The points game is always changing when it comes to valuations and redemptions. Should you diversify your points to de-risk?
The main factors that come into play for diversification are:
To simply things, we created this quadrant to determine your strategy.
If you’re someone who has a high amount of spend, but you don’t want to add that many credit cards, then Quadrant 1 is for you.
Pick a points system that works for your spending habits based on categories, and what you want to redeem the points for.
For example, if you don’t care about travel and prefer cash back, then I suggest looking into the Bank of America card set up to earn cash back.
If you have high spend and you want to redeem points for first class or business class flights, then American Express, Chase, or Citi cards would be ideal.
Quadrant 2 is for people who have a high amount of spend and want to obtain more credit card bonuses that provide outsized value. Diversifying your points portfolio should be relatively easy based on spend.
For people who spend less than $1,000 per month and want to optimize for cash back, I suggest picking one card or a simple cash back system.
A flat-rate cash back card like the Citi Double Cash or the Chase Freedom Unlimited card is ideal.
If you want to play the 5% cash back game, then adding the Chase Freedom, Discover It, and ABOC Platinum card is optimal.
The Chase Sapphire Preferred is another card to consider since the welcome offer is worth $500 in cash, and the $95 annual fee is waived the first year. You can product change it to a Chase Freedom or Chase Freedom Unlimited after 12 months of account opening.
If you have low spend, but you’re willing to add a few more cards, then going for cards that offer $100-200 as an intro offer is ideal.
There are a handful of cards in the travel, hotel, and cash back categories that fit the bill.
For cash back, cards like the Bank of America Cash Rewards card offers $200 after $500 in spend within the first 3 months of account opening.
For travel, the Capital One Venture card offers 50,000 bonus miles after $3,000 in spend within the first 3 months of account opening.
Monthly spending is an interesting topic because some people might not spend that much money on a day-to-day basis. However, they might have large monthly bills to pay like health insurance, rent, mortgage, or student loan payments.
The ideal strategy is taking the large monthly bills and paying them with a credit card to meet a minimum spend requirement on a new credit card.
When you’re excited about a hobby or topic, you might naturally want to share it with friends and spread the word. However, before you talk to friends about credit cards, be sure that they’re 100% financially responsible first. The last thing you want to do is help someone get into more debt.
For people who aren’t financially responsible (carry high balances on credit cards, only pay the minimum each month, high utilization, etc.), tempting them to open a new credit card is like offering an alcoholic more alcohol.
People who’ve been burnt by credit cards from irresponsible behavior will probably have a strong disdain for cards. It’s not worth wasting your energy by arguing with people who don’t like credit cards, especially family members.
They might think you’re insane for opening cards, and that you must be in debt from all the travel. The best approach is to reassure them that you’re not in debt and that you’re financially responsible (you better be!!).
If you can’t do basic math, you probably shouldn’t be using credit cards. Ideally, you should be getting positive expected value with the cards you have and the services you use.
One example is people who use Plastiq (2.5% fee) with a cash back credit card like the Citi Double Cash (2% — 1% at purChase plus 1% upon payment). There’s not a reason to use a service unless you’re getting positive expected value like hitting a minimum spend requirement or using a card that earns more than 2.5% on the specific category.
I recommend using Plastiq for hitting minimum spend requirements on new credit cards by paying bills like rent, tuition, or car payments.
To be successful in the credit card hobby, it’s essential to be organized. It doesn’t mean that you need a spreadsheet for everything, but at a minimum, you should have calendar reminders of due dates or minimum spend deadlines.
A few other items worth tracking:
There have been a few times where readers reach out with simple questions that could easily be answered with a Google search. Questions like,“is United Airlines a Chase transfer partner?” or “what is Chase 5/24?” can be Googled.
A lot of people seem to ask questions first before trying to solve or research the problem themselves. Spend at least 5 minutes trying to find the answer yourself, and then reach out for help.
Having a basic grasp of financial literacy is essential for credit card success. Understanding the difference between statement close dates and payment due dates, how to set up auto pay, or how to add a bank account to pay your credit card are basic functions you should know.
If you don’t understand the basics of how to use a credit card and how to avoid fees, you are set up for failure.
The most highly effective credit card users have a financial goal in mind to work towards. The goals are usually geared towards travel or cash back. The two goals have different optimal credit card setups, so you should pick one path to focus on.
