Finding a Points Strategy: Part 1

This is the first post in a series of posts outlining my analysis of which credit cards I should be putting my spend on when I get back to the States. I alluded to this in my previous post, but I now want to dig in with more detail into what I believe my strategy will be. The Amex Business Platinum card will be a pillar of my strategy.

Before I go further, I want to lay down the basics. A flexible points currency is a currency that lets you transfer points to another loyalty program. For example, Chase has a flexible points currency called Ultimate Rewards. If you earn Ultimate Rewards points, you can transfer them to other loyalty programs such as United, Southwest, Marriott, and Hyatt. Having that flexibility is what makes these currencies great.

There are 3 main flexible points currencies. Chase, Citi, and American Express all have flexible points currencies and they all offer credit cards that earn those points.

Chase‘s flexible currency is called Ultimate Rewards (UR) Points

Citi‘s flexible currency is called Thank You (TY) Points

American Express‘s flexible currency is called Membership Rewards (MR) Points

9 out of 10 times, it will always make more sense to try and earn flexible currencies versus a fixed currency. A fixed currency is one where you cannot transfer your points to another loyalty program. An example of this could be Delta SkyMiles. If you spend on a Delta credit card, you will earn Delta SkyMiles. You are then stuck with those SkyMiles and cannot transfer to other loyalty programs.

Points Strategy Draft #1

The centerpiece to my flexible points earning strategy when I get back will be the American Express Business Platinum card. The Business Platinum card allows you to redeem Membership Rewards (MR) points for 2 cents a piece toward economy airfare with the airline of your choice. I do not yet know where I will be living, so I have not chosen an airline yet. It also lets you to redeem at this rate for First/Business Class airfare with any airline. I am not yet sure how often I’ll be using this benefit, but having this option is a big enough reason for me to switch a big chunk of my spend to MR earning cards. You can still get a bigger bang for your buck if you transfer your MR points directly to other loyalty programs. The problem is that getting value that way is never guaranteed, but the 2 cent per MR point is.

Airfare

Cash Tickets

If I don’t want to use points to pay for a flight, I’ll use my Amex Business Platinum card to book flights through AmexTravel and get 5x MR points on my purchases (this benefit starts at the end of this month). Using the 2 cent per MR point valuation, that gives me a 10% discount on airfare!

Award Tickets

Since it’s not possible to book award tickets on AmexTravel, I’ll use my Amex Premier Rewards Gold card to pay any taxes/fees on award tickets. Using the 2 cent per MR point valuation, that gives me a 6% discount on taxes/fees on award tickets.

Other Travel Expenses (Excluding Gas)

1.) Chase Sapphire Reserve

In September, I will finally no longer be in the category of people who applied for 5 credit cards in the past 24 months. That means I’ll be eligible to apply for a Chase card. I’ll try to pick up the Chase Sapphire Reserve card. The sign up bonus has dropped from 100,000 to 50,000 points, but I believe the long-term benefits are still worth it. The card offers 3x Ultimate Rewards (UR) points on travel expenses.

2.) Citi Premier

If I decide against the Sapphire Reserve, I will keep my Citi Premier and use that for 3x Thank You (TY) points on travel expenses.

Gas

1.) Amex Everyday Preferred

After I apply for a Chase Sapphire Reserve, I am going to apply for the Amex Everyday Preferred credit card. This is the card I am definitely most excited about getting. It offers 2x points on gas, but if you make at least 30 transactions in a billing cycle, you get a 50% bonus on points. I will make sure that happens. That benefit makes this card earn 3x MR points at gas stations. Using the 2 cent per MR point valuation the Business Platinum card gives me, that gives me a 6% discount on gas.

1.)* Chase Freedom

If the Chase Freedom card has a quarter that is giving 5x UR points on Gas, I would switch my spend to the Freedom for that quarter.

Groceries

1.) Amex Everyday Preferred

The Everyday Preferred card also offers 3x MR points at grocery stores (up to $6000 per year). With the 50% bonus after making 30 transactions in a billing cycle, that makes the card earn 4.5x MR points at grocery stores. Using the 2 cent per MR point valuation the Business Platinum card gives me, that gives me a 9% discount on groceries.

2.) Amex Premier Rewards Gold

If I go over the $6000 spend at grocery stores during a year, I will switch my spend over to the Premier Rewards Gold card and get 2x MR points at grocery stores. Using the 2 cent per MR point valuation the Business Platinum card gives me, that gives me a 4% discount if I use my Premier Rewards Gold card.

2.)*Chase Freedom

If the Chase Freedom card has a quarter that is giving 5x UR points on groceries, I would switch my spend to the Freedom for that quarter.

Grocery stores in the past have been an avenue I’ve used to manufacture spend for a ton of points. I’m assuming I’ll be able to keep that going and will be able to max out the grocery store categories on these cards. If I can’t max out this category, I am unsure if I would switch spend to the Freedom from the Everyday Preferred if the Freedom had a 5x UR bonus for the quarter.

Restaurants

1.) Chase Sapphire Reserve

If I do get the Sapphire Reserve, I would use that for restaurant spend. The Sapphire Reserve gives 3x UR points on dining. Having the Sapphire Reserve gives you the benefit of being able to redeem UR points for 1.5 cents each when booking travel through Chase. That gives me a 4.5% discount on restaurant spend.

2.) Amex Premier Rewards Gold

The Premier Rewards Gold would give me 2x MR points. Using the 2 cent per MR point valuation the Business Platinum card gives me, that gives me a 4% discount on restaurant spend. If I decide against the Sapphire Reserve, then the Premier Rewards Gold will be my restaurant card.

1.)* Chase Freedom

If the Chase Freedom card has a quarter that is giving 5x UR points on restaurants, I would switch my spend to the Freedom for that quarter.

Amazon

Yes, I am giving Amazon its own category. I spend a decent chunk of money at Amazon every year. I will use my Chase Ink Plus credit card to buy Amazon Gift cards at office supply stores to get 5x UR points.

If the Chase Freedom card has a quarter that is giving 5x UR points on Amazon, I would switch my spend to the Freedom for that quarter so I wouldn’t need to go through the hassle of buying gift cards.

Telecommunication

I’m lumping internet, cell service, and tv service (recently signed up for DirecTV now) into this category. My Chase Ink Plus card gives me 5x UR points in all of these categories.

Other Spend

This category is anywhere that is not a bonus category on a card that I have. For this spend I’ll use the Everyday Preferred card. It gives me 1x MR point everywhere, but if I use it to make 30 transactions in a billing cycle, it will give me 1.5x MR points on all purchases. Using the 2 cent per MR point valuation the Business Platinum card gives me, that gives me a 3% discount on everyday spend. Get it?

Conclusion

It’s funny how things change. I used to think that Amex MR points would never be one of my biggest points programs and now it will be. I’ll have a hybrid Chase/Amex earning strategy. Citi is practically nowhere to be found in my list above. They went from being my program of choice while abroad to not being in the mix once I get back to the states. It just shows that you need to be constantly looking at your options and willing to change if something better ends up surfacing.

Be on the lookout for Part 2 [edit: read Part 2 here], which will further examine the benefits of this strategy. 

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