- 1 Chase Sapphire Preferred is terrible, get Slate instead
- 2 Is Chase Freedom Unlimited Visa a Game Changer in The Game?
- 3 Combine the New Chase Freedom Unlimited Card with Chase Sapphire Preferred and Turn Dollars Into Sensible Travel Rewards
- 4 Does It Make Sense to Upgrade to the Chase Sapphire Reserve from the Preferred?
- 5 I Downgraded My Chase Sapphire Preferred To The Chase Freedom Unlimited
Chase Sapphire Preferred is terrible, get Slate instead
I'm going to do my readers a favor and assume that by the time they've graduated to blogs like mine from the training-wheels affiliate bloggers, they're perfectly aware of my objections to the Chase Sapphire Preferred, so I won't relitigate that case today. Suffice it to say, the only person who should even entertain the notion of paying a $95 annual fee for the card is a business traveler who's reimbursed for their travel expenses and is allowed to pay for their own hotels and meals while on the road. Even then, I'd be skeptical.
But whenever I rail against the Sapphire Preferred, someone inevitably comes back with their supposed trump card: "Sure," they say, "you'd have to be crazy to keep the Sapphire Preferred, but a 40,000 Ultimate Rewards-point signup bonus makes it worth applying whenever you're eligible for a new bonus."
That's wrong too. Here's why.
Both Sapphire Preferred and Slate can be product-changed to Freedom
While Sapphire Preferred is an Ultimate Rewards-earning card and Slate isn't, both products are "own brand" Chase credit cards, and cardholders can call in to request a product change to the best no-annual-fee Ultimate Rewards-earning credit card: Chase Freedom.
That means the end game is the same with both cards: a product change to Freedom. The only comparison worth making is the advantages of signing up for each card in the first place. So which card offers bigger rewards for signing up?
What are 40,000 more Ultimate Rewards points worth to you?
A lot of bloggers will try to tell you what 40,000 Ultimate Rewards points are worth. A night at the Park Hyatt Vendôme costs 672 Euro, so 40,000 Ultimate Rewards points must be worth $810!
But I don't really care what 40,000 Ultimate Rewards points are worth in the abstract. I care what 40,000 more Ultimate Rewards points are worth.
And the answer is that if you're not going to redeem them, they're worth $400.
Now, maybe you are going to redeem them. Maybe you keep your Ultimate Rewards balance as low as possible by continually redeeming them for premium cabin international trips and luxury hotels. But even if so, don't value 40,000 more Ultimate Rewards points at the highest value you get from the program; value them at the average value you get across all your travel redemptions.
What is a $30,000 negative-interest-rate loan worth to you?
I wouldn't have thought it was possible, but last week I understated the value of the Chase Slate introductory balance transfer offer of no balance transfer fee for transfers within the first 60 days, and a 0% interest rate on balance transfer for 15 months.
I wrote, "for the first 60 days of a Slate account membership, you can transfer up to $15,000 in balances with no balance transfer fee."
But that's not exactly right. You can transfer up to $15,000 from non-Chase-issued credit cards in the process of opening a new account, but that actually has nothing to do with the $0 balance transfer fee and 0% balance transfer APR: it's a restriction Chase places on all balance transfers.
In fact, Chase's rule is that only $15,000 can be transferred in each rolling 30-day period. Since the $0 balance transfer fee lasts for the first 60 days of card membership, you're actually able to transfer up to $30,000 under the no-fee, 0% APR offer.
Of course, that would require having a sufficiently high credit limit, but Chase does allow you to transfer available credit from other credit cards, so you can always scrounge up as large a credit line as possible from your worthless Marriott, British Airways, Hyatt, and Southwest credit cards, for example.
Before I dig any deeper, let's be clear on the math here: your $30,000, 15-month loan has a negative interest rate because you've transferred the balance from other, rewards-earning credit cards. Using conservative assumptions of a 2% cash back credit card with 1% in purchase and liquidation fees, your $30,000 loan is worth a minimum of $300 — before you even get around to using the money!
