Battle of the Big Three – Part 2: Ultimate Rewards vs Membership Rewards vs ThankYou Points



Note: this post was updated on 6/11/2018 to add the Ink Business Unlimited card that Chase launched in the end of May. This product is identical on the earning and spending sides to the Freedom Unlimited personal card in that you earn 1.5 UR points on every dollar of spending. While the business version does have some minor added benefits, such as primary car rental coverage for business purposes, given its’ similarities, we are not going to cover it in much depth apart from including it in all the comparison charts.

Today, we are continuing our review of the three major transferrable points currencies: Chase’s Ultimate Rewards (UR), Citibank’s ThankYou Points (TYP), and American Express’ Membership Rewards (MR). Our second article in this series covers the Chase Ultimate Rewards (UR) program, which I think is the most user-friendly of the big three. Read on to find out if the UR-earning cards are a good fit to maximize the return on your credit card spending.

 
 
 
 

Chase Ultimate Rewards: Background
Chase Cards that Earn Ultimate Rewards
Earning UR Points
Spending UR Points
Using Points for Transfer to Partners
Points Expiration
Ultimate Rewards Program Summary

 
 
 
 

Chase Ultimate Rewards: Background
Compared to Citi’s ThankYou Points, it is quite easy to determine how many points you earned with Chase, check on your pending points, and have the peace of mind that your points will never expire as long as you keep your accounts current. On the flip side, Chase does not reward you in any way for having a banking relationship with them, so you do not earn anything no matter how extensive or limited this may be. However, this means that you also do not need to worry about tracking separate pools of expiring points as you do with Citibank. Really, the major issue with the UR program is the initial difficulty that some may have in getting approved for the most lucrative credit cards, which give you the ability to maximize the value of your points and also open up the opportunity for enticing partner transfers.

 
 
 
 

Chase Cards that Earn Ultimate Rewards:
The following is a list of the cards, which earn Chase’s rewards currency:
Sapphire Reserve
Sapphire Preferred
Freedom
Freedom Unlimited
Ink Cash
Ink Unlimited
Ink Preferred (replaces Ink Plus)

As with Citi, the cards vary widely in their annual fee, ancillary benefits, and number of points earned per category. The first two are Chase’s top tier and mid-tier personal cards, respectively, and carry no foreign transaction fees. This is something you should keep in mind depending on your travel habits and whether you plan to use your card often overseas. Similar to Citi, Chase dose not have a business equivalent to their ultra-premium Sapphire Reserve (CSR) card and positions its’ Ink Preferred at the same level as the mid-tier Sapphire Preferred (CSP). The good news about this is that this card also offers the ability to transfer UR points to travel partners and has no foreign transaction fee, upping Citi in this regard. The Ink Cash card can be thought of as a cousin to the Freedom product. For reference, the CSR’s closest competitor cards are the Platinum card family from American Express and the Citi Prestige, which was covered previously with Citi’s ThankYou Points program. For the CSP, the Citi Premier and Premier Rewards Gold from American Express are, arguably, the most similar. The details for the cards are illustrated in the spreadsheet below:

Chase Credit Cards Annual Fee Summary

Contrary to the preferential rate that can be obtained for the Citi Prestige, I’m not aware of any annual fee reduction that is available from Chase for either the CSP or CSR. Although Chase has equivalent banking products to Citi for high net worth individuals, those that qualify are eligible to receive a separate card product in the form of the J.P. Morgan Reserve card – essentially a duplicate of the Sapphire reserve – but not any other benefits. As this card is more of a novelty than a genuinely different product, I will not cover it further in this review.

Similar to my review of the cards available from Citi, take note that the CSR comes with a built-in travel credit, which is even more generous than the one offered by the Prestige (300$ versus 250$). It also comes with similar perks such as airport lounge access (which, unfortunately, is in the process of being downgraded from an unlimited number of guests to two coming 8/2018), as well as other expected features such as reimbursement for Global Entry/TSA Precheck. Again, despite the high upfront annual fee, the CSR is either free or can even net you literally hundreds of dollars, depending on your use and travel habits. Thus, I think the CSR is definitely a worthwhile consideration for the right person and can be one of the most valuable cards in your wallet, especially if you stick exclusively to the Ultimate Rewards program.

Two particularly negative aspects of Chase’s cards are the dreaded 5/24 rule in addition to the relatively recent ‘One Sapphire’ rule. The first states that you are not eligible for most new Chase cards – as listed below – if you have had 5 or more new credit card accounts in the last 24 months.

