Part 3: Use Ultimate Rewards for Flexible Redemption
In Part 1, we went over a relatively easy tactic for accumulating a ton of credit card rewards without having to significantly increase our spending by signing up for many credit cards with generous sign-in bonuses. In Part 2, we discussed how to pay your rent or mortgage indirectly using a credit card and earn points (or meet minimum spending requirements) using one of your largest recurring expenses. If you blindly followed the 1st 2 parts, you may have ended up accumulating tens of thousands of points in different credit card programs so your next logical step is to redeem them.
While you may have enough points to purchase roundtrip plane tickets for one person, you’ll run into problems trying to redeem them for 2 or more people. Let’s say you have 50,000 points with Airline A and 50,000 points with Airline B. An international roundtrip ticket costs 35,000 with either airline. It’s enough for 1 roundtrip ticket but you’re 20,000 points short for 2 tickets. While there’s generally no way to transfer points between 2 frequent flyer programs unless they have a special partnership, you can mitigate this problem by collecting a 3rd class of points known as flexible rewards. The most popular flexible reward programs is Chase’s Ultimate Rewards.
How Ultimate Rewards Work
In a nutshell, Ultimate Rewards are points that you accumulate with Chase that can be transferred to any program that they’re partnered with. Suppose you have 20,000 Ultimate Reward points and 50,000 frequent flyer miles with Airline X that is an Ultimate Reward partner. If 2 roundtrip tickets cost 70,000 miles with Airline X, then you can transfer the 20,000 points from Ultimate Rewards to the airline and use them the purchase the reward ticket! If you didn’t have those 20,000 Ultimate Rewards, then you would have had to spend roughly another $20,000 with your Airline X credit card to earn enough points to buy the ticket. But 20,000 points isn’t that difficult to obtain using the sign-in bonuses with various Credit Cards with Chase whereas Airline X probably only has 1 credit card that offers a sign-in bonus of around 50,000 miles.
Why You Should Hoard Your Ultimate Rewards
If possible, try not to rely on your Ultimate Rewards to pay for your plane tickets, hotel stays, and other rewards. Instead, try to accumulate as many of them as possible using sign-in bonuses. Sign up with credit cards from as many Ultimate Reward partners as possible as well and collect their sign-in bonuses. Whenever you try to purchase a ticket from a partner and you’re just, say, 10,000 or 20,000 points short, transfer some Ultimate Reward points over so that you can just barely afford the ticket(s). Hoard these Ultimate Rewards as much as possible because you cannot undo the transfer!
Credit Cards that Offer Ultimate Rewards
Here’s a list of credit cards that offer Ultimate Rewards as a sign-in bonus as of 2015:
Chase Sapphire Preferred: 40,000 points for spending $4000 in the first 3 months.
Chase Ink Business Plus: 50,000 points for spending $5000 in the first 3 months. Note: you need to have a business to sign up for this card; if you don’t, you can try starting one of your own.
Chase Freedom: Although this card generally doesn’t offer Ultimate Rewards in its sign-in bonuses, it does offer 5 points per dollar spent for various categories throughout the year. If you have one of the 2 cards above, you can convert the points you earned with this card into Ultimate Rewards and then transfer those rewards to one of the partners.
So How Did I Afford 2 International Round Trip Tickets with Points again?
For those of you who were following my blog from the start or read my mission statement, you may recall that I’ve mentioned buying 2 roundtrip tickets for my then future inlaws to attend my wedding in the US. So here’s how I did it:
In October 2013, I signed up for the Chase Sapphire Card. I earned 40K points by spending $3000 in the first 3 months (the requirement has now been upped to $4000 but it’s still not too difficult if you use my tactics in Part 2 and earn points on your rent/mortgage.)
In January 2014, I signed up for a United Explorer card which awarded 50K points for spending $2000 in the first 3 months. When I was ready to purchase roundtrip tickets for my future inlaws, I noticed they cost 35K points per person. So I needed 70K points but only had 50K. I then transferred 20K Ultimate Rewards to United which is a partner. Problem solved!
Always, always save your Ultimate Rewards points for when you need to strategically transfer them so that you have enough miles to purchase your desired # of tickets (like in the above example.) In the next part, I’ll go over another method you can use to obtain points or miles if you’re short: manufactured spending. If you’ve taken the initiative to further research how to earn points faster, you may have stumbled upon this concept which is quite popular in the credit card hacking community. I generally discourage such a practice except in a few circumstances which I’ll go over in Part 4.