's Membership Rewards portal and points. If you prioritize frequent air travel, I would say get yourself a Southwest card, assuming the carrier is prominent in your area and you're cool with flying coach. This program co-brands with Chase, and their points are some of the most valuable. Other programs, like United, American, and Delta, are a little bit less valuable and generally require higher redemption values, so the points and miles don't generally go as far. For the sake of transparency, I also have a United card because I fly out of Denver a lot, so I'm gonna cover that one too.
And third, if you prioritize hotels, go for the Marriott Bonvoy or the Hyatt program next. I generally recommend people go for an airline or hotel card next, if only because they tend to have far lower annual fees, and we're working our way up in fees and perks instead of diving straight into the deep end. But honestly, it's totally up to you in how you intend to use your points.
So let's talk airlines first. The Southwest Rapid Rewards Priority card is technically their most premium card product. It has a $149 annual fee, but the benefits offset the fee pretty easily in my opinion, assuming you fly Southwest. You get 7,500 anniversary points every year; you get 25% cash back on in-flight purchases—so think your $8 wi-fi, your $5 drinks. You get four upgraded boardings per year, so at a $40 value each, that's worth $160 alone. And you get a $75 annual Southwest travel credit. While I should disclaim that I did used to work there, Southwest is my favorite from a rewards standpoint, because it's just so easy to earn points and they go a long way, and it's the only program that offers a true companion pass benefit. If you can rack up 135,000 points in a year, and I think the easiest way to do this is through a big sign-up bonus and then referrals, you can designate someone to fly free with you for the rest of the calendar year and the entire following year, which is a benefit that's actually kind of hard to quantify, since someone who flies a lot could easily rack up thousands of dollars in free flights.
My husband and I had a lot of points and companion pass in 2021 and 2022, and we basically didn't pay for a single domestic flight for 24 months. You just have to pay taxes for your companion’s flight, which is usually $5.60 each way. Southwest also makes it really easy to change and cancel flights, especially if you're booking with points; there aren't any fees for changes, cancellations, or bags, and you can do all of it online really easily. I know this 'cause I used to work on optimizing the flows. Sometimes they'll run promotional companion pass offers where you'll get some points and a companion pass for the rest of the year if you sign up and spend a certain amount of money. That is probably the best time to get the card. Right now the bonus is not great—it's only 50,000 points, but I've seen it get up to 85,000 in recent years. Benét is also a big fan of Southwest, but told me she actually does not carry the card anymore, which I can understand if you're trying to keep your strategy really simple and load up all your spending on your travel-agnostic cards like the Chase or the AmEx.
Benét Wilson:United and American and Delta all do dynamic pricing now. We used to have these really cool award charts where you knew exactly how many points you were going to need to go from North America to Hawaii or North America to Asia, wherever it is that you wanted to go. Now it's dynamic pricing; you never know. It depends on when you book it, what seating is available, but you never know exactly how much miles you're going to be redeeming, and it tends to be higher unless you get some real bargains. Sometimes the airlines will come up with these bargain fares for points, but not for miles, but not very often anymore. Southwest is very simple. You get points based on how much you spend and if you've got status. I have A-List Preferred, so I get the 100% point bonus every time I book a flight, so that's a really nice little perk. And Southwest is easy. You can buy it by points or buy it by money, and there's no blackouts. If there's a seat on that plane, you can use your Rapid Rewards to buy it with your points.
Here's the thing: I had the Rapid Rewards card, but I found that it is better to go with a travel card like American Express Green or Chase Sapphire Preferred or the premium cards, because you actually get more points and miles with those cards than you do with an airline card. I think about, if I wanna fly Southwest and if I had the Chase Sapphire Preferred, you know, that's one of their partners, so I can just transfer my points and live my happy life.
Katie:Of course, the obvious shortcoming for Southwest is that you can't fly to Europe or Asia—just North America, Central America, Mexico, and the Caribbean. But I've been able to travel all over the US, Cabo, Cancun, Grand Cayman, and Hawaii on them.
