A lot of people have started asking for my advice on credit cards — and more specifically, a lot of my (young) peers are asking what the best options are to get started in the credit card game.
And I first want to say, these are the questions to start asking! If you are in your mid 20s, with a steady job, no previous amount of substantial debt, and you can responsibly pay off your credit card debt, you aren’t doing yourself any favors not earning something back on your credit cards. Whether that’s cash or points, it comes down to a bit of personal preference.
But if you were to ask me, I would say that the best place to start with credit cards is the Chase Sapphire Preferred — and I don’t think I’m alone on this. Not only is this card super valuable in terms of “regular” points earning, it is also free the first year. I’ve talked about this previously, but if you think you want to get in the miles and points game, but are not sure you’re ready for some of the annual bonuses that other cards present, the Chase Sapphire Preferred is the perfect card.
There’s still something missing
With that being said, I think a lot of people I talk to struggle to see the true value in points. For whatever reason, $500 back from one of the cash-back cards sounds so much better than 50,000 points. And as someone realtively new to the real world, I can see both sides — because when push comes to shove, $500 is going to get my bills paid, 50,000 points ain’t doing s%&t. (my grandparents *may* read this)
And ultimately, I don’t talk about this stuff to try and force anything onto anyone. I strongly believe in the value of credit card points, but I also understand personal situations, as well as the mystique that credit cards have. Maybe not the most accurate, or well represented mystique, there is always going to be an air of uncertainty when it comes to credit cards.
Which I get. But what I wanted to do here was try to justify those credit card points. Ultimately, why I think that those 50,000 points, and the cards that earn them, are worth way more than their cash substitute.
Points Value: Redeemed for Cash
To begin, I want to look at the most basic form of value recognized with your points. And when I talk about basic forms, I envision those as either converting your points to cash or redeeming for travel directly through the Chase portal. For now, I don’t want to get too into what I think is the most valuable.
The below examples are from my Chase Sapphire Reserve account.
While the Chase Sapphire Reserve card is not traditionally thought of as a cash-back card, nor may many of you actually know that you can get cash back with the card, there is the possibility. As you can see above, with my 191,576 points I can redeem those points for $1,915.76 — in other words, I can convert my points at the value of 1 cent/point, which you can see at a value above.
Which I want to point out, but would probably not recommend. For the purposes of the arguments in this post, 50,000 points is our threshold. Similar conversions would put that 50,000 points at $500 when redeemed for cash back with the Chase Sapphire Preferred.
But let’s continue on to our other options.
Points Value: Redeemed for Travel thru Chase UR Portal
The other “basic” option is redeeming for travel directly through the Chase portal. The reason I call these both “basic” is because they are both easily accessible, and well advertised, through the Chase Ultimate Rewards travel itself. So, while maybe not the most lucrative option, I believe a lot of people think these may be the only options.
Regardless, the Chase Sapphire Reserve (as pictured above) offers 50% more value on travel when redeemed directly through the Chase travel portal. The Chase Sapphire Preferred offers 25% more value — which I mention because I spoke about using the CSP as a sort of benchmark in this comparison.
Either way, I think it is pretty clear to see the difference in value when simply redeeming for travel versus redeeming for cash. Based on the two pictures above, I would get about $950 more in value when redeeming for travel directly through the Chase travel portal.
Trying to stay consistent for the sake of comparison, our 50,000 points with the Chase Sapphire Preferred would be worth $625 when redeemed for travel directly through the Chase travel portal.
But, of course, I don’t think that is anywhere close to the value you can truly recognize with that amount of points.
How to get 50,000 Chase Ultimate Reward points
Before I get into the true value of 50,000 points, I want to go over where one could score so many Chase points.
