In part I and part II, we learned how credit card sign up bonuses play a significant role in traveling free (or nearly so). In this third installment, we’ll explore an action plan to get started: which credit cards should a beginner go for first? If you’re new and haven’t already, please read parts I and II. Although there may be overlapping information, we assume knowledge from those posts. Less new but things still not making sense? Follow the Roman Numerals enumerated above.
How you’d ideally choose your first travel reward credit cards
In a perfect world, you’d start with the end in mind. Life becomes so much easier when you have a target to aim at. For instance:
- Where do you want to travel?
- e.g. let’s say it’s to Japan. Well, you’d want to know what airlines, or their partners, fly to Japan from your home airport.
- When do you want to travel?
- e.g. how much time do you have to accumulate the points or currencies required? A year? Three?
- Do you need airfare only, hotels only, or both?
- My younger, poorer self only needed free airfare. I was willing to stay in Youth Hostels for lodging. Hostels aren’t only for youth today–although I’ve moved on: both age and comfort-wise. Others may find ultra-cheap for-pay airfare (e.g. great deals from the U.S. to Iceland on Iceland Air), but want to use points for more comfortable accommodations.
- Do you need help with other costs like theme park tickets, cruise fares, car rentals, etc?
Best First Credit Card
When anyone asks me what credit card they should apply for first, the answer’s always the same: go for the Chase Sapphire Preferred. Also known in the Hobby as the CSP. There’s also a Chase Sapphire no annual fee card (lower in the product chain) and a Chase Sapphire Reserve (top of the line with an outrageous annual fee). Why should you pull the trigger on the CSP first? Because it’s like a swiss army knife. It’s even made of steel rather than plastic. Seriously. And this multi-tool does practically everything you’d need starting out. It earns transferable points called Ultimate Rewards (UR). While you may redeem UR points on Chase’s own UR travel portal, you may also:
- Transfer points free to a spouse living at the same address
- Transfer points to hotel and airline partners at a ratio of 1:1
While the CSP has other terrific benefits, we’ll focus on the points.
The best CSP bonus is typically 50,000 UR points for spending $4,000 within the first three months of opening the account. This is around $1,000 more in minimum required Spend than when I first got the card; but it’s doable if you put all your expenses on the card–and ideally have a spouse who could also put all of his expenses on the card. Or if you add a relative you’d trust with your life, and more, as an Authorized User, so they can help with the spend. At the time of this writing, the best available public offer was 40K UR points. Contact me with your email address, if you’d like, and I’ll send a referral link that will get you the 50K sign-up bonus. It’s a win-win, since I’ll receive 10K referral UR points if you’re approved and you receive the better offer. Or apply through the links in this spouse.
The spouse could get his own card, and then you’d have 100,000 UR family points. This is a great first step. Down the road, by mindful that there are Chase business credit cards offering lucrative Ultimate Rewards sign-up bonuses. You may qualify as a business and not even realize it–but that’s for another post, another time.
At the time of writing, Ultimate Rewards transfer partners were as follows:
Airline Travel Partners
British Airways Executive Club
Flying Blue AIR FRANCE KLM
Korean Air SKYPASS
Singapore Airlines KrisFlyer
Southwest Airlines Rapid Rewards®
Virgin Atlantic Flying Club
Hotel Travel Partners
IHG® Rewards Club
However, it’s best to keep UR points as UR points until you’re ready to book a flight or hotel. Cuz:
1. You may not know which travel partner has room or flight availability for your trip
2. Rewards Programs devalue their points over time. The same Hilton in Venice that cost me 50K Hilton HHonors points one month cost 100K points to book the next! A flight that costs 40K points RT one year may cost 60K the next, etc.
Choosing not to transfer points to partners until you’re ready to book gives you the Ultimate in Rewards flexibility. Don’t know if that’s what Chase was going for with it’s naming of their loyalty program, but it fits.
What second card should I get?