If you’re switching between cash back and travel, it’s hard to get maximum value since most travel cards have lower points value when you redeem for statement credits. The value of travel cards is when you use transfer partners, and not cashing the points out.
I recommend taking the time to reflect on the path you want to take and focusing on cards that help you achieve that goal.
American Express cards earn Membership Rewards (MR) points, and Chase cards earn Ultimate Rewards (UR) points, which point system is best for you?
We're going to look at the best use cases for both of these programs, and also consider the long-term strategy at the end of this post.
Amex MR points are great for first-class and business-class products. You'll need to transfer the MR points to transfer partners to redeem the points.
Good for aspirational travel ("YOLO redemptions").
Examples:
One thing to be aware of is that first class flights require significantly more points. From the chart below, round-trip economy class tickets cost 60,000 miles, and round-trip business class tickets cost 120,000 miles.
For most people, especially if you're younger and just starting out on your credit journey, I recommend going for economy flights. Set up flight alerts and book discounted fares with points.
For deals I use:
When it comes to airline transfer partners, Amex has a better list than Chase for international flights.
American Express
Chase
In case you're curious, it's hard to get outsized value from transferring to Ritz-Carlton, as far as I know. Many properties are Tier 5 (70k Ritz = 70k UR points) that can be booked for $500 to $800 (33k to 53k UR points via travel portal w/ CSR).
With Chase UR points, the best hotel redemption is for Hyatt properties. Chase UR points transfer at a 1:1 rate for Hyatt points. You can use 5k UR points for $100-$200/night Hyatt Place (Category 1) or use 30k UR points for $700/night Park Hyatt (Category 7).
Transfer partners (hotels):
When I stayed at a Hyatt Place in Arizona, I was able to find a reward redemption for 5k points ($50).
Depending on the retail price of the hotel, you're getting at least 2-4 cents per point in value.
a) $100 / night = 2 cents per point
b) $200 / night = 4 cents per point
In my opinion, transferring UR points to Hyatt is the best redemption for hotels compared to other hotel groups.
By transferring the points out and paying with points, you'll be able to avoid taxes and resort fees.
Chase UR points have good redemption value when it comes to last-minute United flights or Polaris flights. You can also use UR points to book Southwest Airline deals or to get Companion Pass.
Transfer partners (airlines):
Important: Don't transfer your points out until you have a specific redemption in mind. You can always transfer UR points -> Airline, but you can't transfer the points back.
For flight deals, I recommend using the Chase Travel Portal via the Chase Sapphire Preferred Card, Chase Sapphire Reserve, or the Ink Business Preferred Credit Card .
Chase travel portal (CSP/CSR/CIP):
Although American Express has better airline redemptions, I recommend going for Chase cards first because of the 5/24 rule. You will not be approved for the core selection of Chase credit cards if you have opened more than five cards from any credit issuer in the past 24 months.
You can always get Chase cards first, and then move on to Amex cards, but not the other way around (unless you wait 24 months).
For most people, I recommend getting the Chase Quadfecta first and then move on to Amex cards. If you want to talk strategy on what card to get next, feel free to fill out a free card consultation form.
A: Even though the cards are Chase cards, they do not earn UR points. The cards mentioned above earn points from their respective program.
The Chase cards below are sorted by their programs as outlined by the boxes. Only Chase core products will earn UR points. United cards will only earn United miles, and not UR points. Each card that isn't encompassed by a light blue box has their separate points program as well.
A: No. You can't transfer points to Ultimate Rewards, but you can transfer UR points to transfer partners.
For example, you can transfer UR points to United, but you can't transfer United points to UR points.
Also, only certain Chase cards will let you transfer points to another program:
Transferring points to a partner program can lead to increased points value. For example, if you want to fly first class from SF to Tokyo on United, you would need:
If you were to pay out of pocket for the airfare, it would average $500 for Economy, $2,000 for Business, and $4,000 for First Class.
A: Yes, you can combine UR points across Chase core cards. Here's how:
Watch the video below to learn more about the Chase Sapphire Reserve and how to transfer UR points to one account:
A: Yes, Chase lets you transfer points to members in the same household. Be careful and err on the safe side by making sure last names are the same, or you have lived in the same household for a relatively long time.
The reason for this is because Chase has shut accounts down for selling UR points. Some people also try to game the system by changing their address temporarily. It's not worth getting shut down by Chase.
A: Transfer partners are the best way to get the most out of UR points. Watch the video below to learn about the best (and worst) ways to use UR points:
A: No, UR points do not expire.