Chase Credit Cards 5/24 Summary

This rule is above and beyond the normal approval processes for a bank such as Chase, which already examine number of inquiries, length of credit history, revolving balances, etc on your account. The 5/24 rule generally does not include business cards, provided they are not from Chase and are not reported on your personal credit report. Finally, a peculiar thing about it is that it is not enforced absolutely – there are multiple reports of people getting approved despite being way over the limit. So you can still get approved for some cards but your odds become progressively smaller with every card account above 5/24, and the CSR – Chase’s arguably most valuable card – becomes much harder if not impossible to qualify for. The most infuriating aspect of this rule is that Chase does not advertise or mention it anywhere, yet uses it to immediately deny your application, resulting in a hard pull inquiry on your credit report with nothing to show for it.

In addition to 5/24, the ‘One Sapphire’ rule enforces that you may only have one of the Sapphire cards active on your account at any point in time; you have to essentially choose between the CSP and CSR as you cannot have both. It is still certainly possible to switch cards either by requesting a product change or cancelling one and applying for the other, but you cannot have both no matter what. If you apply for both on the same day to circumvent the system, you will either be denied or Chase will close down one of the accounts shortly after approval. This rule seems to have been created after the initial introduction of the CSR when many people, already possessing a CSP, applied to receive the historic 100,000 UR point bonus, resulting in two Sapphire accounts. While I agree that its’ a bit counterintuitive to possess both cards since many of their benefits and bonus UR earning categories overlap, I still find it strange that Chase goes out of its’ way to enforce this.

The existence of the above rules makes Chase a very difficult issuer to deal with, especially for those in the mid to late churning game, who easily exceed 5/12, let alone 5/24! As Chase believes that their rules are effective at targeting churners specifically, it does not look like these are going to change anytime soon, if at all. Thus, if the cards in Chase’s portfolio appeal to you, please be sure to start with them, targeting the UR cards, which are more difficult to be approved for, followed by other cards affected by 5/24, and leaving the non-5/24 list for last. Barring advance planning, you will be stuck in limbo waiting until your 5/24 status expires prior to being approved for more Chase cards.

 
 
 
 

Earning UR Points
As I mentioned above, although there is no headache with worrying about a separate pool of rewards obtained from banking products, Chase, nevertheless, has a system in which not every UR point is created equal. Fortunately, this is on the spending and not on the earning side. The earning categories are quite broad and are summarized below:

Chase Credit Cards Earning Ultimate Rewards

As you can see, most of the categories are well represented although, compared to Citi, Chase does not have an entertainment category. Similarly, neither rewards program has any benefit for grocery spending, but does reward gas purchases as well as travel. Like Citi, Chase defines travel quite broadly, as noted below:

“Merchants in the travel category include airlines, hotels, motels, timeshares, campgrounds, car rental agencies, cruise lines, travel agencies, discount travel sites, and operators of passenger trains, buses, taxis, limousines, ferries, toll bridges and highways, and parking lots and garages. Please note that some merchants that provide transportation and travel-related services are not included in this category; for example, real estate agents, websites or owners that rent vacation properties, in-flight goods and services, on-board cruise line goods and services, sightseeing activities, tourist attractions, merchants within airports, and merchants that rent vehicles for the purpose of hauling. In addition, the purchasing of points or miles does not qualify in this category.”

The dining category is, likewise, generous:

“Merchants in the restaurants category are merchants whose primary business is sit-down or eat-in dining, including fast food restaurants as well as fine dining establishments. Please note that some merchants that sell food and drinks located within larger merchants such as sports stadiums, hotels and casinos, theme parks, grocery and department stores will not be included in this category unless the merchant has set up such purchases to be classified in a restaurant category. In addition, gift card and delivery service merchants will not be included in this category unless the merchant has set up such purchases to be classified in the restaurant category.”

Other bonus categories are generally well represented, but require at least one of the business cards to fully optimize. Compared to the CitiBusiness ThankYou, which only offers bonus earning opportunities for office supplies in select quarters of the year, the Ink family of cards makes this category permanent. Instead, Chase caps the amount of maximum spend for which you are eligible to earn 5X points. Additionally, there is no bonus category for online purchases, but you can get rewarded for spending on utilities, internet, and landline phone services in addition to cell phone charges.