My second favorite airline from a rewards perspective is United, because I think their miles actually do kind of go a long way and you can use them for trips all over the world, with twice as many destinations as Southwest. So if Southwest doesn't serve your city, but United does, I like the United Explorer card; it's the mid-tier offering and you get a $0 annual fee in year one, then $95 each year after. Two United Club one-time passes per year, so that's nice for lounge access in terminals or airports without Priority Pass or Centurion Lounges. You get your first checked bag free for you and a travel companion; you get priority boarding, and you get up to $100 Global Entry or TSA PreCheck credit, though this benefit may overlap with your premium card. If you don't get a premium card, though, this single perk does pay for the annual fee in year two, and then you get 25% back on in-flight purchases. So right now this card is offering 50,000 bonus miles, not a great sign-up bonus, but one to keep an eye on when it shoots up to 75,000 or more. I also have this card, and I spent my 60,000 sign-up bonus on a roundtrip flight worth $1,200.
Okay, so now that we've covered our favorite airline-specific cards, let's talk about hotels. If flying is not your thing. Assuming you haven't tired of the $300 cleaning fees at your Airbnbs yet, you may not need to dabble in this section, but I have always been a hotel person, and Marriott Bonvoy’s program is my pick for two reasons. Number one, their credit card more than pays for itself with its recurring annual perks. And number two, total ubiquity of properties. You can pretty much always find a Marriott property at basically every price point and luxury preference, which is why I like them. As for the card, I like the Marriott Bonvoy Boundless, and here's what you'll get.
So number one, normally I don't recommend putting ongoing spend on these airline or hotel-specific cards, since they normally don't generate points that are as valuable as points you'll earn on a Sapphire or AmEx product, even money spent at those properties or airlines. But you'll earn 17 points per dollar on spending at Marriott properties, because you'll get automatic Silver Elite status that's gonna act as a point multiplier. You'll also get a free night award worth up to 35,000 points after your card anniversary. And if you book a room worth, say, 50,000 points, it'll usually allow you to split the cost between that free night award certificate and points. And you'll get complimentary premium wi-fi while you're there, thanks to the free Silver Elite status that you'll receive. Right now, the sign-up bonus is three free nights worth up to 50,000 points each, valued at 150,000 points total, after you spend $3,000 on purchases in the first three months. The annual fee is $95, which is, again, more than offset by the annual free night award. Generally speaking, Bonvoy points are worth between 5 and 8 cents per point, meaning a 150,000 point bonus could be worth up to around $1,200 in Bonvoy hotel credits. As for other hotel programs that are worthwhile, I asked Benét for her take, because she told me she used to have a lot of loyalty to Bonvoy, but has since switched teams and now prefers Hyatt.
Benét Wilson:I was a diehard Marriott fan for 35 years, and then we went through some series of events that had me very disappointed, and so I switched to Hyatt and I like Hyatt. The only thing I don't like about Hyatt is, they have the smallest number of actual hotels worldwide. So if I'm going to a smaller place, I'm not gonna have a Hyatt, but I've got Marriott still as the backup. But I like that Hyatt has not stepped into dynamic pricing like the other hotel chains have, and you can get some really nice hotels at very reasonable prices. So for example, I live here in San Antonio. I am turning 60 in July and I went and booked a suite, the Entertainer Suite, 1,100 square foot suite, and I used 9,000 miles plus $200 a night. That is a steal.
I wanted to talk about the World of Hyatt credit card. That is going to be the next one I get. I have to get under 5/24 and that happens at the end of the year. So it just kind of enhances the perks that I already get as an Explorist. The only thing I don't like about it is number one, the card only comes with Discoverist status, which is the lowest status, but you get more points per dollar spent because you're getting the points that you would get for booking the hotel and then you get the points from using the card. You get a free anniversary night every year, and I just really like this card. I wish that the sign-up bonus, it's 60,000 points, which is nothing to sneeze at, but it's 30,000 and then another 30,000. You kind of have to jump through some hoops to get that second 30,000. But for everything that I like to do and as much as I love Hyatt, it's definitely worth it for me to get that card.
Katie:Like I said before, you have options for your third card. You can go for an airline product, a hotel product, or you can go straight for your premium card. The Bonvoy Boundless, the United Explorer, and the Southwest Rapid Rewards priority card, they're all Chase products that I carry and love. So if you're trying to avoid triggering the 5/24 rule, you may wanna consider grabbing those first. The Hyatt credit card that Benét mentioned is also a Chase product.
