American Express Membership Rewards points are some of the best rewards you can earn because they're flexible - you can use them for travel, gift cards, or statement credits, among other things.
Amex cards that earn Membership Rewards include:
Each card offers a unique set of bonuses and benefits depending on how you spend and travel.
While Amex's rewards program has a lot of flexibility, that doesn't mean all redemption options get the same cents per point value.
Let's start with the worst ways to use your Amex points.
Amex has a shopping portal with many products you can buy with Membership Rewards points. While this is a versatile way to use your points, it doesn't have a high redemption value.
For 10,000 points, you'll only get a value of 0.5 CPP— which is not the best value for Amex points.
If you're set on using points for merchandise, you might be better off buying a gift card or going through a shopping partner like Amazon.
Amex has a ton of airline transfer partners that you can transfer your points straight to.
Most partners offer a 1-to-1 transfer rate, so if you transfer 1,000 points to them, they will give you 1,000 points back. Sometimes, American Express runs promotions for transfer partners where you can get a better rate.
One thing to keep in mind here is the Excise Tax Offset Fee.
In most cases, American Express charges an excise fee of 0.06 cents per point (capped at $99 for any single transfer) when you transfer points to U.S. airlines with a card such as The Platinum Card®.
American Express's U.S. airline partners that charge an excise fee include:
On a 100,000-point transfer, that fee equates to $60. In addition to these charges, the airline may also charge taxes and fees.
However, not all partners charge this fee. Some of the airline programs where you can transfer Membership Rewards points without paying any fees include:
Since these are points from airlines outside the United States, American Express won't charge you the Excise Tax Offset fee to transfer points into these programs, although you need to evaluate their value (Note: some of them are hard to redeem points from). Transferring points to their hotel partners will also be free of charge.
Unfortunately, the only way to transfer points to your Delta SkyMiles account is through AMEX, so be prepared to pay the fee to utilize them.
To get the best redemption rates, you need to do a lot of research before you transfer your points.
If you don't want to pay your card bill, you can redeem your points for statement credits, effectively wiping out any purchases you made with the card. While this option is handy, it also isn't recommended.
However, if you're in a pinch, this can help.
It's best used as a last resort if you need some last-minute funds to cover your balance. But each point will only be worth 0.6 CPP. So the low value makes it not a great option.
We'll talk about other setups later in this post if you're after cash.
With JustGiving, you can donate your points to over 1.5 million charities. Unless you can redeem your points for travel, you'll likely get no more than 0.7 cents per point from this redemption option.
The points aren't the greatest value for your money, but if you don't need your points, this is a decent option.
Beware of the value change, though. Depending on the organization, the value of your points may vary, so pay attention.
Doing the math can help you make a bigger impact.
With American Express Travel, you can book all kinds of travel, including hotels, vacation packages, and cruises.
If you book travel through the American Express Travel portal (excluding airfare), you will only earn 0.7 CPP. In addition, considering other companies will give you 1 CPP, booking your travel using the Amex Travel portal may not be the best way to spend your Amex points.
Keep in mind that using the Amex Travel Portal is NOT the same as using a transfer partner.
Similar to option 1, you can use your points to spend with certain merchants.
The cents per point come out to 0.7 mostly, except for NYC Taxis and Ticketmaster.com. Those have different point-to-cent ratios, so check the redemption rate before redeeming, as redemption rates may vary from retailer to retailer.
You also need to be careful because some platforms like Amazon can automatically fill in that you're using M.R. points when you check out.
If you want to use your points for shopping, there are probably better options in this list.
This option is new for 2022.
If you have a business checking account with Amex, you can redeem your points for cash. You'll get 0.8 CPP, so 10,000 points would come out to $800. These points are considered rebates instead of income, so you're not taxed on them.
So if you have a lot of points, cashing out your business checking account through your Business Platinum might be a better option. (More about this below)
Gift cards come in different types, and your redemption value varies. Then again, there are many 1 CPP options with less variance, which is not too bad.
It may not be the best redemption method for your Amex points because it has additional hoops to jump through.
With Upgrade with Points, you can bid on seat upgrades at over 20 participating airlines using your Membership Rewards points. This is a convenient option if you are worried about cramped seats on long flights.
It might make more sense to upgrade your seat with the actual card and earn more points because there are higher-value options to redeem your points. However, membership rewards here are worth at least 1 CPP depending on how you use them.
If you value your seat on the plane, you might like this option.
This is a great option for the avid traveler.
Compared to other companies, you can get a decent rate on your points. You can expect to redeem 1 CPP with flights and hotels if you book it through the Amex Portal.
But if you have the Chase Sapphire Reserve, you could get 1.5 CPP when you book through their own portal.
With this option, you can get an elevated value for your points, whether it is flights, and pay yourself back.
This is a better option than the 7th option mentioned above.
Instead of $800 per 100,000 points, you can get a better rate of 1 CPP. That comes out to $1,000 per 100,000 points. You must have the Amex Business Platinum card, though.
If you run a large business, that might be enough to offset the annual fee, but you still need to do the math.
If you own a Morgan Stanley brokerage account, this might be useful.
It's similar to a business checking account using your business platinum but on a more personal card side.
If you own the Platinum Card from American Express Morgan Stanley edition, you can cash out your points to your brokerage account at 1 CPP.
The points can be cashed out anywhere once they reach your brokerage account.
Though, you might want to consider these things first before you use this option:
I made a blog post about this before and how to waive the annual fee. You can learn more about it here: https://www.asksebby.com/guides/waive-amex-platinum-annual-fee
You can transfer M.R. points at 1.1 CPP to your brokerage account with the Platinum Card from American Express Charles Schwab. So if you're looking to redeem for cash, this might be the best option.
However, as with any other Amex Platinum cards, there are a few things you need to consider:
If you have a Business Gold, you can get a 25% rebate when you book an eligible flight.