- Sapphire Reserve – earn 50,000 points after $4,000 spent in the first 3 months of account opening. Other highlights: 3x points on travel and dining, travel perks like a Priority Pass membership, 50% more value when redeeming for travel
- Sapphire Preferred – earn 50,000 points after $4,000 spent in the first 3 months of account opening. Other highlights: 2x points on travel and dining, travel perks like a Priority Pass membership, 50% more value when redeeming for travel
- Ink Business Unlimited – earn $500 cash back (which can be converted to 50,000 Ultimate Reward points) after $3,000 spent in the first 3 months of account opening. Other highlights: 1.5 points on all purchases
- **Ink Business Preferred – it would be hard to leave this card off the list, as it currently offers 80,000 points after $5,000 spent in the first 3 months of account opening. Other highlights: 3x points on travel and “select business categories.”
As I will continue to stress, Chase Ultimate Rewards are (what I currently believe) the most valuable points currency on the market. Not only are the credit cards themselves super valuable, but the ability to spend the points themselves is what sets them apart.
Instead of getting into the detail of why I think Chase credit cards can be so powerful altogether, I want to try and justify their value. So hopefully when I tell someone how valuable this card is, this post will help justify that.
Points Value: Redeemed for Travel from a Transfer Partner
While the above two examples (redeeming for cash, or travel directly through the portal) represent good value, I think I can find way more value. To review, we are looking at a benchmark of 50,000 points on the Chase Sapphire Preferred card — which we’ve valued so far:
- $500 if redeemed for cash
- $625 if redeemed for travel directly through the Chase Ultimate Rewards travel portal
Which I think more than justifies any “cost” you incur as part of the card — annual fee, credit score hit, stress! But the most value, in my opinion, from Chase Ultimate Rewards is recognized when you transfer points to one of Chase’s 11 transfer partners.
|British Airways Avios||World of Hyatt|
|Air France/KLM Flying Blue||IHG Rewards Club|
|Singapore KrisFlyer||Marriott Rewards|
|United MileagePlus||Ritz Carlton Rewards|
|Southwest Rapid Rewards|
|Virgin Atlantic Flying Club|
|Aer Lingus AerClub|
While not the most thorough list of transfer partners, when compared to other transferable points currencies, I find this list to be extremely well rounded. In other words, this list offers great opportunities for every kind of travel — domestic flights, international flights, or hotel stays.
Thinking about all of those opportunities, let’s now try and put a price tag on those 50,000 Chase Ultimate Rewards.
Round-trip to Europe
There are a few different options for travel to Europe, and some are definitely better than the rest, but for the sake of argument I found some compelling price options. I will highlight all the different options for travel to Europe, but let’s take an example to try and get an idea of price.
Looking at the Air France/Flying Blue award prices, you can get round-trip awards to Europe for a few thousand miles lower — I saw prices at 46,000 miles. Of course those fuel surcharges aren’t great, but still some great value — as you’ll see.
Those 49,000 points get you a flight worth 1,900 Euros! Taking into account the surcharges that you’d pay on an award flight, that’s about 1,750 Euros (~$2,000) in value!
These were the first flights available I found, and I figured it was a good representation of the value to be had, but if you go a bit beyond that 50,000 miles mark there are plenty of other options:
- British Airways – as low as 34,000 miles round-trip off-peak (be aware of high fuel surcharges, though ~$600 range and up)
- Singapore Airlines (Star Alliance Travel) – 55,000 miles round-trip
- United Airlines (United/Star Alliance Travel) – 60,000 miles round-trip
Price Tag of 50,000 Chase UR points = $2,000 (!!) and I think there’s a strong possibility for more there
Short-haul domestic flights on American
While maybe not the most glamorous, one of the redemption opportunities I’ve taken advantage of the most is short-haul awards on American, booked through British Airways. Not only are the prices very reasonable, but there is (usually) plenty of availability and it is a great option for last minute awards. Oh, and there are no fuel surcharges on domestic flights!
BA Avios awards are priced based on segment, and in the US the minimum for awards is 7,500 miles. So while there are definitely opportunities for lower prices, I am focusing on US only flights, but be aware that the value can get even better!