Now it's time to talk about your premium card, and you'll either get this third or fifth, depending on whether you go for airlines and hotels beforehand. Premium cards, though they do come with a higher annual fee, tend to offer perks that are way above and beyond what you'll get from a normal credit card, like travel insurance coverage, car rental insurance, access to exclusive vendors, 24/7 concierges, and purchase protection and warranties on lost or stolen items purchased with the card.
My favorite premium card is the Platinum card from American Express, and I will tell you why. First of all, you get that $100 credit for TSA PreCheck and Global Entry. Remember, there is some overlap here with the United Card. You'll also get up to $200 in statement credits per calendar year. That covers incidental fees from your selected airline. So think bag fees, change fees, cancel fees. You'll also get up to $200 in statement credits on hotels in the Fine Hotels and Resorts or Hotel Collection bookings per calendar year in the portal. You'll get up to $200 in Uber cash per calendar year. You'll get $300 in Equinox credit on the digital app and eligible club memberships. You'll get a Clear credit worth $189 per year. This is the companion to TSA PreCheck. You'll get $20 per month in streaming credits. You'll get $100 per year in Saks credits, and you'll get lounge access to Priority Pass and Centurion Lounges. Though it is worth noting that the guest privileges for the Centurion Lounge are going away unless you spend more than $75,000 per year on the card.
Now, assuming you used all of these statement credits, we are talking about a $1,400 value, not including the once every five years TSA PreCheck credit, which I didn't count because it's once every five years. Plus when you book in the Fine Hotels and Resorts Collection, typically these are gonna be four- or five-star places. You'll get a daily breakfast credit for two during your stay, and typically an additional $100 resort credit, which adds up as well.
If you don't typically like staying in luxury hotels, and/or these other credits don't actually sound like something you'd use, the Platinum card probably will not be for you. My husband and I definitely get our money's worth, but the credits align really well with how we travel and spend, and thank god, because the annual fee is steep at $695 right now. The sign-up bonus is 80,000 points, but if you open the application in an incognito browser, you can usually get an offer up to 125,000 points. The Platinum Card also offers concierge services when you are planning travel, dining, events, or honestly other random things. And while I've never personally used it, I have friends who rave about how it's like having your own personal travel agent or assistant. But the concierge does not just help with travel. Benét even used the Platinum concierge for help with shopping for appliances.
Benét Wilson:Well, I mean, we were all stuck in the pandemic. I lived in Baltimore at the time, but I came home to San Antonio and I was here for nine months, and so we decided we were gonna start getting some stuff done. The kitchen is from 1995 and it's this horrible invection, you know, the thing that just the coils heat up, it's not electric and it's horrible. And there's this griddle that was just awful. The refrigerator was dying, the microwave, the whole thing. So one of my coworkers had talked about how he had called the Platinum AmEx concierge to help him with gardening supplies. And I'm like, “Wait, what?” And so I called and I still remember Ms. Rebecca to this day, because she was that good. She asked me all kinds of questions. She had me measure everything and she's like, “Give me two days.” And she sent me from luxury to just budget. And so she was like, “So whenever you're ready to choose, we'll make the arrangements. They'll pick up your old appliances, they'll bring in the new ones, install them.” And it was great 'cause I had no idea.
And they do crazy things, like I remember this other story. This woman was at a theater in Paris and she was watching this foreign movie, and the woman had on these gorgeous earrings. She wanted the earrings. So she used the concierge to find the earrings. You can use it for emergency daycare. I mean, you think of it…I have never heard a concierge say no to anything.
Katie:I love their customer service. So I recently lost a pair of $130 sunglasses that I purchased in 2021, far outside the supposed window of purchase protection. But I submitted a claim anyway, and they deposited the $130 as a credit on my account in less than 18 hours. The other popular premium card offering is the Chase Sapphire Reserve, with a $550 annual fee. But this is where a caveat is required. You can only have one Sapphire product at a time. So if you decide to go for the Reserve card, you'll wanna get access to the AmEx world of Membership Rewards points in a different way. So while my preferred strategy is getting the Chase Sapphire Preferred and the AmEx Platinum, the opposite approach is getting the AmEx Gold and the Sapphire Reserve, which is what Henah has. The Sapphire Reserve currently has a 60,000 point sign-up bonus after spending $4,000 in three months. And in years past, these sign-up bonuses used to get up to 100,000 points, but those days are pretty much over.