So, how should you use the money?
So now you've got $30,000 in cash lying around, and you only need to make minimum payments on your new Slate card for 15 months. What do you do with the cash?
- Max out high-interest savings accounts. Maybe you're like me and you drip a steady amount into your high-interest savings accounts each month. That's no longer necessary: max them out and reap 5% or higher APY on your savings.
- Pay down your mortgage. While your home is hopefully financed at an extremely low interest rate, you may still be paying private mortgage insurance if you haven't yet built up enough equity. By bringing your equity up to 20% of your home's value, you may be able to save hundreds of dollars a month in mortgage insurance payments (I'm not your banker or insurance agent; check with them first).
- Pay down your student loans. I have a small Perkins student loan that's accruing interest at a rate of 5.6% APR. I'm going to pay it off, saving a few hundred dollars in interest payments over the life of the loan.
- Make retirement contributions. If you qualify for the retirement savings contribution credit, up to 50% of your contributions to qualifying retirement plans can be rebated when you file your taxes. I recently wrote a walkthrough of the retirement savings contribution credit over at the Saverocity Forum; there's a lot more information available there.
- Invest it. Of course traditional investment vehicles aren't paying much at the moment, but we're travel hackers: there are alternatives. You can fund Kiva loans with a 5%- or up-to-6%-earning credit card. If you belong to a bank or credit union that allows it, you can fund certificates of deposit with a rewards-earning credit card. A 6-month CD funded with a 2.22% cash back credit card suddenly adds 4.44% to your annualized return. 3-month CD's will double that again.
- Buy something. Of course this isn't strictly speaking a way of maximizing the yield on your loan, but if the alternative is to finance a car or appliance at a high interest rate, being able to make the purchase with cash may save you hundreds or thousands of dollars.
The options I listed above are just the first few that sprang to mind; you no doubt have your own ideas about what you'd do with a $30,000 negative-interest-rate loan. So do the math, and in almost all cases I suspect you'll find the loan is more valuable than the additional Ultimate Rewards points.
After all, Ultimate Rewards points are easy to earn — a lot easier than finding negative-interest-rate loans!
Is Chase Freedom Unlimited Visa a Game Changer in The Game?
Double usage of the word “game” is intentional. Last Friday I’ve mentioned a new product called Chase Freedom Unlimited Visa that should be available within the next few weeks. Update: The card is now available and it pays me commission.
Basically, it comes with a very simple earning structure: 1.5 Ultimate Rewards points per dollar on all purchases. If you decide to cash out the rewards, it would amount to 1.5 % return: not bad, but not great.
Of course, the real value lies in ability to transfer to partners like Southwest, Avios, Hyatt and United, and get a potentially much better return on your points. Let’s take Southwest program. You can get roughly 1.5 cents towards “Wanna get away” fare per each Ultimate Rewards point. So, 1.5 UR points will give you approximately 2.25 cents on Southwest Airlines. That’s better than 2% you would get with a no-annual-fee Citi Double Cash card. Read this post with analysis of Ultimate Rewards program when it comes to regular family.
But there is one problem. You still need to have a premium card like Chase Sapphire Preferred or Chase Ink Plus. And those products come with a $95 annual fee. If you’ve been around my site for the last few years, you probably know that I always encourage folks to be very careful when it comes to annual fees. Of course, it doesn’t mean you should never pay them. I just hope you do the math and decide if it’s worth it.
Something I’ve seen Dan from DansDeals mention a few times to readers. He said you don’t technically need CSP or Ink Plus because as long as you have Chase Freedom or Freedom Unlimited, you can upgrade it to CSP as needed. The annual fee of $95 on Chase Sapphire Preferred doesn’t kick in immediately, so you can always downgrade it after transferring the points to airline or hotel program. I’ve never done it, but I suppose it could work. I do caution readers not to rely on this method being available at the time you need to make a redemption.
