How to get 7.04 points per dollar buying fireworks on July 4th (7/04).
Happy Fourth of July! Today’s post is a silly challenge: how to buy fireworks on July 4th (7/04) and earn 7.04 points per dollar. This is similar to the Pi day challenge I did in March (see “Pie at 3.14X for Pi day 3/14”), but with an added twist: today we want to use a Chase Freedom card to make the purchase.
On Pi day, I took advantage of the Sapphire Preferred card’s 7% annual dividend to come up with a way to buy a Pie kit for 3.14X. With the Freedom card, things are a bit more complicated because the Freedom’s reward structure is more complicated….
The Freedom card has two great benefits that I’ll take advantage of here (besides its name). The first is that the card offers rotating 5X categories each quarter. This quarter the categories are restaurants and gas stations. Most gas stations carry firecrackers and the like, so we’ll buy our fireworks there. The second benefit the card offers is dependent upon having a Chase checking account. Once you have both the Freedom card and a checking account, you qualify for the Chase Exclusives program. With Chase Exclusives, your base rate increases from 1 to 1.1 points per dollar AND you get a fixed 10 points per transaction. Within a 5X bonus category you would earn 5.1 points per dollar plus 10 points.
I had to send my brain back to 8th grade algebra to figure this one out:
Given, F = price of fireworks (after tax), our goal is to earn 7.04 points per dollar. In other words, we want to earn 7.04 x F points. Our formula then is:
7.04 x F = F x 5.1 + 10, therefore:
7.04 x F – F x 5.1 = 10, therefore:
1.94 x F = 10, therefore:
F = 5.154639
In other words, if we spend $5.154639 to buy fireworks at a gas station, we would earn 7.04 points per dollar. Unfortunately, most gas stations do not take denominations smaller than a penny, so we need to round down the amount. When we round down to a payment of $5.15, we see that we earn 36.265 points. Unfortunately, Chase is likely to round this down to 36 points which completely messes up the math. After playing with some amounts and accounting for rounding, I found that a payment of $5.11 results in 36 points which comes to 7.045 points per dollar. Sure, technically this is closer to 7.05X, but I’ll take it.
Buy fireworks for 7.04X
So, there you go. Simply get a Freedom card and a Chase checking account and register for this quarter’s 5X bonus categories. Then, go to a gas station that sells fireworks and find some in which the after tax price will come to $5.11. Easy as pie!
A word to my son
See! I told you that algebra comes in handy in the real world! And to think that you doubted me…
|Chase's 5/24 Rule: With most Chase credit cards, Chase will not approve your application if you have opened 5 or more cards with any bank in the past 24 months. Some exceptions that are NOT subject to the 5/24 rule include: British Airways, Hyatt, IHG, Marriott Business, and Ritz Carlton.
To determine your 5/24 status, see: 3 Easy Ways to Count Your 5/24 Status.
|Chase 5/24 semantics ("Subject to" vs. "Count towards"): Most (but not all) Chase cards are subject to the 5/24 rule. That means the rule is enforced in making approval decisions. In other words, you probably won't get approved if your credit report shows that you opened 5 or more cards in the past 24 months. Meanwhile, most business cards (such as those from Chase, Amex, Barclaycard, BOA, Citi, US Bank, and Wells Fargo) are not reported on your personal credit report. These cards do not count towards 5/24.
Chase IHG Card is not subject to 5/24 so it's easy to get. But after approval it will count towards your 5/24 total.
Chase Ink Business Preferred is subject to 5/24, so you likely won't get approved if over 5/24. If you do get approved, it won't count towards 5/24 since it won't appear as an account on your credit report.
|Amex 5 credit card limit: If you apply for a new Amex credit card, you may get turned down if you already have 5 or more Amex credit cards. Both personal and business cards are counted towards this limit. Charge cards, though, are not counted. You can apparently get as many charge cards as you’d like, and the number of charge cards you have does not affect your ability to get up to 5 credit cards. Authorized user cards are also not counted towards the 5 credit card limit. See also: Which Amex Cards are Charge Cards vs. Credit Cards?|
|Applying for Business Credit Cards
Yes, you have a business: In order to sign up for a business credit card, you must have a business. That said, it's common for people to have businesses without realizing it. If you sell items on eBay, for example, then you have a business. Similar examples include: consulting, writing (e.g. blog authorship, planning your first novel, etc.), handyman services, owning rental property, etc. In any of these cases, your business is considered a Sole Proprietorship unless you form a corporation of some sort.
When you apply for a business credit card as a sole proprietor, you can use your own name as your business name, use your own address and phone as the business' address and phone, and your social security number as the business' Tax ID / EIN. Alternatively, you can get a proper Tax ID / EIN from the IRS for free, in about a minute, through this website.
|Chase Ultimate Rewards points are super valuable and super flexible. At the most basic level, points can be redeemed for cash or merchandise, but you'll only get one cent per point value that way. A better option is to use points for travel. When points are used to book travel through the Ultimate Rewards portal, points are worth 1.25 cents each with premium cards (Sapphire Preferred or Ink Business Preferred, for example) or 1.5 cents each with the ultra-premium Sapphire Reserve card. Another great option is to transfer points from a premium or ultra-premium card to an airline or hotel program when high value awards are available (see this post for details). If your points are tied to a no-fee "cash back" Ultimate Rewards card, then first move those points to a premium or ultra-premium card before redeeming them in order to get better value.|
|Amex Membership Rewards points can be incredibly valuable if you know how to use them. In general, if you use Membership Rewards points to pay for merchandise or travel, you won't get good value from your points. One exception is with the Business Platinum card where you'll get a 35% point rebate when using points to book certain flights. This gives you approximately 1.5 cents per point value, which is pretty good. If you don't have the Business Platinum card, then your best bet is to transfer points to airline miles in order to book high value awards. More details can be found here: Amex Transfer Partners.|
|Editor’s Note: This guest post was written by the same guy who showed you how to fly round trip to Africa (DC to Senegal) for 50,000 points. You can find John’s website and award booking service here: theflyingmustache.com/awardbooking.
-Greg The Frequent Miler