I will also specifically point out the Freedom cards: the regular Freedom card is unique in that it offers rotating bonus categories that change quarterly and offer 5x UR points for every dollar of spend for a total possible value of 7500 points back each quarter on $1500 of charges. This translates to a maximum of 30,000 UR points annually on 6000$ of spending. Although Chase advertises cash back in the form of $75 per quarter and $300 annually as the maximum, the quirk lies in how the points can be spent, which I will cover in the Spending UR Points section. Alternatively, the Freedom Unlimited (and Ink Business Unlimited!) gives 1.5 URs for every dollar of spend across the board. These two cards represent two extremes: the Freedom rewards planning and strategic spending in selected categories each quarter to maximize returns on eligible spend, while the Freedom and Ink Unlimited allow you to use your card for anything automatically, knowing that you will always get 1.5 URs for each $ of your spending. Having either card coupled with either the CSP or CSR allows a return of 5x UR points on rotating selected categories, 2-3 UR points on travel and dining, and 1.5 points on all other spend allow you to really supercharge your earnings!

As a welcome additional perk, unlike Citi, Chase offers the ability to earn extra UR points on top of defined category spend by using the Ultimate Rewards Shop through Chase portal. This consists of click-through links that you can activate and use with indicated merchants that allows you to earn the indicated number of points when using your card. This is limited only to only purchases and does not apply in-store. Although the offers are the same, be sure to use the same card for your purchase as the one you had selected initially in the Shop through Chase page!

Chase Credit Cards Earning Bonus Shopping Ultimate Rewards

Keep in mind that these bonuses are in addition to the category-defined bonus spend of the card: thus, if you are purchasing a travel reservation using a 2 UR points/$ link, you will earn a total of 4 UR points/$ with the CSP and 5 UR points/$ with the CSR. Unfortunately, you cannot combine this with coupon codes or other portals that require a click-through (such as ebates) as only the last recorded click-through will be honored. I have personally found that, on occasion, Chase did not record the transaction properly. They ultimately awarded me the missing points on request, but this requires Chase to log in and investigate your prior activity; they are able to determine if you clicked on the link and the time and data of your activity so they will not honor any requests if you forgot to do so or they find no record of this.

Finally, as I noted in my introduction, Chase makes tracking your point purchases as well as any bonuses – both received and pending – very user-friendly and straightforward (are you listening, Citi??). After logging into your account and loading the Ultimate Rewards page, you will see sections for all current spend with UR point summaries and listings, representing all the points that have been posted to your balance.

Chase Credit Cards Earning Ultimate Rewards Summary 1
Chase Credit Cards Earning Ultimate Rewards Summary 2

You can additionally click on the ‘Review more activity” link that will then display a list of all recent purchases with pending point balances (it generally takes 2-3 days from the purchase date for your transactions to show up here) as shown:

Chase Credit Cards Earning Ultimate Rewards Pending Points

If you see that a transaction did not award you points, even though it was not part any published exclusions and should have been awarded, you can give their call center a try and ask that they address the shortfall. Note, however, that each credit card purchase is associated with a particular merchant code, that Chase then uses to determine which category they fit into. If the purchase is misclassified at the point of sale, they may refuse your request. This is not just Chase-specific but is true of all banks’ programs. I have the experience of going to a particular food truck, which is not classified as dining with either of the big three banks for some reason and I never get extra points for it, even though the truck literally next to it always codes correctly. At least with Chase, I know within a couple of days if I will earn extra points and can factor that into my decision on future purchases, instead of receiving a much nastier surprise after a potential months’ (or more!) worth of purchases. My advice, especially for big purchases that you expect will earn extra points, is to make a small transaction with the same merchant to make sure that the points post correctly or use a different seller that you know has gone through without a hitch in the past. This will save you a lot of calls and potential headaches down the line.

 
 
 
 

Spending UR Points
Now, onto the fun part! By now you’ve hopefully amassed a ton of points from maximizing strategic credit card spend and getting in on a record high sign-up bonus, and are eager to redeem all that hand work for a first class ticket. Not so fast – there are, unfortunately, some additional quirks to note. Let’s begin with another spreadsheet, delineating what each UR Point is worth:

Chase Credit Cards Spending Ultimate Rewards
That’s right! Similarly to Citi’s system, UR points are not created equal and their redemptions and ability to transfer to other partner programs are different as well! Since all points can be redeemed for cash value, let’s cover that first. The values listed for each redemption are in cents; that is 1 UR point is equal to the indicated number of cents. As you can see, the best possible redemption, without utilizing a partner transfer, is getting 1.5 cents per point and is only available to those with a CSR card. Owners of the CSP and the Ink Preferred are rewarded with 1.25 cents per point, while if you have the other cards listed, your maximum redemption is capped at 1 cent. I think Chase deserves credit for allowing a better-than-average redemption with their business card, which is definitely not the case with Citi. Thus, if you signed up for a 50,000 point bonus and received it after successfully meeting the spend requirement, you’ll be able to get a minimum of 500$ in value. If you also happen to have the CSP or Ink Preferred, those points can be worth up to 625$, and lucky owners of the CSR can get a whopping 750$ for the same point haul.