So, if you use 100,000 points to cover a $1,000 flight, you'll get 25,000 points back. That means you used only 75,000 points for a $1,000 purchase, which works out to a rate of 1.33 CPP.
The maximum rebate is 250,000 points, so you wouldn't want to redeem more than 1 million.
Platinum Business cardholders can redeem M.R. points for travel and get a 35% rebate when they use their card for either first class or business class travel or flights with the airline of their choice (via the travel incidental credit).
That means if you spend 100,000 points for a $1,000 flight, you'll get 35,000 points back. Considering the 35% points rebate, the effective value is 1.54 CPP.
This is your best bet if you're looking for a simple travel redemption. The maximum rebate here is 1 million points per year, so you wouldn't want to redeem more than 2.85 million.
This is the same for the two previous options, but even better!
You can redeem your points with Business Centurion for a 50% rebate. As you know, spending 100,000 points for a $1,000 flight would get you 50,000 points back.
With the rebate, you can effectively get 2 CPP, the highest rate we've discussed.
On top of that, there is no maximum rebate. However, the personal Centurion card does not offer flight rebates.
Finally, you can transfer your points to American Express airline and hotel partners.
The rate here can be up to 10 CPP, but it can generally fluctuate or come out to about 2 or 3 CPP when you get through all the transferring. There are a lot of nuances to this one.
But for avid travelers, this might be a decent option for you.
American Express points can be redeemed in many ways, so it's important to know which one gives you the most value.
While you can use them for merchandise or shopping with Amazon, they don't provide good value.
Most people will get the best value from their points by transferring them to airline or hotel partners or using your Amex business card.
Watch this video to find out how to get the most out of your Amex points:
Starting May 31, 2020, Chase added a new temporary benefit for Chase Sapphire Preferred® Card and Chase Sapphire Reserve® members to “Pay Yourself Back.”
Note: The “Pay Yourself Back” feature is not available to the no annual fee Chase Sapphire card.
The Pay Yourself Back Program lets Chase Sapphire Preferred and Sapphire Reserve cardholders redeem Ultimate Rewards to offset select category purchases at a favorable rate.
Pay Yourself Back Categories:
The current promotion is valid through September 30, 2020, but it’s possible that it may be extended due to uncertain times.
[ March 30 Update ] Pay Yourself Back is extended until Sept 30, 2021.
Sign into your online Chase account and navigate to the Ultimate Rewards tab located on the bottom of the left column.
Select the card you’d like to access. If you have multiple Ultimate Reward earning cards, you can choose to pool points to the Sapphire card to redeem.
In our example, we choose the Chase Sapphire Reserve.
Navigate to the left hand column and select the “Pay Yourself Back” menu item. Clicking the main promotional banner also works, as seen in the screenshot below.
The current categories for pay yourself back are: restaurant and grocery stores (including take out and eligible delivery services), home improvement stores, and select charitable organizations.
After each purChase posts, you have 90 days to pay yourself back. Check the respective box to select the purChase.
Enter the dollar amount you’d like to receive as a statement credit by using some or all of your available Ultimate Rewards points. The Chase Sapphire Preferred redemption rate is 1.25 cents per point, and the Sapphire Reserve is 1.50 cents per point.
After setting the cash value, click “Confirm & Submit” to redeem!
One of the main benefits of Chase Ultimate Rewards points is that you can transfer them out to partners if you have the Chase Sapphire Preferred, Chase Sapphire Reserve, or the Chase Ink Preferred.
You can view credit card offers by going to the "Credit Card Offers" tab. Find offers for the respective cards in "Travel Rewards Credit Cards" and "Business Credit Cards." You don't have to use our links, but we're grateful when you do. Thank you for supporting AskSebby!
Chase Ultimate Rewards transfer at a rate of 1:1. On average, you can get up to two cents per point when you use transfer partners.
If you're looking for the most value possible, then airline partners are the way to go for first class redemption. This also works well for last minute flights.
The way I redeem points for "best value" is hotels because everyone in your travel group can benefit.
For example, if I transfer my Ultimate Rewards points to United:
On the other hand, if I transferred my Ultimate Rewards points to Hyatt:
For the cost of a round trip United Polaris flight to Asia, I can get four nights at a top tier Hyatt property.
Examples:
IHG is not an ideal transfer partner because of the cost of the points, and you typically need more points for a redemption.
In my experience, Hyatt has the best redemption value for transfer partners. The Category 1 Hyatt properties start at 5,000 Hyatt points.
Category 1 = 5,000 Hyatt points / 5,000 Chase UR points
Check out the video below for more redemption ideas.
Japan Airlines First is one of the best first-class products in the air for 2023, especially if you factor in both the soft (experience/service) and hard (seat/food) products.
This easily falls into my Top 5 First Class products, especially when you consider the number of points/miles needed, ease of earning, and “points/$ per hour in First” (especially compared to alternatives like Singapore Suites, which requires a LOT more miles).
There are four primary points currencies to consider:
In terms of value and points required, I would prioritize AA > AS > CX > JL.
Earn American Airlines AAdvantage® miles with Citi cards.
Earn flexible points with American Express cards.
Although you would think the namesake frequent flyer program would be the best, it doesn’t really work for our purpose.
Japan Airlines uses a distance-based award chart. From the US West Coast, you’re looking at 90,000 JL miles for First Class.
There is a JAL Card, but the intro bonus floats around 15,000 miles. This means that you would need 6 intro bonuses to do First Class; not really conducive to our purposes.
Marriott Bonvoy transfers at a 3:1 rate, and you receive an extra 5,000 miles bonus for every 60,000 Bonvoy transferred.
This means:
60,000 Bonvoy ⇒ 20,000 JAL + 5,000 bonus = 25,000 JAL
You would need to transfer 225,000 Bonvoy to book this flight.
Skip JL as an option unless you live in Japan and have a ton of JL miles accrued from JAL flights.