Few things to keep in mind about new Freedom Unlimited card:
1) While earning 1.5 UR points on everything is pretty good, you will do better by buying $300 Visa gift cards at Staples.com and using them for everyday spending.
I wrote a post Is $300 Visa Gift Card at Staples.com a Game Changer? which I recommend you read. Obviously, if you plan on buying expensive equipment, using credit card is preferable. But if you are willing to use gift cards for everyday purchases, buying Visa gift cards at Staples.com with your Chase Ink Plus is the way to go. Overall, if you want to collect Ultimate Rewards, it will be very hard to beat Chase Ink Plus/Chase Freedom combo. Adding Freedom Unlimited card will probably yield marginal benefit.
2) If you plan to stick with Chase Sapphire Preferred instead of Ink Plus, Freedom Unlimited is worth considering.
Having regular Freedom card is still a no-brainer, but adding Unlimited to the mix could make sense. You’ll have a trifecta of Freedom/CSP/Freedom Unlimited. Use the first one for 5% bonus categories, second one for dining and travel, and third one for everything else. However, I recommend you don’t get hung up on buying regular gift cards with Chase Freedom or Ink.
As I wrote in my post last week, you can often do better by going through third-party resellers. Sure, you can buy Olive Garden gift card at Staples with Ink Plus and get 5 points per dollar OR you can buy the same gift card at 15% off through Cardpool (my link, you’ll get $5 off your first purchase) or another store. Amazon and gas gift cards are rare exceptions, as you can’t usually get a big discount on those.
Update: My reader Audrey has mentioned that purchases from third-party reseller CardCash code as Utility category (a fluke?), so you should be able to get 5 points per dollar when using your Chase Ink Plus.
3) If you apply for new cards regularly, you won’t be able to get Freedom Unlimited due to 5/24 Chase rule.
But you should be able to convert Chase Sapphire Preferred or another Chase Freedom to this product. I actually plan to convert my husband’s CSP to Freedom Unlimited as soon as it becomes available. I currently only apply for cards that come with a decent sign-up bonus upfront, and don’t have a 2% cash back card. So, having one that pays 1.5% will be the next best thing.
Going after sign-up bonuses will still be my core strategy for the foreseeable future. I just expect it to be less lucrative overall. But free is still free.
4) As always, I encourage you to look at other cards when it comes to everyday spending.
I put together a list of “keeper” cards and best 2-card combinations for a middle-class family. I recommend you take a look and see if perhaps going after cash back or other flexible rewards currency could be advantageous. I’ve written quite a few posts on Amex Everyday Preferred and why it’s a game changer. While it has an annual fee, you can usually make up for it via various promos.
Getting several good cash back cards could also make a lot of sense. Read my post on US Bank Cash Plus Visa Of course, everyone’s circumstances will be different, so I can’t say what will or won’t work for you. If you love staying at Hyatts/ flying Southwest and would otherwise pay cash for those, then you will most likely do better sticking with UR cards’ combination.
5) Chase Freedom vs. Freedom Unlimited comparison will be very YMMV
That means “your mileage may vary.” If you are just starting out in the hobby and debating on which one of those two cards to get, it will heavily depend on your spending pattern. If you don’t like to buy gift cards from reselling sites, you might want to go with Chase Freedom. Those 5% categories can be quite lucrative, especially when it comes to gas and Amazon purchases. In all likelihood, you will average 2 points per dollar at the end of the year. I think for most people, original Freedom is a superior choice.
However, if you are a person who likes simplicity, then perhaps it’s better to get Unlimited version. Once again, I assume that you plan on accumulating transferrable Ultimate Rewards points and want to get Chase Sapphire Preferred or Chase Ink Plus down the road. Otherwise, get a decent 2% cash back card like Citi Double Cash and call it a day. To new readers: if all of this confuses the heck out of you, feel free to email me or look at my Free consulting service page.
Readers, who is excited about Chase Freedom Unlimited?
