Reader OfficiallyBill asked the following question in the Ask Lucky forum:
So after reading this post about what card Lucky puts spend on… and having just gotten the SPG Amex (Personal) as well as the Freedom Unlimited and already having the Freedom card… when you have the CSR, where does the the SPG Amex card come in? Even with additional few SPG points per dollar spent at SPG properties, 3X on the CSR still seems like a better deal, and non-bonus spend areas seem to be better on Chase Freedom Unlimited? Am I missing something??
I imagine many people have similar questions, so in this post I wanted to address this, “big picture.”
The Chase personal three card trifecta
Bill has the excellent trifecta of three personal Chase cards that helps maximize Ultimate Rewards points:
- The Chase Sapphire Reserve® Card, which offers 3x points on dining and travel
- The Chase Freedom® Card, which offers 5x points in rotating quarterly categories, on up to $1,500 of spend per quarter
- The Chase Freedom Unlimited®, which offers 1.5x points on everyday purchases
Technically the only card of the above that directly earns Ultimate Rewards points is the Chase Sapphire Reserve® Card, though that’s the beauty of the above setup. If you have any card earning Ultimate Rewards points (the Chase Sapphire Preferred® Card, Chase Sapphire Reserve® Card, or Ink Business Preferred℠ Credit Card), then points earned on the Freedom cards can be converted into Ultimate Rewards points at a 1:1 ratio (otherwise each point gets you just one cent). Since I value Ultimate Rewards points at 1.7 cents each, that’s like a way of increasing the value of your points by 70%.
This means that if you have the above three cards, you’d be earning a return of 5.1% on dining and travel, a return of 2.55% on everyday spend, and a return of 8.5% in rotating quarterly categories, which is awesome.
How do other cards fit into the equation?
Bill recently got the Marriott Bonvoy American Express Card, which I also like — the card has a great welcome bonus, $95 annual fee (Rates & Fees), gives you elite stay and night credits towards status annually, and offers 6x Marriott points per dollar spent at Starwood and Marriott hotels and 2x Marriott points per dollar spent on all other purchases, which I’d consider to be a solid return.
But now Bill is saying “wait a second, I’m earning a return that’s better than 2.2% on the Chase Freedom Unlimited®, so why would I use the Marriott Bonvoy American Express Card?”
It’s all about diversifying your points
Bill isn’t necessarily better off putting that spend on another card. In a way I’d say he’s almost getting the best return possible. If we’re going to look at the bonus categories he’s taking advantage of right now, then I think there are only two cards that might be worth acquiring to maximize spend:
- The Blue Business® Plus Credit Card from American Express, which offers 2x Membership Rewards points on the first $50,000 spent annually, and has no annual fee (Rates & Fees)
- The Amex EveryDay® Preferred Credit Card from American Express, which offers 3x Membership Rewards points at US supermarkets (on up to $6,000 of spend per year) and 2x points at US gas stations, plus a 50% points bonus when you make at least 30 transactions per billing cycle, for a total of up to 4.5x points on groceries and 3x points on gas stations (none of his current cards offer bonuses in those categories)
Anyway, I think Bill’s strategy right now is great, and the main reason he should consider using other cards is because he wants to diversify his points. When it comes to credit card rewards it’s not just about earning the most points per dollar spent, but also earning points that are most valuable to you, and get you the travel experiences you want.
I have a lot of Ultimate Rewards points, and it’s a currency I love, though I haven’t been redeeming them all that much lately. So that’s one reason I’d consider putting spend on other cards right now. For example, lately I’ve been redeeming Amex Membership Rewards points more than Chase Ultimate Rewards points, and at this point I’m pretty Membership Rewards “poor” and Ultimate Rewards “rich,” which means I’m trying to put as much spend on cards that earn Membership Rewards points at the moment.
A similar thing is true of the Starpoints earned on the Marriott Bonvoy American Express Card. Those are just about the most flexible points out there, so even if you’re not earning as many points on the card, it could still be worth using the card in order to diversify your points.
There’s one caution I should add on that front — there’s value in diversifying points, but you don’t want to over-diversify. So I think it all comes down to how many points you have in different programs. You want enough points in a particular program so that you can redeem for your “dream” redemption, but if you get beyond that, it may make sense to consider other cards for the time being.
Achieving the best return on your credit card spend isn’t just about earning as many points per dollar spent as possible, but about getting the right number of points in various programs. In Bill’s case, I think he has a great approach, and if he’s earning Ultimate Rewards points at a decent rate, I’d say he should keep doing what he’s doing now. The only thing I might consider in his shoes is a card earning bonus points on gas and groceries (assuming he spends a decent amount in those categories), since he’s missing out on quite a few points there.
Otherwise I think he should only direct spend onto the SPG Amex (or another similar card) if he’s at the point where he has so many Ultimate Rewards points that he can’t redeem them in the short term, or if he has a dream trip that wouldn’t be practical to book with Ultimate Rewards points.
The following links will direct you to the rates and fees for mentioned American Express Cards. These include: Starwood Preferred Guest® Credit Card from American Express (Rates & Fees), and The Blue Business® Plus Credit Card from American Express (Rates & Fees).