In 2023, this is the go-to option to book Japan Airlines First Class, given the value you’re receiving and the ease of earning AA miles.
American Airlines uses a location-based award chart for their partner airlines.
Japan is considered “Asia Region 1” in their chart, meaning that you would need 80,000 AA miles for First Class.
Luckily, there are tons of cards that offer AA miles from both Citi as well as Barclays. In many cases, you might be able to have enough miles for First Class with just one intro bonus, depending on if there's an elevated offer or not.
Marriott Bonvoy transfers at a 3:1 rate and you receive an extra 5,000 miles bonus for every 60,000 Bonvoy transferred.
For the same reasons as mentioned under the Japan Airlines program, this doesn’t make sense in my book.
This is one of the best ways to book Japan Airlines First Class, especially given the number of AA cards and their typical intro bonuses.
I would avoid transferring Bonvoy since that seems overly prohibitive.
They increased the number of points you need to make this booking but I think it’s still one of the better use cases for AS miles.
Booking with Alaska miles is based on region and whether you’re flying to/from the East or West Coast of the US.
West Coast to Japan: 85,000 Alaska
East Coast to Japan: 100,000 Alaska
There are two Alaska cards from Bank of America, and from the West Coast, this is still one of the more affordable ways to book JAL First Class.
Marriott Bonvoy transfers at a 3:1 rate and you receive an extra 5,000 miles bonus for every 60,000 Bonvoy transferred.
For the same reasons as mentioned under the Japan Airlines program, this doesn’t make sense in my book.
You can open an Alaska card and meet the intro bonus requirements to get pretty close to the number of points needed. Many people go for both the personal and business cards for this reason.
There is a case to use your other currencies but it might make sense to save those points for other trips and use Alaska where you’re getting outsized value.
Asia Miles is a more expensive option but might be worthwhile if you just want to transfer points from core cards (Citi, Amex) rather than sign up for dedicated airline cards from Alaska and American Airlines.
Cathay prices partner redemptions off their calculator.
Pricing out a flight from San Francisco (SFO) to Tokyo (HND), you’re looking at 120,000 Asia Miles.
Cathay Pacific does have a Visa card but the intro bonus hovers around 35,000 miles. This means you would need 4 intro bonuses to do this flight which isn’t really viable.
Instead, I would look into American Express and Citi cards since both transfer to Asia Miles.
Both Amex Membership Rewards (MR) and Citi ThankYou (TY) transfer at a 1:1 rate outside of any limited-time promotions.
The benefit is that these can be pooled easily. If you need 120,000 Asia Miles, 80,000 can come from Amex and 40,000 from Citi, and that’s perfectly fine.
Check out the video below to see what it's like flying JAL F.
Before you apply for an American Express card, it’s important to learn about the rules to increase your chances of approval.
The guidelines presented here include non-negotiable rules explicitly stated in the terms and conditions, as well as practical insights gleaned from experience and shared among industry insiders.
While certain guidelines may apply to a broad range of individuals, there may also be exceptions to these rules that could impact your personal experience.
Terms apply to American Express benefits and offers. Enrollment may be required for select American Express benefits and offers. Visit americanexpress.com to learn more.
To be eligible for US credit cards, you typically need to meet certain requirements, such as being a US citizen or legal resident and being at least 18 years of age. However, obtaining a card can be challenging for those without an ITIN or SSN.
That being said, there are exceptions to these requirements, as residency can be interpreted broadly. For example, Canadian citizens who operate a business in the US for a limited period may be able to obtain US cards by using their US mailing address.
Additionally, even if you are not perceived as a resident, you may still be considered one for tax purposes, which American Express typically looks for.
Furthermore, there are programs like Global Transfer that allow you to bring your Amex history from another country to the US, potentially improving your chances of getting approved for US cards.
Across the board, American Express tends to be one of the most stringent, so there’s a list of things they require, such as:
A big reason for this is just due to the financial compliance that’s required in the U.S.
Typically, having a credit score of 700 or higher is desirable, although it is not an absolute requirement. In my experience, a score of at least 700 is generally necessary to qualify for most American Express cards, but others may suggest different thresholds, such as 670 or even 650. Personally, I find that aiming for a credit score of 700 helps to minimize the risk of rejection and reduce the hassle of applying for credit.
You might be surprised at how simple it is to improve your credit score if you lower your credit card utilization. However, even if your score is at a satisfactory level, such as 670 or 700, you may still be denied credit due to other factors, such as a high credit utilization rate or being on a blacklist.
The intro offer may not be available to those who have previously had the same card or versions of it. However, different variations of the card, such as The Platinum Card® from American Express, American Express Platinum Card® for Schwab, or The Platinum Card® from American Express Exclusively for Morgan Stanley, are considered distinct products, and applying for them can still earn you a welcome bonus, even if you already have the Platinum.
Although many of the features may be identical, these are technically different products, not previous versions. Some issuers may still consider it a disqualifying factor if you have had the same card before or if you did not receive the welcome bonus previously.
This is why it is important to be cautious when upgrading or downgrading your card, as it could potentially lock you out of the intro offer. Since the intro offer is a significant incentive for many applicants, a mistake here could cost you hundreds or even thousands of dollars.
The key takeaway is to avoid downgrading your card unless you have had it before or are not interested in the intro offer.
Exceptions to the general rule exist, such as:
Therefore, it is recommended to apply for cards during elevated offers or use tools like CardMatch to determine if you are targeted for an elevated offer rather than solely relying on exceptions.
In the past, this was referred to as the Five Card Rule, as American Express historically limited customers to five credit cards. This means that if you already have five personal credit cards and attempt to apply for a business credit card, your application will likely be rejected. If you only have four personal credit cards, you can only be approved for one business credit card, which means that you are limited to a total of five credit cards between your personal and business accounts.