If you found my content beneficial, look at my Support Me page for ways you can help keep the site running. Also, please, subscribe to receive free blog updates through email and recommend me to your family and friends. You can also follow me on Twitter, like me on Facebook and download my e-book
Leana is the owner and founder of Miles For Family. She enjoys beach vacations and visiting her family in Europe. Originally from Belarus, Leana resides in central Florida with her husband and two children.
Combine the New Chase Freedom Unlimited Card with Chase Sapphire Preferred and Turn Dollars Into Sensible Travel Rewards
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. For an explanation of our Advertising Policy, visit this page.
If you’re looking for the best way to save money on travel, look into combining the new Chase Freedom Unlimited SM Card with the Chase Sapphire Preferred ® Card for a winning combination.
Get even more by using two Chase cards instead of one!
With Chase Sapphire Preferred ® you’ll earn 2X points on all of your travel and dining purchases. When you pair Sapphire Preferred ® with the new Chase Freedom Unlimited SM for all of your other purchases, you’ll earn 1.5% cash back, which you can easily convert to Ultimate Rewards ® Points to get the biggest bang for your buck. This is a perfect card combination that will keep things simple while you earn more travel rewards than you would using Sapphire Preferred ® alone.
Earning 1.5% cash back is new from Chase, but what’s really unique is that the Chase Freedom Unlimited SM can be transferred to Sapphire Preferred ® and converted to Ultimate Rewards, which means your cash back will be worth 1.25 cents per point. What’s more, with Sapphire Preferred ® you can transfer your rewards to Chase Partner loyalty programs such as United, Southwest, Hyatt, and Marriott, making your rewards worth up to 2.1 cents vs. 1 cent – making this an even better value.
Here’s how you can earn over 100,000 Ultimate Rewards ® Points within the first year of card membership, using both cards.
First, sign up for the Chase Sapphire Preferred ® card and you’ll be eligible for 50,000 bonus points when you spend $4,000 in the first 3 months of being a cardmember. Add an additional cardmember to your account and you’ll earn another 5,000 bonus points when they make a purchase within the first 3 months.
Next, sign up for the Chase Freedom Unlimited SM and earn a sign-up bonus of $150 (15,000 points) when you spend $500 in the first three months, plus an additional $25 bonus (2,500 points) when you add an authorized user and have them make a purchase in the first three months. Transfer this bonus to your Sapphire Preferred ® card and begin your journey with 17,500 Ultimate Rewards bonus points. It may not seem like a lot but when it is used as travel rewards with Chase partners, it could be worth $362 making this a much better value than if you redeemed it for the $150 cash back.
Now, let’s take the average spending of $2,300 a month on a credit card and multiply that by 12 months – that’s $27,600 per year. Of that amount, an average family of 4 spends $4,580 per year on vacations, and $2,505 on dining out. If you use Chase Sapphire Preferred ® for all your dining and travel expenses, you’ll earn 2X for each dollar spent giving you a total of 14,170 points. Then, use the Chase Freedom Unlimited SM Card for all of your other expenses (the remaining total of $20,515) and with the 1.5X earn you will accumulate $308 cash back. Then transfer it to your Sapphire Preferred ® card for a value of 30,772 Ultimate Rewards ® bonus points.
This will give you a whopping total of 117,442 Ultimate Rewards ® by the end of the first year if you apply for both cards today. That’s worth more than $1,468 (2.1 cents vs. 1 cent), and you’ll be well on your way to planning your next vacation all with no annual fee the first year.
Apply for both today, and start saving!
Why we think it’s imperative that you carry two cards from Chase
The very best way to get the maximum from a cash back card is by converting your points to travel rewards. And you can only do this together with the Chase Sapphire Preferred and the NEW Chase Freedom Unlimited. It’s a phenomenal deal!
- 1.5% cash back offer that’s easy to track and redeem
- No Annual Fee
- Easily convert your cash back to Ultimate Rewards if you have another Chase card
- Needs less-than-excellent credit
- No rotating categories to keep track of
- Not the highest flat-rate cash back card
- No bonus categories
Get a $150 cash rewards bonus after you spend $500 in purchases in the first 90 days after account opening.