Above is an example of a flight that I have personally booked between Palm Beach and DC. As you can see, the round-trip flight on American, thru BA, is 15,000 Avios and $11.20 in taxes and fees.
Let’s try and put a value on that same flight…
So, $242 for the round-trip flight on American’s website — which, to be honest, is not a terrible round-trip price. But for the sake of our argument, we’d be able to buy 3 of these tickets, which puts the total value at $693 when you subtract the taxes and fees. That leaves you 5,000 points leftover as well.
So, if we were to transfer all of these 50,000 points to BA we’d get these three round-trip flights on American as well as another one-way award within Europe (under 650 miles). Which should add a few more dollars in value.
Price tag of 50,000 Chase UR points = $750
Hyatt hidden gems
One of the redemption’s that I have my eye on for the future is the Hyatt Andaz Resort Papagayo in Costa Rica. This is a well known property within the Hyatt brand that is severely undervalued.
As a category 4 Hyatt property, this property will cost just 15,000 points/night for a standard room. With our 50,000 points benchmark, that would cover 3 nights at the resort, so let’s see what that would be worth.
While the rooms can be understandably hard to come by, I’d recommend stalking the Hyatt website for a few days around your dates and I’m sure an award night will open up.
Looking at the cash price for the same night, things may surprise you…
$833 for one night! I would say that’s already a pretty good value, as you’re already above the value of the points when redeemed for travel through the Chase Portal. But multiply that by 3 — $2,499 in value. Incredible! And you’ll have 5,000 points still leftover.
Price tag of 45,000 Chase UR points = $2,499
Ever-consistent Southwest LUV
As I mentioned at the top, the way any one person decides to use their points is totally up to them. And while it’s not the most glamorous, nor is it very creative, there is a ton of value to be gained with Southwest Rapid Rewards.
The main difference, in this scenario, with Southwest is that they use a revenue based frequent flyer program. Which essentially means that they have already put a price on their points, and what you see is what you get. As the price for a paid ticket goes up, the price for an award ticket goes up — and vice versa.
Which obviously doesn’t allow for any crazy good redemption opportunities, but it is transparent.
Even though it is a bit more arbitrary, I still want to lay out an example — mostly to prove to you that I’m not blowing smoke!
These are the same three flights, one showing the award price and the other the cash price. Southwest does make it easy to look at both prices!
Taking the second and third flights, 5,370 Rapid Rewards is equivalent to somewhere between $97-101, and for arguments sake we’ll say $100. Which is equivalent to 1.86 cents/point — which I believe is actually a pretty good deal, as Southwest advertises more in the 1.75 cents/point range.
So bringing it back to our original point, if we value RR points (transferred from your Ultimate Rewards) at 1.86 cents/point, the total value of the 50,000 UR points would be $930. Not bad! Taking into consideration that flights can even get a bit cheaper, you can get at least ten one-way flights out of that!
Price tag for 50,000 UR points = $930
But don’t stop there…
And while these options are all awesome, and more than justify signing up for one of the cards mentioned above, the best part of Chase Ultimate Awards are all the options that they offer to earn points. With the extensive portfolio of Chase credit cards, you will be well on your way to even more travel opportunities, and even higher price tags!
To quickly review, consider one of these cards to help bolster your credit card spending power and really up that Ultimate Rewards stash:
Bringing it all together
This is by no means a complete list of all the different ways to use 50,000 Ultimate Rewards points, but I do hope it depicts a somewhat realistic picture of the value that can be recognized with those points.
As I continually try to stress, value is not always recognized in dollars and cents — sure, getting an award ticket home may save you a couple hundred dollars, but it is hard to quantify the value of the experiences you earn when travelling to said destination.
With that being said, if you decide to sign up for one of the above Chase cards, or maybe already have, definitely take a look at some of these options the next time you think about travel. Even if you decide to just take out cash, I hope it helps relieve some of your financial pressure in one way or another.