There are also several distinctions between credit cards and hybrid cards. Hybrid cards are those that do not have a specific spending limit, including:
When you log in to view these cards, they typically state that there is no set spending limit. However, there is a limit based on risk assessment, which can change frequently.
All other cards are considered credit cards:
If you have five credit cards, you can still be approved for the American Express® Gold Card, The Platinum Card® from American Express, and other non-credit-card products. The American Express® Gold Card and Platinum cards do not count towards the five-card limit. However, there is some variability in this rule, as some people may be limited to only four cards, while others may be allowed up to six.
The rule states that you are only allowed to be approved for one credit card every five days. However, the 1 in 5 rule does not apply to other cards. This means that you can apply for one credit card and any number of other cards on the same day without any issues. However, it is important to keep in mind that you will still be responsible for meeting the minimum spending requirements for each card.
Another thing to note is that applying for multiple American Express cards typically does not have a significant impact on your credit score. Once you have one Amex card, they usually only do soft credit pulls for subsequent applications. Your mileage may vary.
If you apply for more than two credit cards within 90 days, you will automatically be rejected for the third one. However, it is important to note that this rule only applies to credit cards and not to other cards. Therefore, you can apply for as many other cards as you want without worrying about this rule.
"Popup Jail" is a term used to describe a scenario where you apply for a credit card, and a popup appears, informing you that you can still apply and receive the card but without any intro bonus. The reasons for this can vary greatly, but it is often due to the applicant's behavior being considered unprofitable or not meeting the issuer's criteria.
Common reasons include low spending on current cards, closing a card too quickly or after taking a retention offer and spending too much on elevated categories.
To avoid ending up in popup jail, it's recommended that new applicants start with other issuers first, especially if their spending is relatively low.
Another example is self-referrals, which can result in shutdowns and blacklisting in extreme cases. Ultimately, the issuer is less likely to provide an intro bonus if the applicant is perceived as unprofitable, as it doesn't make economic sense for them to do so.
Historically, Hyatt has the most valuable status because it's generally hard to get.
Between March 28 and April 1, you can unlock World of Hyatt's midlevel status for free and the opportunity to extend it OR earn the top-level status.
Note that you don't need to have a Bilt Mastercard to join the challenge. You can just download the app.
However, if you want to earn points while paying rent, you can learn more about the Bilt Mastercard here: https://www.asksebby.com/go/bilt
Once you do this, you'll receive Explorist status by April 17, and it'll last until July 16, 2023.
To make things even sweeter, Hyatt is currently running a Bonus Journeys promo to earn 3,000 bonus points every two qualifying nights, up to 30 nights. If you're a World of Hyatt credit card holder, you'll earn an additional 500 bonus points. Learn more about the Hyatt promo and enroll here: https://world.hyatt.com/content/gp/en/offers/bonus-journeys.html
As someone with Hyatt Globalist, I'm super jealous that you have the opportunity to do a challenge.
Even if you don't care about Hyatt, this is the best move to get MGM status for Las Vegas by status matching.
Note that the temporary Hyatt status does not match over. You must do one of the extended status challenges to qualify.
Hyatt Discoverist → MGM Pearl
Hyatt Explorist → MGM Gold
Hyatt Globalist → MGM Gold
You can status match here: https://world.hyatt.com/content/gp/en/rewards/other-partnerships.html
The main benefits of MGM Gold are:
The fact you can get MGM Gold with no gambling is crazy to me and an incredible value.
If you own a business, you know how important it is to have access to credit when needed. A business credit card can be a great way to manage your company's finances and build your credit score over time. But getting one isn't as easy as applying for a personal credit card.
Here's what you need to know about getting a business credit card, how you can apply, and what issuers are looking for.
Disclaimer: I'm not an accountant or financial advisor. Consult a professional if you have questions related to your specific business entity.
Generally, any activity that offers goods or services to customers generates income from its operations and runs to make a profit is defined as a business. Businesses are all around us – from the corner store in your neighborhood to online marketplaces selling unique products worldwide.
Though many people have preconceived notions about what constitutes a business, almost anything can qualify as long as it meets these simple criteria:
The answer is no. The reason for this is that issuers use your personal credit report and your personal credit score to make a decision. Business credit can be helpful if you're doing giant lines of credit.
Let's start by figuring out what kind of business you are in. You can find companies of all sizes and shapes, but here are some eligible ones.
Note that all of these are eligible for business cards from most U.S. issuers. Some are only for C-corps or larger ones, but for the most part, the main ones are for everyone.
This is what most major credit issuers are looking for when getting a business card:
Generally, I recommend Chase cards because there are a lot of no-annual-fee options and they've got pretty good bonuses. Easy examples of this will be the Ink Business Cash® Credit Card and Ink Business Unlimited® Credit Card. There are tons of other good cards as well outside of Chase, but if you are someone at 4/24, you generally can get Ink Cards, and it doesn't affect 5/24.
Getting a business credit card is important in managing your company's finances and building its financial health over time. Remember to do your research before choosing the best option for your needs—but when used responsibly, having access to extra funds can make all the difference between success and failure in today's competitive marketplace.
Delta and American Express co-branded SkyMiles credit cards have a sweet new offer that makes travel more affordable.
The TakeOff 15 benefit for Delta credit cardholders saves 15% off Award Travel. To quality, existing cardholders simply use the “Shop with Miles” option when booking travel using delta.com or the Fly Delta app.
The discount is automatically applied to the transaction when you redeem your reward points this way. Just keep in mind that taxes and that only eligible partner flights qualify for the promotion.
This discount makes the SkyMiles program worthwhile, so if you’re a frequent Delta traveler looking to save on economy trips, this is worth considering.
With the TakeOff 15 offer, there are now two ways to redeem Delta points. You can use the “Pay with Miles” options. You can use the “Pay with Miles” option, which allows you to pay at a rate of 1 CPP (cent per point) in increments of 5,000 miles.
