MilesTalk University: Start with these two credit cards if you are new to miles and points
I can craft a custom miles and points strategy for anybody as long as I know things like spending volume, spending habits (categories of spend), and travel goals (and you can actually hire me to do that for you).
But the single most common question I get asked by miles newbies is this: What credit cards should I get first?
So I’m going to keep this post simple and reference it often – at least until either a new and better card comes along or these cards change their benefits.
You can see signup bonus offers for cards in the Credit Card Offers section of this site.
As of now, June 2017, I would be comfortable recommending a starting attack plan of just these two credit cards:
- Chase Sapphire Reserve
- Chase Freedom Unlimited
If you have a small business, I’d additionally add on the Chase Business Preferred card which currently has an 80,000 Ultimate Rewards point signup bonus.
Now, this may not be the best plan for everyone in every situation, but it is a very sound first go of it for three reasons.
a) You will start off with 65,000 Ultimate Rewards points (145,000 if you also get the Business card) just from the signup bonuses based on today’s signup bonuses of 50,000 for the Reserve and 15,000 for the Unlimited as well as 80,000 for the Business Preferred.
b) All of the Chase UR points can be combined into the Reserve account where you can redeem for a minimum of 1.5 cents per point on anything travel.
c) Because of the Chase 5/24 rule which says that you won’t be approved for a new Chase card (with some exceptions) if you have opened 5 new credit cards with ANY bank in the last 24 months, a newbie should acquire the prime Chase products before any other bank issuer. If this were a more advanced post, I’d recommend rounding out with 5 solid Chase cards for which 5/24 applies before anything else.
Now, just a bit about how these Chase points work.
- Chase allows you to combine points from any Chase card to any other Chase card. You will always want to transfer to and spend from the Sapphire Reserve card because only the CSR gets 1.5 cents per point on redemption.
- You will want to use your Reserve card for all of your travel and dining purchases as these earn 3X on the Reserve. That means at 1.5x redemption, you are earning a net effective 4.5% cashback on these points
- You will then use your Freedom Unlimited card for all other (non-travel/dining) purchases to earn 1.5 points per dollar. Once you transfer to the Reserve to spend at 1.5x, you are earning a net effective 2.25% cashback on these points
- If you also have the Chase Business Preferred card, you can use that for 3x on Travel, including airfare, hotels, rental cars, train tickets, and taxis, Shipping purchases, Internet, cable and phone services, and Advertising purchases made with social media sites and search engines for a net effective 4.5% cashback on that spend once you transfer the points to your Reserve.
Based on your spend habits, you will likely have a total cashback north of 3%.
I’m also just using redemption for travel on the Chase Ultimate Rewards Portal as the “base case” as you should never do worse than that redemption value. If you learn how to transfer to airline and hotel partners, your yield just goes up from there.
Feeling really adventurous? Add on a third card, the Chase Freedom. This card has a quarterly rotating 5% set of bonus categories. When that category is Drug Stores or Supermarkets, you are locked and loaded for 5% cashback (in UR points, so that is worth 7.5% cashback when spent in the travel portal if you also have the Reserve card!) on up to $1,500 in purchases. Why is that such a big deal? Because you can buy gift cards in drugstores and supermarkets, giving you basically 7.5% off ANYTHING.
Substitution: Because the Reserve has a $450 annual fee, even though it is offset by $300 in travel credits good on nearly everything, some people hesitate. You could certainly choose to substitute the Chase Sapphire Preferred to start, which has a $95 annual fee waived the first year. Compared to the Reserve, for the net $55 annual fee difference, you will earn just 2x on travel and dining compared to 3x with the Reserve and also forgo Priority Pass lounge access and a $100 Global Entry credit Your pints can still be transferred to all of the same airline and hotel partners, though should you choose to redeem your points in the Chase Ultimate Rewards portal, a Sapphire Preferred pint is worth 1.25 cents a piece whereas the Reserve points are worth 1.5 cents a piece.
As you can see, the Reserve packs a healthy punch for that extra $55, but if you weren’t sure you would use all of the $300 travel credit (airfare, hotel, taxi, parking, Uber, etc) then you could stick with the Chase Sapphire Preferred. It’s no problem to upgrade to the Reserve for your second year if you feel more confident in your miles and points by then.
Questions? Ask me below in the comments or on the MilesTalk Facebook Group
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New to all of this? My new “introduction to miles and points” book, MilesTalk: Live Your Wildest Travel Dreams Using Miles and Points is available now.