Update: These offers for the Barclaycard Arrival Plus® World Elite MasterCard®, the Premier Rewards Gold Card from American Express and the Starwood Preferred Guest® Credit Card from American Express have expired. Learn more about the current offers here.
Yesterday I shared what I consider to be the best uses of Chase Ultimate Rewards points post-February 1, 2014, in light of United’s massive award chart devaluation that kicks in then.
There’s no doubt the value of the Chase credit card rewards points have decreased as a result of these changes, and based on my initial, “rough” valuation I’d say the value of Ultimate Rewards points has gone from 1.8 cents per point to 1.6 cents per point. Ultimately there are still many potentially good uses of Chase rewards points for travel, including:
- Hyatt Gold Passport redemptions, especially for their top properties, which go for 22,000 points per night
- United MileagePlus redemptions, since their award chart for travel on United hasn’t actually gone up that much
- Southwest Rapid Rewards redemptions, since transferring points to them gets you 1.67 cents per point towards “Wanna Get Away” fares (they’re devaluing their program in April, and the value per point will go down to 1.43 cents)
- British Airways Executive Club redemptions, which can be a great value in some markets due to their distance based award chart
So while I value Ultimate Rewards points less than I did before the change, at the end of the day I don’t think these changes substantially alter the value proposition of cards that accrue Chase Ultimate Rewards points.
Given that, here are my recommendations for an overall spending strategy:
The Barclays Arrival Plus® World Elite Mastercard®, Starwood Preferred Guest® Credit Card from American Express, and Marriott Bonvoy Business™ American Express® Card remain some of the best cards for everyday spend
If you’re spending money in a category that isn’t otherwise eligible for bonus points, just as before the above cards remain your best options.
- The Barclays Arrival essentially earns you the equivalent of 2.1% cashback towards travel (you earn two miles per dollar, each mile can be redeemed for one cent towards the cost of travel, and you get a 5% refund when making redemptions)
- I value Marriott points at 0.8 cents each, so the Bonvoy Amex remain a great value
- Both cards have reasonable annual fees as well, which are waived for the first year
Beyond that, these are probably the two lowest risk points currencies out there. I can’t imagine the Barclays Arrival will switch from their “one point gets you one cent” model anytime soon, and similarly Starwood has so many airline transfer partners that even if one were to devalue, it wouldn’t drastically change the value of those points.
The Chase Sapphire Preferred® Card remains the best “all in one” card
Despite the devaluation, there’s still not really any card that can compete with the Chase Sapphire Preferred® Card:
- You earn 2x points on dining and travel (and while there are other cards that offer bonus points on airfare and hotels, for example, this card has a much more liberal interpretation of travel, as it includes parking, train tickets, etc.)
- The card has no foreign transaction fees
So for spend in a category that otherwise doesn’t accrue bonus points the Barclays Arrival or Starwood American Express Cards are still your better options, but that has always been the case. Every traveler should have a card with no foreign transaction fees, and the double points on dining and all travel expenses are pretty unique to the Chase Sapphire Preferred.
The Ink Cards have some of the most lucrative category bonuses out there:
- 5x points on spend at office supply stores, and on cellular phone, landline, internet, and cable TV services
- 2x points on spend at gas stations and on hotels
Everyone has to crunch the numbers for themselves as to whether they do enough spend on the cards to justify the annual fee, but whether the points earned are worth 1.6 or 1.8 cents doesn’t materially alter the value proposition of these cards, in my opinion.
For big spenders the Premier Rewards Gold Card from American Express can be very lucrative
In terms of the ability to earn points, the only American Express card that can compete with the Chase Sapphire Preferred is the Premier Rewards Gold Card, which offers the following category bonuses:
- 3x points for flights booked directly with airlines
- 2x points at US restaurants, US gas stations, and US supermarkets
If the annual fee were $90 lower I’d say it would be great competition for the Chase Sapphire Preferred for just about anyone.
For the average consumer, however, it’s probably not great beyond that.
So while these devaluations are discouraging and frustrating, for the most part you’re still better off accruing a points currency than cash back, unless you can tailor that to specific bonus categories as well.
Big picture the devaluation changes very little on the credit card spend front
Chase has been gaining market share like crazy over the past few years, and justifiably so, since their co-branded Ultimate Rewards cards really are that good. Ultimately that hasn’t changed, even if their value goes down by ~10%. So as a general rule of thumb I wouldn’t be switching credit card spend strategies.
As always, I think it’s important for everyone to decide what they’re looking to get out of their points, because there’s no “one size fits all” points currency. If you like to redeem your miles for domestic trips or international economy redemptions, it’s tough to beat a card like the Barclays Arrival, where you’re earning the equivalent of 2.2% cash back towards travel.
Meanwhile if what you really want to do is redeem your miles for Singapore A380 Suites Class, you’re best off focusing on a card like the Premier Rewards Gold Card, given that Membership Rewards points can be transferred to Singapore’s KrisFlyer program at a 1:1 ratio.
So you should never blindly follow advice as there’s no program that’s perfect for everyone. But in terms of the overall value proposition, I don’t think it has changed all that much for Ultimate Rewards cards.
Is there an alternative to MileagePlus for premium cabin redemptions?
One question I’ve been getting a lot is “which Star Alliance frequent flyer program should I switch to for premium cabin redemptions?” I’ve given it some thought, and I think the reality is that there’s no stable mileage currency in Star Alliance that really stands out for first and business class partner redemptions:
- US Airways Dividend Miles will likely be leaving the Star Alliance soon and already blocks many premium cabin redemptions, including Lufthansa first class
- Air Canada Aeroplan imposes huge fuel surcharges on award redemptions, and their rates aren’t great either
- AviancaTaca Lifemiles has good redemption rates in theory, but they have a history of devaluing their program without any advance notice, and have some ridiculous award rules (like not being able to mix first and business class on a single award)
So I really don’t think there’s any Star Alliance program to switch to that offers an especially compelling value proposition. I certainly think it’s more tempting to purchase AviancaTaca Lifemiles now when they go on sale for 1.5 cents each, though only with short term redemptions in mind, given their award chart changes without any advance notice.
Will you be changing your credit card strategy as a result of the United devaluation?