Or you can use the “Shop with Miles” option with a value of around 1.2 CPP to 1.5 CPP usually, but with the TakeOff 15 discount, it’s around a base of 1.4 CPP.
Thus, the Delta 15 discount offers a substantial value for frequent Delta travelers, making SkyMiles an even more attractive option for those seeking savings on airline domestic travel.
Getting a 15% discount on your eligible flight as a Delta credit card holder is simple. This offer is available to American Express cardholders with the following credit cards:
The Delta SkyMiles® Blue American Express Card does not qualify for the discount.
A popular question about the TakeOff 15 promotion is whether Delta will raise award ticket prices in response.
While it’s impossible to know for sure, there are no current plans to do so. Many people have been able to rebook the same flight, redeem their rewards points, and save a flat 15%.
There were no differences in price for rebooking a flight itinerary using points other than the 15% discount.
Although things could change at any time, we’re hopeful that Delta will continue to honor the TakeOff 15 promotion without changing reward point redemption.
If you’re looking to get from Point A to Point B for a low price, Delta SkyMiles is an option worth considering. However, if you’re trying to get from Point A to Point B in lavish business and first-class options, Delta SkyMiles may not be the best option.
That’s because Delta has one of the least redemption rates for premium cabins, so if you’re looking for luxury travel, your miles will go further with other rewards programs. Consider American Airlines and Alaska Airlines credit cards if you want more domestic travel rewards with higher upside.
Delta is an economy option with a flat value reward system and another with a flat 15% price reduction, while other cards have higher upside potential.
Overall, the Delta SkyMiles TakeOff 15 program is a good fit for someone who plans to travel domestically and save money. However, if you’re looking for more rewards and higher upside potential, consider other credit cards that offer greater flexibility and value in their rewards program.
That’s not to say that you cannot transfer your SkyMiles to other airlines or use them for luxury travel if you have a high-end card, but the value of those points might be better spent elsewhere. If you’re searching for a card to help meet your aspiration travel goals, this isn’t the right program for you.
Regardless, the TakeOff 15 promotion is a great way to save money and increase your travel budget. As long as Delta maintains its current reward redemption values, you can take advantage of the 15% discount on eligible flights without worrying about higher prices or devaluation.
Credit card rewards "transfer wealth" from cash users to credit users. If you select the right credit card and use it responsibly, it can be form of couponing.
By using credit cards (that earn rewards), you get the cash back. For example, let’s say a merchant (Walgreens) pays 2-3% in interchange fees to accept your card. In most states, this amount is the same, so that the merchant will increase the product cost.
Consumers who use credit cards get the rewards back, and cash users foot the bill. Per the Federal Reserve Bank of Boston, cash users pay $149/year into this system. Credit card users get $1,133/year from this same system. Keep reading if you want to learn more about how to be on the receiving end of the money.
Side note: If you don’t want to use credit cards but still want to reap the benefits of rewards, I recommend looking into cash back portals. One of the most competitive rates and payouts right now is Rakuten. Here’s a referral link to check them out: https://www.asksebby.com/rakuten
These are generally the starting point for people who are new to this channel. They know they should have a credit card for all the reasons we just mentioned, including building credit and getting some rewards back but haven’t looked into it too much beyond this.
You can usually derive 2-3X more value with minimal work. For example, some 1.5% cards tie into other card setups, but this is generally due to something (a premium card) making it worth more.
These cards are my recommendation for people who want to set it and forget it and use one card for everything.
The Citi® Double Cash Card (1% when you buy and 1% when you pay), Fidelity 2%, and the PayPal 2% Mastercard all fit the bill along with some regional credit union cards. Of these, I recommend the Citi Double Cash because it gives you more optionality.
One of the benefits about Citi is that you can product change between any of their cards when it comes to using it for travel or cash back. For example, the Double Cash can be changed to the Costco credit card.
Regarding travel, the 2% is the baseline value that we use when comparing cards; we want it to pass the 2% hurdle rate.
The Citi Double Cash card is a great example of making a travel card work for you with up to 4% cash back for advanced redemptions like business or first class.
These types of cards are for people who spend a lot of money at specific places. Cash back is cash back here, so generally, there are no additional reward options. The goal here is to find cards that offer at least 3% back. You want your cards to work for you.
There are three sub-types of cards in this category:
An example of a payment method type of card is Apple Pay. Apple gives you 3% cash back when using Apple Pay at places like Apple, Walgreens, Duane Reade, Nike, Uber and Uber Eats, and Exxon, to name a few.
For people who have expensive medicine, 3% cash back at Walgreens can be huge. By the same token, if you spend a lot of money on Apple products, this is a great option.
The Amazon Prime card is a great example of an extremely competitive 5% cash back for high Amazon spenders or frequent Whole Foods shoppers.
If you’re someone who buys a lot of electronics or cameras, B&H is worth considering because it can cover the tax amount at 8.5%. That’s a lot of savings on a $1000 camera lens!
Be careful with this; avoid getting cards for places you don’t spend a lot of money or don’t see yourself using in the future.
Specific Categories Examples:
The benefit here is that you are not locked into a specific store. You can go to Trader Joe's, Safeway, and Whole Foods, and any restaurants or gas stations, etc.
For a lot of these cards, there are annual fee versions as well. The American Express Everyday Preferred and the Blue Cash Preferred are good examples of cards with various annual fees.
To see which card is the best for you, do a simple break-even calculation. Ignoring all other multipliers, for example, if your supermarket spending is $3,167, you are impartial to either card. If you spend more than that, the Blue Cash Preferred has the better value.
Lastly, make sure these cards cover the bases that you need covered. If you only cook at home and your restaurant spending is low, or if you don’t have a car, these might not be the best cards for you.
This is the setup I recommend for lower spenders using the U.S. Bank Cash Plus and Chase Freedom Flex℠ cards. The U.S. Bank Cash Plus lets you pick two categories where you can earn 5% cash back on up to $2,000 spend per quarter.
