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Getting Started with Travel Rewards: It Can Be Overwhelming!
Diving into the world of travel rewards can feel like navigating a maze. Should you focus on cashback or points and miles? Which credit card family should you embrace first? Or should you explore cards from various issuers? And perhaps the biggest question of all: will those annual fees actually be worth it? I know I felt overwhelmed when I first started!
When people ask me for advice on building their credit card portfolio, I always suggest looking at card programs that offer scalability. This means choosing cards that you can pair with others down the line to create a robust strategy without relegating your original card to the dreaded sock drawer. After all, that would be a waste of a good credit line!
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The Power of Transferable Points
You’ll quickly discover that transferable points are incredibly valuable for travelers. They allow you to redeem rewards across a wide range of airline and hotel partners, giving you incredible flexibility. However, travel credit cards often have stricter approval requirements, so they might not be ideal as your very first rewards card. I remember initially being intimidated by some of the premium cards.
Fortunately, some issuers offer card families that let you start with a no-annual-fee credit card and then upgrade to a higher-tier card later for maximum value. This is the strategy I used when I first started collecting points!
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Why I Recommend Chase Ultimate Rewards for Beginners
In my experience, Chase Ultimate Rewards is an excellent starting point for points and miles newcomers. The program is fairly straightforward, and their unique 5/24 rule makes it strategic to start with their cards.
For those unfamiliar, the 5/24 rule essentially means that if you’ve opened five or more credit cards (from any bank, not just Chase) in the past 24 months, you’re unlikely to be approved for most Chase cards. This is why planning your credit card strategy is important.
If you want to earn Ultimate Rewards, I recommend starting with the Chase Freedom Unlimited and the Chase Sapphire Preferred Card. These two cards create a powerful combination.
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Why Pair the Chase Sapphire Preferred with the Chase Freedom Unlimited?
Let’s delve into why these two cards are a winning combination, particularly for beginners. Chase’s 5/24 rule is a significant factor.
Since Chase limits the number of cards you can be approved for, it’s wise to strategically choose your first cards. If you already have a solid credit score, the Chase Sapphire Preferred is a great starting point because it directly earns transferable points. I applied for this one early on because I knew I wanted to redeem points for travel.
On the other hand, if you’re relatively new to rewards credit cards, the Chase Freedom Unlimited is also a fantastic option for earning cashback.
The best part? The rewards you earn with the Freedom Unlimited can later be transferred to the Sapphire Preferred if you decide to get that card later. This flexibility is invaluable. I started with the Freedom Unlimited and then graduated to the Sapphire Preferred once I felt I was ready to maximize travel redemptions.
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Chase Sapphire Preferred: A Closer Look
Let’s explore the benefits of the Chase Sapphire Preferred in more detail.
* Welcome Bonus: New cardholders can earn a substantial welcome bonus after meeting the spending requirements within the first few months. This is a fantastic way to quickly accumulate a large number of Ultimate Rewards points. * Earning Rates: The Sapphire Preferred offers impressive earning rates on various categories, including travel booked through Chase Travel, dining (including delivery and takeout), select streaming services, online groceries, and all other travel. * Perks: This card comes with valuable perks, such as no foreign transaction fees, a 10% points bonus on your cardmember anniversary, and a $50 annual hotel credit for reservations made through Chase Travel. I always appreciate the lack of foreign transaction fees when I travel internationally! * Travel Protections: The Sapphire Preferred provides numerous travel protections, including primary auto rental insurance, baggage delay insurance, trip delay reimbursement, trip cancellation and interruption insurance, extended warranty protection, and purchase protection. These protections offer peace of mind when you’re on the road. * Annual Fee: The Chase Sapphire Preferred has an annual fee, but the welcome bonus, earning rates, and perks can easily outweigh the cost, especially if you maximize the card’s benefits. * Why I Love It: What I love about this card is the breadth of the travel category. From airline tickets to taxis and tolls, you can quickly earn Ultimate Rewards points even if you don’t travel frequently. The travel protections are also a huge plus!
When it comes to redeeming points, you have access to a wide array of travel partners. You can also redeem Ultimate Rewards points directly for eligible purchases through the Chase Travel portal at a fixed value.
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Chase Freedom Unlimited: A Closer Look
Next, let’s examine the benefits of the Chase Freedom Unlimited.
* Welcome Bonus: New cardholders can earn a bonus after meeting the spending requirements within the first few months. * Earning Rates: The Freedom Unlimited offers compelling earning rates, including cashback on travel purchased through Chase Travel, dining, drugstores, and all other purchases. * Annual Fee: The Freedom Unlimited has no annual fee, making it an accessible option for those who are new to credit cards or prefer to avoid annual fees. * Why I Love It: I appreciate that the Freedom Unlimited offers solid everyday earning categories. However, its true value shines when paired with a card that allows you to redeem your rewards as Ultimate Rewards points.
Even if you don’t have a premium Chase card right now, you can always apply for one later and combine your points into the Ultimate Rewards account of the premium card. The flexibility to combine points is one of the reasons why I consider this combination to be one of the best beginner options available.
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Maximizing the Combo: How to Use the Cards Together
As mentioned earlier, the rewards you earn with the Freedom Unlimited become far more valuable when you also hold a higher-end Chase card. This is because you can only convert your cash back into transferable points with a card that directly earns Ultimate Rewards points.
To redeem rewards earned with the Freedom Unlimited as points that can be transferred to partners, you need to hold a higher-tier card like the Chase Sapphire Preferred. Another option is the premium Chase Sapphire Reserve for those who find that its annual fee is justified by its better earnings, additional benefits, and annual travel credit.
The Ink Business Preferred Credit Card can also be a great alternative (or addition) for small business owners. This is a great way to grow your point earnings!
Even if you don’t plan on transferring points to travel partners, these cards guarantee extra value when redeeming points through the Chase Travel portal for travel at a fixed value. In other words, rather than redeem each point for 1 cent each with just a Freedom card, you’ll be able to redeem them at a rate of 1.25 or 1.5 cents apiece by also having the Sapphire Preferred or Sapphire Reserve, respectively.
If you simply want cashback and never plan on pairing your cards, you should explore other cashback credit cards with higher returns. However, those looking to build a long-term card strategy can leverage the Chase Freedom Unlimited’s pairing capabilities with a card that unlocks Ultimate Rewards redemptions.