Also, unlike Citi, this maximum value is achievable by purchasing any travel through the Chase travel center and is not just limited to airfare, adding additional flexibility. Actually, if you account for the fact that the airfare booked is treated much like any other ticket that you purchase and earns both award miles and award dollars from the carrier, you get more than 1.5 cents in value. Your ultimate value will vary slightly based on how many extra miles you earn but it’s only fair to account for them when figuring out the true net redemption value that you receive. However, it is also possible to inadvertently book basic economy fares, which may negate any of the above additional mile-earning benefits, depending on the carrier (looking at you, United!), and may come with nasty surprises such as inability to select a seat without paying extra.

My advice for this is to always double check the fare code of the ticket you purchased with points and reference these with the fare codes for your carrier; if you risk getting stuck in basic economy, you have 24 hours to change or cancel your purchase. Beyond airfare, the same engine also sells car rentals, hotels, and even cruises and with Chase these redemptions are valued the same. Obviously, depending on your travel profile, this should definitely be a large consideration for you to decide if this point ecosystem makes sense and is worth it for you.

While there are many other redemption opportunities made available by Chase, ranging from gift cards, to using your points for Amazon purchases, to getting statement credits, they are generally equivalent as they tend to value points at 1 cent each, although a few of them cut this down to 0.8 cents and should be avoided. Chase does not offer quite as many opportunities to redeem your points as Citi, but it also does not cut into their potential value as drastically – you will generally never see a value of 0.5 cents/point. The other good news is that points never expire, eliminating a potential headache and another thing to track. Chase also doesn’t play games with redeeming your points for merchandise, which is typically a redemption to be avoided as it decimates point values twice – by overpricing items and then using a subpar value for each point redeemed.

An additional perk is the ability to trade in points for special events, such as meeting a celebrity chef and receiving a private dinner or getting invited to a baseball team meet and greet during practice. While enticing, these redemptions are priced at the same 1 cent value per point no matter which cards you have, and their relative worth depends in large part on your personal valuation of them and whether you think Chase’s set prices are fair.

To finish this section, I will add that Chase is fortunately not as stingy as Citi and has not been known to send 1099-MISC forms, characterizing redeemed UR points as income. That being said, I would still be conservative and avoid excessive redemptions per calendar year as this may change at any time and there is nothing that prohibits them from doing so.

 
 
 
 

Using Points for Transfer to Partners
Now let’s explore the last, and arguably, most valuable use of UR points – partner transfers. Here is a spreadsheet of current partners, the value you will get from transferring 1000 URs, which is the minimum amount you can move between accounts, and the average time is takes for a transfer to occur:

Chase Credit Cards Transferring Ultimate Rewards

Chase makes these redemptions very simple: every program gives you a single point of their currency for each UR point, and every transfer has to be made in 1,000 point increments. You will also note that the average time it takes for the transfers to process are very short and the vast majority are immediate, beating out both Citi and American Express. This is an additional perk of the UR system as it opens up very lucrative (and, therefore, time-sensitive!) redemptions, that are just out of reach of other programs unless you are able to guarantee a reservation hold or other means of making sure your award is not given away. Please note, however, that your mileage may vary with these transfers and the provided times are rough averages – some peoples’ points processed immediately, but some unfortunate few experienced significant delays (Chase claims the maximum transfer time should not exceed 7 days in the worst case scenario).

Unlike Citi and American Express, Chase does not tend to run any time-limited promotions, where they give an additional percentage bonus on transferred points, so keep this in mind in case you have another source of credit card points. Checking for any promotions with other issuers may help tip the balance away from URs in getting the best value in these situations.

While I will not cover any of the programs in detail at this time and will leave this for future posts, I will note a couple of points about this part of the program. First, Chase has great hotel partners, even exceeding that of American Express. While the conversion rates for some of them can be a bit steep (as an example, IHG points are generally valued at 0.5 cents per point, making a 1:1 conversion from UR points a losing proposition), it is still helpful to maintain flexibility and know that you can top-up accounts for redemptions quickly if you’re in a bind. I would go so far as to say that, if you value hotel stays above other travel opportunities, the UR program may be your best bet, although I would definitely choose Hyatt over the other partners in terms of the most equivalent value received per point.