There are lots of categories to choose from, and I’ve seen this played in two ways.
First, pick a category that you consistently spend a lot of money on. (The same idea as Tier 3 but covers two categories.) Electronics are an easy example here.
Secondly, use this card for items you don’t usually purChase but could have a spike in spending throughout the year.
For example, buying new furniture, a new cell phone, sports equipment, or back to school shopping.
The Chase Freedom Flex is the other major pick in this category, and this is for the potential upside of earning 5x cash back on up to $1,500 in combined category purchases each quarter you activate.
Similar to the Citi Double Cash, this can be worth twice as much (10% cash back) if you decide to switch to a travel set up. The fact that you have a good 5% baseline and huge optionality with this card is a great benefit.
If this is confusing, or you have a Player 2 that always uses the wrong card, I would invest in a label maker. It takes 30 seconds of work every 3 months to help clarify which card to use and when.
Tier 2 is also the best spot for most cash back people who are low to normal spenders who want to maximize their card's value.
The card systems in Tier 1 have the most upside, but almost always have something that makes it hard to justify.
We'll quickly go through these, but I could make a dedicated post for each.
Here you’ll earn Membership Rewards (MR) points from the American Express® Green Card, American Express® Gold Card, and the The Blue Business® Plus Credit Card from American Express. Then, cash them out using the Schwab Platinum card for 1.25 cents per point (CPP).
The main disadvantage here is that you generally need a pretty sizeable spend to justify this setup long-term. There are also a lot of annual fees involved; generally $800-$950 per year. But there are also many credits that help subsidize these fees, like the $200 annual travel credit. Terms apply.
This is generally the setup I recommend to people who have a lot of work spending, or for someone who only takes one short vacation per year and they can’t use all of the points anyway.
In this instance you might as well cash out the points into your brokerage account.
The main disadvantage here is that you need $100,000 in your Bank of America account or Merrill Lynch brokerage account. With this setup you get a 75% rewards bonus on Bank of America cards.
That means the 3% Cash Rewards is 5.25% cash back on a pretty wide range of things like gas, online shopping, dining, travel, drug stores, and home improvement.
There are spending caps, but people who run this setup get multiple cards or product change to different cards.
This is new for 2021, mostly because Chase added the Pay Yourself Back program. With this program, you can redeem your points for additional value; 25% or 50% boost for everyday purchases. This sounds good on the surface, but there are some disadvantages.
The main disadvantage is that Chase picks the categories, so we don’t know if it will stay as groceries or switch to gas, for example.
You’ll also likely need a decent spend or multiple Freedom or Freedom Flex cards for it to work well. To take advantage of the additional credits, it’s a good idea to commit to a little bit of travel for this setup to be beneficial as well.
The Chase Ultimate Rewards® ecosystem may be one of your best options if you like to travel. Besides being versatile, Chase points are valuable if you know how to optimize them.
One massive benefit of the Chase system is that you can stack Chase points easily with Chase's Ultimate Rewards-earning credit cards.
The Chase Ultimate Rewards program has plenty of redemptions for any budget, whether you're looking for luxury experiences or a low-cost flight.
This blog post looks at the best and worst ways to use your Chase Ultimate Rewards points. But before we get started, let's talk about the basics.
Chase Ultimate Rewards® is a points program where you can earn and redeem points. The cards that earn UR points include:
Although the Chase Freedom Flex, Chase Freedom Unlimited, Ink Cash, and Ink Unlimited cards are marketed as cash back, they earn Chase Ultimate Rewards.
Throughout this guide, you'll also notice the term cents-per-point (CPP), which is what each point would cost if we paid cash for the redemption.
So if 1.5 CPP means each point is worth $0.015, then: 10,000 UR points = 10,000 * 0.015 = $150
One major exception to transferring Ultimate Rewards between UR earning card accounts is the Ink Business Premier credit card.
Although the Ink Business Premier earns cash back in the form of Ultimate Rewards, you cannot transfer or combine points to other UR accounts.
As long as you have a Chase Ultimate Rewards earning credit card open, your Ultimate Rewards points won't expire. Any points you have left will be lost if you close the card. You shouldn't cancel your credit card before redeeming or transferring your rewards.
You'll also lose your points if Chase closes your account. Even though credit card companies can close an account anytime, it rarely happens. You're most likely to get your card canceled if:
Here's a simple step-by-step process to combine your points:
1. Log in to your account and click on the "Earn/Use" tab.
2. Select one of the cards that earn Ultimate Rewards points (refer to the card list above).
3. Hover over your points balance and hit "Redeem."
4. Once you're in the portal, click the top bar again to reveal the "Combine Points" icon in the menu.
5. Click the Combine Points option. From there, follow the prompts to combine points with your card.
Chase Ultimate Rewards are flexible and can be redeemed in various ways, including gift cards, statement credits, and travel. Keep in mind that the cents per point valuation vary with each redemption method. Here are the best and worst ways to use Ultimate Rewards.
First, let's look at the worst ways you can use your points.
You can sometimes use your Chase Ultimate Rewards points to purchase items at Amazon and other online merchants rather than using your credit card balance.
Although it's convenient, you lose the overall point value with this option. Furthermore, using points to shop on Amazon or with PayPal will only earn you 0.8 CPP.
Let's say you used 100,000 UR points; that's: 100,000 UR points * 0.8 CPP = $800 in value
With this value, I'd say this is not worth it in any situation.
Chase also offers gift cards as redemption options. When you take this route, you'll normally receive 1 CPP. That means 100,000 UR = $1,000 in gift cards.
There are even times when Chase offers gift cards with better value for specific retailers, but I would still skip this option.
You can use Chase Dining points for Sapphire Private Dining series events, takeout, outdoor seating reservations, and more.
