The BEST travel rewards card

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Chase Sapphire Reserve
For background regarding the Chase Sapphire Reserve card, please see our new resource guide: Chase Sapphire Reserve Complete Guide.

Nope, I’m not going to declare that the new Chase Sapphire Reserve card is the best travel rewards card.  By many measures, it probably is the single best travel rewards card, but it’s possible to do better.  Let me explain…

The Chase Sapphire Reserve card offers 3X Ultimate Rewards points for Travel & Dining.  But, Citi’s ThankYou Premier card offers 3X ThankYou points for Travel & Gas, and 2X for Dining & Entertainment.  And the Amex Premier Rewards Gold card offers 3X Membership Rewards points for airfare, and 2X points for dining, gas and groceries.  Even better, for many, the Amex Everyday Preferred card offers 3X for groceries (up to $6000 per year in spend), 2X for gas and a 50% bonus on all points earned in every billing period in which you use the card 30 or more times.  Depending upon your purchase habits, the Amex or Citi cards may offer better point earnings than the Chase Sapphire Reserve card.

The Sapphire Reserve card lets you redeem points for travel for 1.5 cents per point value by booking through Chase.  This means that travel and dining purchases effectively earn a 4.5% rebate when rewards are used to purchase travel.  That’s excellent.  But, for all other purchases (which earn just 1 point per dollar), it means a paltry 1.5% rebate.  For those purchases, most would be better off with a no-fee 2% cash back card such as Citi’s Double Cash card.

The BEST travel rewards card

The BEST travel rewards card, in my opinion, is the combination of several Chase cards: Ink Cash (or Ink Plus) + Freedom + Sapphire Reserve + Freedom Unlimited.  If that’s too much to handle, the Sapphire Reserve + Freedom Unlimited combination alone is well worth considering.

Combination Earning

Consider the following point earning rates:

  • Sapphire Reserve: Earn 3 points per dollar for travel and dining.
  • Freedom Unlimited: Earn 1.5 points per dollar for all spend.
  • Freedom: Earn 5 points per dollar in rotating categories each quarter.  5X earnings are limited to $1500 spend per quarter.
  • Ink Plus Business or Ink Cash Business card: Earn 5 points per dollar for cell phone service, cable TV, internet, and office supply purchases. Earn 2 points per dollar at gas stationsYou can also earn 2X for hotels with the Ink Plus or 2X for restaurants with the Ink Cash, but you should use the Sapphire Reserve instead to get 3X for travel and dining purchases.

As you can see above, a person with four Chase Ultimate Rewards cards can earn a minimum of 1.5X on all spend, 3X for travel and dining, and 5X on many other purchases.

Combine points before redeeming

Chase allows cardholders to move points freely from one Ultimate Rewards account to another.

For details, see: Chase point transfer rules made simple [Infographic].

This means that you can move points earned with your Ink or Freedom cards to your Sapphire Reserve account.  Then, if you use points to book travel through Chase, you’ll get 1.5 cents per point value from all points.

With this plan, at worst you’ll earn 1.5 points per dollar (using the Freedom Unlimited) and will therefore get a minimum return of 2.25%.  That alone is better than a 2% cash back card.  And, obviously, returns will be much higher when earning 3X or 5X rewards.

How to keep annual costs low

There’s no way to avoid the fact that the Sapphire Reserve card charges a $450 annual fee.  That said, it also offers $300 per year in automatic travel credits.  This means that each year in which you use the card to purchase $300 or more in travel, you’ll get $300 in statement credits.  For most people looking for travel rewards cards, this will be easy enough to achieve and will effectively lower the final out of pocket cost of the card to $150 per year.

You can get the rest of the credit card category bonuses without any additional annual fees.  The Chase Ink Cash, Freedom, and Freedom Unlimited cards have no annual fees.

While $150 per year isn’t cheap, it’s only $55 more than the Sapphire Preferred card.  And, I believe that its enhanced earning power, its increased redemption value, and its various other perks (Priority Pass lounge access, National Car Rental Executive status, etc.) are worth far more than $55 per year.

How to get all of those cards

The first goal is to get approved for the Sapphire Reserve card.  After all, the card’s 100,000 point signup bonus is worth pursuing even if you don’t plan to keep the card long term.  So far, results are mixed as to whether or not Chase is enforcing the 5/24 rule with this new card (with many cards, Chase won’t approve your application if you’ve opened 5 or more cards in the past 24 months).  See also: Get approved for the Sapphire Reserve 100K offer despite 5/24.

If you already have the Sapphire Preferred card, you should then consider downgrading it to either the Freedom or Freedom Unlimited card (you could always upgrade it later if you change your mind).  If you combine finances with a spouse or significant other, there’s no reason for both of you to have the Freedom Unlimited card — one of you can downgrade to that card and can get an authorized user card for the other.  So, if you both have Sapphire Preferred cards, consider having one person downgrade to the Freedom Unlimited, and the other downgrade to a regular Freedom card (for it’s rotating 5X categories).

If you have an Ink Plus card, consider downgrading it to the no-fee Ink Cash card.  You’ll get the same 5X categories and will save $95 per year.  Keep the Ink Plus card, though, if you have very high 5X spend since the Ink Cash card is limited to $25K in annual 5X spend whereas the Ink Plus is limited to $50K.  Or, try to get a second Ink Cash card by signing up with a second business.

In the long run, you and/or your significant other or spouse may be able to get more Ultimate Rewards cards by breaking 5/24 or by flying under 5/24.

 

 

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