Some credit cards just pair well with others. Starting out, re-read the list of transfer partners and look for transfer-specific travel partner cards. For example, imagine you’re trying to save up enough points to fly to Europe. Mandy and I have had great success flying to both Hawaii and Europe using United Airlines and their partners (Lufthansa, Air Canada, etc). United points have taken us to Hawaii twice and Europe at least three times.
So, if you’re like us, you may wonder–“us”: does United offer a credit card? Indeed they do–the Chase United MileagePlus Explorer card. The latest offer is 40K United MileagePlus miles for a $2,000 spend in three months. Personally, I’d hold out for at least a 50K offer. The High Water Mark offer for this card has been 70K, so it can pay to wait. Let’s say you apply, say, three months apart, for the Chase Sapphire Preferred card and the United MileagePlus cards respectively. That’s 96K UR points. 50K bonus + 4K in spend points for the CSP and 40K bonus + 2K in spend points Last I flew United to Europe, it was 60K United MileagePlus points in Economy (off-season), plus around USD $100 or so in taxes, to get to Rome and Paris. So with two cards only, you’re going to Europe! There’s also a business version of the Chase United MileagePlus card; so if you qualify, that’s another way to rack up United points: now or down the runway.
Hotels. That don’t smell (abominable)?
All four of Chase UR’s hotel transfer partners offer credit cards. We’ve found Hyatt points to be the most valuable to transfer. Value here being:
- Less points required in the Hyatt system to stay at better properties
- A good variety of Hyatts in places we like to travel
Although IHG points, for us personally, rank a close second. So if you need hotels more than airfare, pair the CSP with a hotel transfer partner credit card.
Mandy and I have held all four cards except for the Ritz-Carlton card. And we presently pay the annual fee on the IHG card for the free night certificates–they’re worth far more than you pay when you redeem at InterContinentals, for example. But Marriott is the only card presently under Chase’s restrictive 5/24 Rule. So it may be worth getting first.
Chase 5/24 is… a situation. A long time ago
in a galaxy far, far away, Chase seemed to pay little attention to how many credit cards you’d applied for in the last 2 years. The number of “hard credit pulls” (a kind of credit inquiry) in the last 12 months was, and still is, a large factor in getting approved for any card from any bank. Generally, less is more. So, those of us in the Hobby would do “App-o-Ramas”, e.g. apply for, say, four or five credit cards in the same day. Those days are long behind us. Please spread your applications out over time–possibly one card per person per quarter. I don’t always practice what I preach, but I’m not presently the kind of person I’m preaching to–meaning I’ve built up a nice, diversified portfolio of points and am willing to take on more risk than I’d ask a beginner to consider.
Presently, when you apply for a Chase card that falls under the 5/24 Rule (e.g. United, Marriott, Southwest), if you’ve applied and been approved for 5 or more credit cards in the last 24 months, this means an instant credit card Rejection regardless of other factors. Fortunately, not all Chase cards fall under the 5/24 Rule (the Chase IHG Rewards card is one of them).
But if feel a strong gravitational pull toward wanting to apply for more than a card or two, consider seeking out the Chase 5/24 Rule cards now. Or you’ll regret yourself later. Chase 5/24 takes counts credit card accounts opened in the last 24 months from any bank. Yes, even some store credit cards. So if you or your spouse got snookered by opening cards to save $50 On Your Next Purchase–or whatever the pitch is; you know these pitches if you frequent brick-and-mortar stores–then you may be banging your forehead into the nearest wall right now.
Another gotcha: you may have to work on that credit score to be approved for the CSP. So if rejected, you may want to try for the Chase United or Chase IHG card and build up your credit score and history. Credit scores are better reserved for another post.
In our next installment, we’ll consider a two to three year application plan for a nearly free trip to Japan; inspired by our dear friends Amanda and Kris who asked in late 2017, essentially: we want to travel to Japan in 2020. How can we do this with points and credit cards, starting now? You could apply a similar plan to reach the destination of your choice. But to get started now, the best card for most is the Chase Sapphire Preferred.