Here, you're going to get 1 CPP. So: 100,000 UR * 1 CPP = $1,000 in dining
Redeeming points for Chase Dining points gets a similar value as redeeming for gift cards, so it's still not the ideal method.
There is a huge exception to this, though, if you have the Chase Sapphire Reserve and the Chase Sapphire Preferred cards. With these cards in your arsenal, you can technically get more value.
You might find getting free Apple products through your credit card points very appealing. But, the same with methods #2 & #3, the 1 CPP redemption value isn't great.
If you do the math: 100,000 UR * 1 CPP = $1,000 in Apple products
It would be a good idea to wait for a promotion if you're interested in using your Ultimate Rewards points for Apple Store purchases.
This redemption option will get you 1 CPP, equivalent to $1,000 in travel value.
If you're looking to book a first-class flight or an expensive luxury hotel, Chase's travel portal usually gives you the best deal, while transferring Ultimate Rewards points typically saves you money.
I'd say that redeeming your UR points for cash back is a good option. If you want to use your points for cash back, there are two ways to do this:
Both methods will get you 1 CPP, which means: 100,000 UR points * 1 CPP = $1,000 in cash/statement credit
Cash back is more ideal than buying gift cards since you aren't limited to select stores.
The great thing about Chase is its cash-out rate floor value. While Chase isn't for everyone, there are three reasons I recommend it:
As mentioned earlier, Chase Apple Store promos are a good time to use your Ultimate Rewards points. For Apple enthusiasts, this is good news!
Until Nov. 30, 2022, Chase cardholders can get an extra discount when redeeming points for Apple products through Chase Ultimate Rewards®. This promo will make your points worth 10%, 25%, or 50% more, depending on which card you have.
For example, if we use the 10% promo, that will be equivalent to 1.1 CPP. This means: 100,000 UR * 1.1 CPP = $1,100 in Apple products
This is the same concept as method #7. The best time to redeem gift cards is during a sale. With this, you're going to have a cent per point of 1.11.
In other words: 100,000 UR * 1.1 CPP = $1,111 in gift cards
While this sounds great and looks like a good deal, make sure you're using your points for something worthwhile. Don't be tempted to get a gift card just because it's on sale.
If you want simplicity or are a rookie with credit cards, Chase has partnered with Expedia to run a search engine where you can book flights, hotels, rentals, cruises, etc., as you would on Expedia.
With a Chase Sapphire Preferred or Ink Preferred card, you can get an extra 25% more, allowing you to redeem at 1.25 CPP.
So: 100,000 UR * 1.25 CPP = $1,250 in travel value
If you have a lot of points, it might make sense to crunch the numbers before applying or upgrading to the Chase Sapphire Reserve to get the most value.
Chase's most significant selling point is how easy it is to get value from a regular travel booking for that elevated value.
If you use your points for the Chase Travel Portal through this card, do your research and check out the rates online to see if it makes sense.
During the pandemic, travel redemptions were severely limited. As a result, Chase came up with the Pay Yourself Back program, and Chase is allowing you to redeem points for elevated value in everyday categories most people can use.
When you use Pay Yourself Back for eligible purchases, you can "wipe" them off your statement with an additional 25% bonus value, essentially allowing you to redeem it at 1.25 CPP.
As a result, we can say: 100,000 UR * 1.25 CPP = $1,250
Cards that offer Pay Yourself Back:
Note that each card above has different Pay Yourself Back categories that may change periodically, so check Chase's site for the most up-to-date redemption categories and rates.
If you hold a Chase Sapphire Reserve card and use your UR points to redeem for Chase Travel Portal, you'll get a 50% boost in value. Essentially, this will give you 1.5 CPP, meaning:
100,000 UR * 1.5 CPP = $1,500
Be sure to compare travel prices to the Chase Travel Portal to see if you're getting the best value.
Transfer Partners are one of the best ways to redeem your points. Generally, when you transfer your UR points to Chase's partners, you get 2 CPP in value. So that's:
100,000 UR * 2 CPP = $2,000
Related Read: Best Chase Ultimate Rewards Transfer Partners
Depending on the travel partner, this value can increase up to $10,000. If you want to know how to use your UR points to Chase's transfer partners, then check out this blog: How to Use Chase Ultimate Rewards Transfer Partners (a Step-by-Step Guide).
If you're interested in learning more about the best and worst ways to redeem your Ultimate Rewards points in detail, watch this video:
Building a strong foundation of credit cards is essential for a healthy credit score. In this post, we’ll walk through the first 5 credit cards to consider if you’re starting out in your credit journey.
A few guidelines:
Since Chase typically likes to see at least 12 months of personal credit history, your first credit card should be a student credit card (if you qualify), a starter card, or a secured card.
I strongly recommend picking a card that does not have an annual fee since you should plan on keeping the card long-term. This card is the foundation of your credit card history, and the last thing you want to do is cancel your oldest card due to the annual fee.
Capital One, Bank of America, and Citi have good beginner card options.
After holding credit card #1 for at least 12 months, I recommend going for a Chase Freedom Flex or Chase Freedom Unlimited to start building a credit relationship with Chase.
I’ve seen people get approved for a Chase card with less than 12 months of credit history, but they usually have a higher income ($80k+) or other credit mixes.
Chase starter cards:
If you have a lot of miscellaneous expenses like home improvement, taxes, or tuition, I recommend going for the Freedom Unlimited.
You can product change between the Chase Freedom Flex and the Freedom Unlimited.
Depending on what your income is and if you have plans to travel, I recommend going for either the Chase Sapphire Preferred or the Sapphire Reserve.
Wait at least 3 months of having the Freedom card before applying. If you apply sooner, it could raise flags due to the velocity of card applications.
The following rules apply to the Sapphire cards:
Since the Chase Sapphire Reserve is a Visa Infinite card, you need to have the ability to get approved for a minimum of $10,000 credit line. I recommend having an income of at least $35,000+ to increase your chances of approval.