Moving onto air travel partners, at first glance Chase has only a moderate number of carriers to select from. Three of these – Singapore’s KrisFlyer, AirFrance/KLM’s Flying Blue, and Virgin Atlantic’s Flying Club – are shared with Citi. The rest of the list is notable for including two large US-based carriers – United and Southwest – making domestic redemptions easier, as well as British Airways, and its’ sister companies Iberia and Aer Lingus, opening up the competitive Avios currency, which utilizes distance-based awards. Adding Korean Air to the mix means that UR points can be transferred to each of the three main airline alliances – SkyTeam, OneWorld, and Star Alliance. This last point is important as it is this option that indirectly expands the potential list of airline redemptions; UR points, converted to any of the above carriers’ programs, can then in turn be used to book tickets on their respective partners. These redemptions will utilize each airlines’ respective partner award chart and rules.

The final comment I will make concerns Southwest. Very similarly to Citi ThankYou point redemptions for JetBlue, UR points converted to Southwest Rapid Rewards carry a relatively fixed value. The number of Rapid Rewards points required for an award is tied to the cost of the ticket with additional factors, such as class of the ticket and whether the flight is international, influencing the final value. In general, most redemptions value Rapid Rewards points between 0.9-1.6 cents per mile. Obviously, it would makes the most sense to research and check your redemptions carefully and aim for the latter valuation (especially if your have the CSR!), as this allows you to eek out an ever-slightly-higher value of your URs. Keep this in mind when deciding to make a redemption – I recommend always running a search on Chase’s Travel Center to check ticket prices and their value in URs if purchased directly as compared to the rate you are getting with a transfer. If the rates are similar, you would definitely want to consider using the Travel Center to earn additional Southwest points (as the ticket would be treated as any other purchased fare).

 
 
 
 

Points Expiration
Unlike for Citi, Chase makes this section easy: your points do not expire! However, please note that if you close your account, Chase takes away all your URs immediately – there is NO grace period. As long as you have any of the UR-earning cards, as listed above, you get to keep all your hard-earned credit card points. The value of each point will be determined by the active cards in your portfolio (e.g. if you had a CSR and Freedom and cancelled the CSR, all of your remaining point redemptions will be worth 1 cent, unless you open a CSP [1.25 cents for travel] or decide to reopen the CSR at a later date). If you have multiple UR cards and want to close one of your accounts, be sure to transfer the balance of UR points for that specific card to the one you will keep open as Chase tracks each balance separately by card account. Fortunately, they make this process very straightforward and painless by allowing immediate transfers via the UR portal.

 
 
 
 

Ultimate Rewards Program Summary
Whew, you made it to the end and now know as much as I do about all the intricacies of Chase’s Ultimate Rewards program! I hope this was instructive and serves as a helpful reference guide for you now and in the future. Despite some of this program’s quirks, I think it has a lot to offer someone interested in air and hotel travel. Based on everything I’ve covered, I can summarize the advantages and disadvantages of the program in the following:

MileNavigator Happy Face

  • Get up to 1.5 cents per point with any travel redemption, not limited to airfare, or transfer to travel partners
  • Many partner transfers are immediate or nearly so
  • Generous bonus earning category definition for earning
  • Ability to leverage multiple UR-earning cards to supercharge point earning across categories
  • Many cards, including the CSR and CSP, offer built-in primary rental car insurance with no additional fees
  • Easiest among the major points programs for tracking earned and pending points
  • Points never expire
  • No 1099-MISC form for redemptions

MileNavigator Neutral Face

  • No Entertainment bonus earning category
  • CSR has the highest travel credit of any premium card but there are no avaialble waivers or reductions in the annual fee
  • Points expire immediately upon closing all UR-earning card accounts
  • Bonus earning opportunities through UR web portal shopping

MileNavigator Sad Face

  • 5/24 and ‘One Sapphire’ rules make obtaining cards difficult for some and require strategic application planning
  • No bonuses given for banking relationship with Chase
  • Some of the available transfer partner values are poor and ideally should be avoided unless used for topping off accounts

 

Please keep in mind that I did not have time to include any of the additional benefits of having cards with Chase nor many ancillary benefits, such as lounge access or primary car rental insurance with many of their cards, in this review. This will follow in the future and is just as important as their Ultimate Rewards point program in determining whether they are a good fit for you!

 
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