Here's why some people prefer this card. You get a $300 annual travel credit to be used on any travel purchases charged to the card, so way more broad. You get Priority Pass lounge access; you get $100 global entry or TSA PreCheck statement credit; you'll get card member perks at the Luxury Hotel and Resort Collection, like upgrades and daily breakfast credits. You'll get complimentary Lyft Pink, DashPass, and Instacart memberships, and $240 in annual credits. And we haven't talked much about point multipliers on spend yet, but every year after you spend $300 on travel, the Reserve card offers 10x points on hotels and car rentals purchased through Chase, and 5x points on flights purchased through Chase, and 3x points on all other travel purchases.
While AmEx offers a flat 5x points on all travel purchases, regardless of where or what you book. In Henah's case, she prefers the Sapphire Reserve card because the perks are broader, like she can spend the travel credit in any way, versus for airline incidentals in AmEx's case. She can combine them with her other Ultimate Rewards points from her other cards, and the card leverages more of the everyday conveniences that she uses, like Lyft and DoorDash. Then the AmEx Gold, as a replacement for the Sapphire Preferred, comes with a $250 annual fee, but it gets you 4x points on restaurants, takeout, and supermarkets; $120 dining credit with specific vendors like GrubHub and Goldbelly; access to the Hotel Collection and $100 in experience credits; and a $120 Uber credit. I have the AmEx Gold card and I put all my food spending on it.
Importantly, the total annual fee costs in both combinations are very similar. Sapphire Preferred plus AmEx Platinum is $790 per year, while Sapphire Reserve plus AmEx Gold is $800 per year. So not that different. I was curious, so I asked Benét which combination she prefers.
Benét Wilson:This is gonna sound strange because I do have the AmEx Platinum, but if I could go back again, I would get the Chase Sapphire Reserve, and here's why. They have the concierge, too, but their benefits are much more extensive. They don't have the AmEx Lounge, but have you tried to get into an AmEx Lounge lately? I mean, it's ridiculous. They have primary coverage for car rentals. So with AmEx Platinum it's secondary. Again, the Reserve has more points for broader travel and dining, although you do get the five points per dollar spent on airlines. But if you're balancing it all out and you're looking at all the perks that come with the Sapphire Reserve, plus it's that $300 a year credit, which means the card is lower-priced than the AmEx Platinum. So if I were going to go back in time and do it again, I would get the Chase Sapphire Reserve and I would get the AmEx Gold. I like the AmEx Gold 'cause it's got some nice little perks, especially if you're dining and groceries, four points per dollar spent. That's a nice little perk. You get the credit for Uber, you get the credit for like Shake Shack and all those little Cheesecake Factories. You get the Uber benefit.
Katie:Which combination you choose will probably depend on A, how you travel, and B, what the sign-up bonuses are at the time you're starting. Right now the Platinum plus Preferred has a better combo of up to 125,000 AmEx points and 80,000 Chase points, compared to the Reserve and Gold, which is at 60,000 Chase points and 90,000 AmEx points. But this changes over time and sometimes the opposite will be true. Assuming you followed my exact strategy: You got the AmEx Platinum card, the Chase Sapphire Preferred, the Southwest Priority, and the Bonvoy Boundless, you'd be paying roughly $1,034 in annual fees each year. But as you can see from our breakdown, if you travel even semi-frequently, you're gonna more than cover your annual fees and get a lot of sign-up bonuses. If you're part of a couple and you wanna double up, you can refer each other to the cards. So you'll get referral bonuses and a second sign-up bonus. As of the time of this recording, the sign-up bonuses are good on some of the cards, not so great on some of the others, so it may not be the best time to sign up for everything, but keep checking back because they typically change monthly or quarterly.
So we've covered how you rack up points, but now, how do you use them? We're gonna share a brief way to redeem points here, but if you're looking for something more detailed, we'll link a few resources that we recommend in the show notes. If you have a hotel or airline card, it's usually pretty straightforward. You'll log into your account, you'll search for the dates you plan to travel, and you'll check the “redeem points or miles” box and book like you would for a paid ticket. Though with airlines it can be a little more convoluted because you can book on different codeshare partners. So for example, I got a really good redemption on a United flight by booking with Air Canada, of all places.
