In an earlier blog post, I explained the “5/24 rule” and why you should start with Chase cards. Once you confirm that you are below 5/24, the Chase Ultimate Rewards (UR) journey begins. Why, you may ask? Why should my next card be a Sapphire Preferred or a Sapphire Reserve, whether I am 0/24 or 4/24? I'll explain in today's post.
CSP/CSR UR Earning Potential
Both the CSP & the CSR earn Chase Ultimate Rewards (URs). The CSP currently has a 100,000 point sign-up bonus and the CSR has a 60,000 point sign-up bonus. CSP earns 2 points per dollar for all dining spend (all types of restaurants, including sit-down, fast food, coffee shops, bars, Grubhub, Eat24, UberEats, Seamless, etc.) and for all travel spend (hotels, airfare, Uber, taxis, parking, cruises, Airbnb, tolls, rental cars, tours, etc.). CSR earns 3 points per dollar for all categories that CSP earns 2x. For Lyft, CSP earns 5 points per dollar and CSR earns 10 points per dollar. All other charges on both cards earns 1x.
A Transferable Currency
Once you have a UR-earning card, and start racking up the URs, you want to spend them to start traveling. Great! Now you must decide how to spend your hard-earned points. Unlike points/miles earned for a specific brand, such as earning Southwest miles via a Southwest credit card, all URs can be transferred to any of Chase's travel partners. At the time of publishing, these partners are: Aer Lingus, Air France/KLM, British Airways, Emirates, Iberia, Jetblue, Singapore, Southwest, United, Virgin Atlantic, Hyatt, IHG, and Marriott. Every time you swipe your CSP or CSR, you could earn 1x, 2x, or 3x points with any of these partners, rather than being limited to one. This incredible versatility leads to increased value of each UR, in addition to the ability to earn up to 3x on purchases.
Value of a Ultimate Reward (UR) Point
As one of Sarah's blog posts last week indicated, URs have both a “fixed” and a “dynamic” value. Chase has a travel portal where you can use your URs as cash to purchase airfare, hotels, rental cars, tours, etc. This travel portal is powered by Expedia. If you hold a CSP, your points are worth 1.25 cents per point in the portal. If you hold a CSR, your points are worth 1.5 cents per point in the portal. This represents the BARE MINIMUM value of UR points. Even with this low valuation, a CSP (2x) earns a minimum of 2.5 cents per dollar spent on dining and travel, while the CSR (3x) earns a minimum of 4.5 cents per dollar. Additionally, holders of either card can transfer their points to partners for increased value. We have redeemed URs transferred to Hyatt for 7.85 cents per point (meaning points earned on our CSR for this redemption netted us a return of approx. 24 cents per dollar spent) and have redeemed URs transferred to Singapore to fly business class to Argentina, as outlined in our Facebook group, for a net return of 22.5 cents per dollar spent.
So how do you determine value? Honestly, it is a personal decision. You have to learn for yourself what percentage of your points you redeem through the portal (at either 1.25 or 1.5 cents per point) versus transferring to partners for higher value. Most bloggers peg the value of URs at 2.0+ cents per point (meaning a 4-6% return on bonus categories). I tend to agree with this valuation, although I personally feel they are worth slightly more. Anytime I redeem URs for 2.5+ cents per point, I feel I've made a great redemption.
The Big Picture
When looking at other high-profile (think high advertising spend) rewards cards, people tend to think about Capital One Venture, Southwest, Marriott, and the major airlines cards. None of these cards offer long-term value close to a CSP/CSR. For example, the Capital One Venture card offers 2 points per dollar on all purchases. While that sounds tempting, the value of each point is fixed at 1.0 cents, meaning only a 2.0 cents return on each dollar spent. While Capital One has recently added transfer partners, the transfers are not 1 to 1, so the original Capital One mantra of “2 points per dollar” does not hold true. All Chase transfers are 1 to 1 to all partners.
For Southwest, it's even worse! UR transfer to Southwest at 1:1. A CSP earns the same points to purchase and fly Southwest (2x) as the Southwest credit cards earn. The CSR (3x) beats the Southwest card outright. Meanwhile, the points earned on CSP/CSR are transferable to 12 other partners, while the Southwest points are only good for booking Southwest flights. Marriott, the major airlines, and other credit cards hold equally bad long-term value.
So now you know that URs are earned in multiples (2x or 3x) on dining and travel, have the ability to be transferred to any of Chase's 13 travel partners, and are incredibly valuable. All-in-all, no cards can compete for this value while you are under 5/24 (if ever!). Grab one of these cards while under 5/24 and never let it go!
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