Does It Make Sense to Upgrade to the Chase Sapphire Reserve from the Preferred?
Disclosure: We get a commission for links on the blog. You don’t have to use our links, but we’re very grateful when you do. Opinions expressed here are the author’s alone.
TL;DR: We have an calculator to determine whether it makes sense for you to upgrade your Preferred to a Reserve.
W e’ve raved about how the Chase Sapphire Reserve is the “must get” credit card of 2016. With a signup bonus of 100,000 UR points, most people can get $2,000 to $3,000 in value from the card in the first year.
Some people aren’t able to get the Reserve because they’re affected by Chase’s 5/24 rule. Others may be looking to get a mortgage soon and don’t want to add another credit card to their credit report.
Many people considering the Reserve already have the Chase Sapphire Preferred, so we wanted to analyze whether it would make sense to upgrade to the Reserve.
That means that you can upgrade your Preferred to a Reserve, or downgrade it to the Freedom.
You shouldn’t upgrade if you’re looking to add a new credit card and you’ll be under 5/24 soon.
For example, if you had 5 new accounts in the past 24 months and one of them was in September 2014, it might make sense to wait until October 2016 to apply for the Reserve and get the lucrative bonus.
Tweet us at @tiltcredit and tell us about which card made more sense for you!
The Reserve gives you a $300 travel credit that’s based off calendar years, 3x points on travel and dining, a $100 credit for Global Entry, Priority Pass Select (with unlimited guests), and 50% discount when redeeming UR points with the portal.
This compares with the 2x points on travel and dining and the 25% discount in the UR portal for the Preferred.
By upgrading, you’re getting $600 in value for a $450 annual fee, meaning Chase is paying you $150 to have the credit card. This easily beats the $95 annual fee you’re paying for the Preferred. That’s before considering the other perks like the Priority Pass Select.
The calculation for year 2, year 3… year x are the same. It mainly just depends on how you’ll redeem your UR points.
To find the break-even — the point where you’re impartial to either card based off the value — we’ll only look at the travel credit, annual fee, and the travel/dining multiplier. If you value Priority Pass and the Global Entry credit above zero, the break-even figure will be even lower.
If you’re looking to redeem for cash, your break-even is $5,500. That means that if you spend more than $5,500 in travel and dining, you’ll get more value from the Reserve than the Preferred. If you’re looking to redeem using the portal, this figure drops to $2,750. If you use transfer partners, it drops to $2,619.
Again, these figures ignore the other benefits. Even if you valued Priority Pass Select at a conservative $50, you’re break-even for spend drops dramatically. Redeeming for cash, the Reserve makes more sense if you spend more than $500 in travel and dining. Using the portal, it drops to $250. Using transfer partners, it drops to $238.10.
I Downgraded My Chase Sapphire Preferred To The Chase Freedom Unlimited
Like I have been posting about a lot lately, I recently got the Chase Sapphire Reserve Card with a 100,000 bonus point offer. Score!
When comparing the Chase Sapphire Reserve to my beloved Chase Sapphire Preferred Card, it seems that everything the Preferred card does, the Reserve card does better. So for me, I was planning to get rid of my Sapphire Preferred with it’s $95 annual fee. I did not think I needed both cards.
I recently posted about downgrading a card as a good alternative to canceling a card. I took my own advice, and called Chase. I downgraded my Chase Sapphire Preferred to the “newish” NO FEE Chase Freedom Unlimited which gives me 1.5 Ultimate Rewards points on every purchase. This card will become my new “go to” card for my everyday spending when I am making purchases where I can’t earn a higher spending bonus. (ie-on sneakers, clothes, etc.)
I wanted the card anyway, but likely would have been barred by the Chase 5/24 rule. I barely got approved for the Reserve card due to this rule.
So, in the end, everything worked out and I am eager to use my two new Chase cards, my Chase Sapphire Reserve and my Chase Freedom Unlimited….A LOT!
Sign up for my free newsletter to learn how you too can travel for free.