But before you book, ensure you're getting the most out of your points and that you're not just better off paying cash, thereby defeating the purpose. Generally speaking, you can divide the cash cost of the flight or hotel room by the number of points or miles, to see what each point or mile is worth. The average redemption value of various points and miles is gonna vary depending on the airline or hotel program. So we'll link the companion blog post this week in the show notes with a breakdown of the loyalty programs that we're talking about today. You can also use something like The Points Guy calculator to do the math for you, so we'll put that in the show notes as well.
For example, if you find a flight on United that's $500 out of pocket, but 30,000 points, you're getting roughly 1.60 cents per mile, which I would consider worthwhile. But if a $500 flight is 60,000 points, that's about 8 cents per mile, which is below average and technically suboptimal. But let's say you're perusing one of the more travel-agnostic platforms like Chase or AmEx, redeeming these can be slightly more complicated, but they're usually more versatile and valuable. Overall, the simplest but not always the most valuable option is to log into your credit card platform's travel site and run a search for your travel dates like you would on Kayak or Expedia. The downside here is that your points are generally worth a fixed amount or will fluctuate based on the real-time price of the flights. So if your flight today is $400, they may request 40,000 points, but if the flight jumps to $500 tomorrow, they may want 50,000 points. And it's not ideal, but it is the simplest.
The best way to redeem points is to transfer credit card points to a partner program. For example, Chase has a number of travel partners including United, JetBlue, Marriott Bonvoy, Hyatt, Southwest, where you can transfer a thousand points or more with a one-to-one ratio. If you need 20,000 JetBlue points, you can just transfer 20,000 Chase points and you should have them ready within minutes, which is pretty dope. AmEx has a similar rundown with partners like Delta, Emirates, and Hilton. We'll link a list of Chase and AmEx's travel partners in the description. But the important thing to note here is, which of these two providers partners with the airlines or hotels that I most frequent? That will also help you decide which card to get first or how you can redeem the points based on your travel preferences.
We're going to link a few other resources in the show notes, most of which expand on things we've talked about today, like the Money with Katie Travel Rewards 101 series, which takes this information and goes into more detail about things like transferring travel rewards as a couple, and more.
But before we go, let's cover some high-level FAQs, like, will credit card travel rewards hurt my credit score? No, not if you do it correctly. Having more credit cards is, counterintuitively, a good thing. When you have more credit cards, you have more credit available to you, thereby driving your credit utilization down, unless you're always using all the credit available to you, in which case, not so much.
Another popular question is, is getting new credit cards bad? New credit is minimally impactful. So having new credit from a new credit card only accounts for 10% of your overall score. Granted, credit age is important, so try not to cancel old cards even if you're not using them, because they make your credit older and therefore more established. You adult, you. But if you are about to apply for a big loan, you may wanna wait on applying for a bunch of new credit.
Another popular question is, am I supposed to keep these credit cards long-term? The beauty of this strategy is that every card featured is valuable enough year over year to warrant paying the annual fee on an ongoing basis, if you are using the benefits. Some cards have high sign-up bonuses but aren't worthwhile afterward. These cards are not in this episode. Everything you are hearing about is a card that I recommend keeping. Maybe you're thinking, what if I don't wanna keep paying an annual fee? As I mentioned earlier, you can always downgrade a card in the second year to a no or low annual fee version. This is a good alternative to closing a card because it won't hurt your credit. You can also call the card company and say you're considering getting rid of the card, and most times someone from the retention department will waive the fee or at least give you points or miles to keep your business.
And lastly, how do you get the credit card welcome bonus? So if it says spend $4,000 in three months, what does that mean functionally? Here's an example. If you get a credit card today, so April 10, we’ll say, and your first statement closes on May 20, you'd have until the end of your July 20 statement. So May 20, June 20, July 20 to hit the spend threshold necessary to get your points.
All right, that was a lot. The show notes are gonna be absolutely loaded with extra resources and more detail. So I hope this was helpful, and that is all for this week. I will see you next week, same time, same place, onThe Money with Katie Show. Our show is a production of Morning Brew and is produced by Henah Velez and me, Katie Gatti Tassin, with our audio engineering and sound design from Nick Torres. Devin Emery is our chief content officer, and additional fact checking comes from Kate Brandt.