If you don’t have plans to travel in the near future or you value Chase travel partners, I suggest going for the Chase Sapphire Preferred. The Sapphire Preferred has a higher intro bonus of 100,000 points, and a lower annual fee.
Worst case, you can cash out the 100,000 points for a net $905. After a year, you can product change the Sapphire Preferred to a Sapphire Reserve.
Chase business cards do not count towards Chase 5/24, but they’re affected by it. You must be at 4/24 or under to get approved for a Chase business credit card.
If you qualify for business credit cards, I recommend adding them here.
You can qualify for a business credit card if you generate any type of income outside of your full-time job. Examples would be tutoring, rental income, selling online, or babysitting. Depending on the state you live in, you could qualify as a sole proprietor.
Chased on your travel goals, I recommend filling in slots #4 and #5 with the remaining Chase credit cards that are on your list.
A strong hotel keeper card that I’ve kept long term is the The World of Hyatt Credit Card since redemption nights start at 5,000. You also get a free night certificate each card anniversary.
A few other cards worth considering:
Pick the cards based on your airline or hotel preferences.
If you are not a fan of Chase or you’re not eligible for Chase credit cards, I recommend going for Capital One first since they’re inquiry sensitive.
Barclays has a soft 6/24 rule that is not always enforced. If you open more than 6 credit cards in the past 24 months from any credit issuer, then you’re likely to get denied.
Barclays credit cards worth considering:
Although some of the Barclays cards have no annual fee products in the same family tree, some people have had trouble requesting a downgrade. I recommend building a strong foundation of cards first before moving on to Barclays.
American Express is not sensitive to velocity or inquiries, so I would save Amex cards as the last cards you get.
Important note: I do not recommend getting an Amex card with an annual fee as your first credit card. If the Amex card does not have a no annual fee downgrade path, and you choose to cancel in the future, you lose the credit history.
For people with a lot of assets with Bank of America, I suggest checking out our post on the Bank of America Duo to maximize your points: https://www.asksebby.com/blog/bank-of-america-duo-credit-cards-for-high-net-worth-individuals
Beginning on April 1, 2021, American Express is adding cell phone protection on select premium cards. This is a big deal because it was a weakness in the American Express core setup compared to other issuers like Chase and Citi.
The following cards have the cell phone protection benefit:
Amex cell phone protection covers theft and damage of your cell phone.
The maximum liability is $800, per claim, per Eligible Card Account. Each claim is subject to a $50 deductible. Coverage is limited to two (2) claims per Eligible Card Account per 12 month period.
Many of the blogs that received the press release mention that screen damage is covered, but I don't see that mentioned in the terms. Cosmetic damage is NOT covered if it doesn't impact the phone’s ability to make or receive phone calls. However, if there is significant damage to the screen and the phone is not functional, it would be covered.
According to the benefit terms and conditions, the following items are not covered:
The idea is that you can't just swap this in when your phone breaks. If you don't pay subsequent bills, you will lose coverage.
To file a claim, you’ll need to contact the benefits administrator within 90 days of the loss or as soon as reasonably possible. Once the claim process is initiated, you’ll have 120 days to submit all necessary paperwork; otherwise, the claim may not be honored.
You’ll need the following documents:
Pay Over Time was always a feature for American Express charge cards. Cardholders can choose to pay their statements in full or carry a balance on eligible charges, up to their Pay Over Time Limit.
However, it was recently brought to my attention that some of my cards were auto-enrolled in Pay Over Time, which makes them act like credit cards.
Cards auto-enrolled in Pay Over Time:
You can check your Pay Over Time status by logging into your Amex account -> Account Services -> Pay Charges Over Time. All of my cards had a default Pay Over Time limit of $10,000.
An important note is that although there is a Pay Over Time Limit, it’s not the same as a credit limit. While the cards technically don’t have a credit limit, if your Pay Over Time Limit is $10,000, you can carry a balance of up to $10,000 and pay the remainder in full.
Important note: Although Pay Over Time is an option, I recommend avoiding it since paying interest usually negates any points value. Always pay off the credit card balance in full, and don’t get a credit card if it tempts you to spend more than you normally would.
The negative impact of being auto-enrolled in Pay Over Time is that cardholders are no longer eligible for the 10,000 MR bonus. In the past, Amex sent out targeted offers to enroll in the optional feature. My guess is that the bonus no longer exists.
I had my fair share of enrollment bonuses since I have multiple Amex Platinum and Gold cards.
The elephant in the room is why American Express would change their charge cards to credit cards. To answer this question, let’s dive into their Q4 2019 financial statements.
Since Amex is a publicly traded company, its earnings report is publicly available: https://ir.americanexpress.com/Cache/IRCache/1ef02650-2d57-1ac2-cedb-51e6bc3ad90a.PDF?O=PDF&T=&Y=&D=&FID=1ef02650-2d57-1ac2-cedb-51e6bc3ad90a&iid=102700
If you flip over to page 8 in the earnings report, you can see that the charge net write-off rates jump from 1.4% to 1.9% within 12 months. However, it looks like the 30+ days past due percentage has little change.
My guess is that since the charge net write-off rates have increased, Amex would rather collect interest on outstanding balances instead of writing them off.
By auto-enrolling cardholders in the Pay Over Time program, Amex can earn more interest income instead of chasing after delinquent accounts.
Provisions for losses is money set aside for write-offs. Total provisions for losses jumped from $809 million in Q1 2019 to $1.024 billion in Q4 2019.
It’s no secret that American Express makes a large percentage of their revenue via swipe fees, which increased by 6% in Q4 2019. Other notable increases are net card fees (annual fees) and net interest income.
My prediction is that more people were getting the cards due to good marketing, and they ended up paying interest as opposed to paying the card off in full each month.
By auto-enrolling cardholders in Pay Over Time, Amex is cutting back on potential write-offs and making money on the interest. Only time will tell if their strategy is more profitable.
