I just signed up for my first Travel Rewards Credit Card, so I wanted to talk about how I planned out making the minimum spend for the signup bonus, while also planning out my Travel for the rest of the year. Travel Rewards Credit Cards award you points toward travel with every purchase that you make. If you travel a lot, using a travel rewards credit card can actually help you towards gaining free travel. Especially when you take advantage of the initial bonus offer when you sign up.
One of the most popular travel rewards credit cards is the Chase Sapphire Preferred. This card has a $95 Annual fee, however with the Bonus points and the rewards you gain from your regular purchases, it can be well worth it. But before I even get into the bonus points, what does this $95 annual fee card give you that your typical no fee credit card may not give you.
Earn 2X points on travel and dining at restaurants
ZERO foreign transaction fees. So if you go on a flight or cruise outside of the United States, you can use this card without being charged an additional 2% to 3% on top of the cost of your purchase.
Trip cancellation/interruption insurance and auto rental collision damage waiver. I never get rental car insurance, because many credit cards include this as a benefit of using their credit card for the purchase.
Points are worth 1¢ per dollar if traded for Cash. So this travel rewards card is essentially a 1% cash back card, with 2% back on travel and dining purchases. However if you redeem your points for travel, you receive 1.25¢ per point, making this a 1.25% cash back for regular purchases, and 2.5% cash back on travel and dining! These points can also be transferred to Chase's travel partners, which include United Airlines, Southwest Airlines, Jetblue TrueBlue, World of Hyatt, IGH Rewards Club, Marriott Bonvoy, The Ritz Carlton and more!
The main feature, and what makes this one of the most attractive Travel Rewards Credit Cards, is the initial Sign Up Bonus. The Chase Sapphire Preferred gives you 60K bonus points if you spend $4,000 on the card during the first 3 month period. Depending on what you spend the $4000 on, you will have your regular points ranging from 4000 up to 8000 if all spending is on travel or dining. This is essentially 16¢ to 17¢ per dollar, or 16% to 17% "cash back" for the bonus plus regular rewards points for your spending. When you use the points for travel which gives you a .25 per point boost (25%), this is increased to an 80K-85K points value of 20-21.25 points per dollar, or 20%-21.25% cash value for travel! So make sure if you sign up for this card, or any card that provides a bonus, you have your spending planned out for this 3 month period.
Since I already had most of my travel planned out for the rest of 2020, I thought this year would be the best time to get started with my Travel Rewards Card. Prior to this card I've only used Cash Back Rewards Cards, because receiving cash back for my regular purchases was more valuable to me than using the travel rewards card due to my minimal travel by plane outside of work. Receiving cash instead of points is more flexible because you can use the cash on literally anything. If you have debts like student loan debt, you can use the cash back to pay it down faster. You can also use the cash from your cash back to go towards your investments. Or you can use the cash to pay for your normal everyday expenses that you would have used your credit card for, like groceries or buying gas. Like with my Costco Credit Card alone, over the course of a year I earn enough Cash Back to pay for a full month worth of groceries (link video).
How Do I Spend $4K in 3 Months?
When spending the minimum amount needed to gain the bonus points, you of course want to only spend money on things that you were going to spend money on anyway, and of course pay these items off so you are not charged interest on the credit card which would negate the benefits of your rewards points.
For my personal cell phone I am actually in a family plan which includes 5 total devices, and that plan costs around $300 per month.
Total costs over 3 months = $900.
The next major item is a wedding we are attending during this 3 month span. Flights for 2 adults (baby fly's for free currently!) was about $700, costs for sharing an AirBnb will be $50/night for 4 nights comes to $200, and food during those 4 days about $200. Then leaving room for another $200 on miscellaneous.
Total estimated trip costs = $1,300.
The next major item was an event I planned to attend at the end of April called the Financial Freedom Summit. This event is hosted by members of the FinCon community, which is how I found out about the Podcast Choosefi, which is also one of the many people/groups who recommend the Chase Sapphire Preferred card as the travel rewards card of choice. For this event the flight is about $300, AirBnb/Hotel $100/night for 4 nights comes to $400, plus food for 4 days about $100.
Total estimated trip costs = $800
If you're interested in attending the Financial Freedom Summit to learn strategies on how to become Financially Independent, I recommend attending this event, which is actually their first annual event! If interested or would like to learn more, click this link for more information. I expect this to be a great event, and I expect to learn a few things myself. If you're a subscriber and want to meet up while there, be sure to send me an email!
If all goes well in my above plans to reach the 60K bonus points I will also have another 4K-5K points from the actual spending to use towards a future trip. Points are allocated at 1 point per dollar, but increased to 1.25 points per dollar when used for travel. If used for travel then the 64K total points would be worth over $750 ($800) toward travel. Which means the flight for my wife and I to go to FinCon this year would essentially be free! Since the FinCon flight would be free, and I have another $1K to spend at this point, I had to find more ways to fill up the remaining $1K.
Normal Every Day Expenses
Well the good news is our car insurance renews in May, and we like to pay the full 6 month premium at once since it saves us money in the long run vs paying each month. Who calls paying Car Insurance GOOD NEWS?!?!? This usually costs us between $500 to $600 for 2 cars. I'll use the $500 level for wishful thinking, and to make this a little bit harder for myself.
Total estimated car insurance costs = $500
This leaves us with only $500 left to spend over the course of 3 months. Because I still use my other cash back cards for specific categories that get me higher cash back: 4% on gas and 3% on restaurants/travel with Costco, 5% on groceries this quarter with Discover, and 2% on Citi Dbl Cash for everything else, I want to essentially use this Chase card for the "everything else" category during and after the bonus time period. However because the Bonus period would give me at minimum a 16% cash back average, then it is worth it to use my Chase card for groceries, gas, and dining. Finding ways to spend $500 won't be a problem, as we will easily spend $100 a month on groceries, cutting it down to $200. And we can easily spend $200 on gas between our 2 cars over the course of 3 months.
Other potential expenses:
If for any reason we are cutting it close due to overestimations or changes in travel plans, I could essentially purchase Gift Cards for gas or groceries to make up any gap I would need to fill to get to $4K. Either way, about $500 of spending isn't hard to figure out, and some emergency could come up or I could be forgetting something that's going on during this time period. I won't see a need to buy gift cards! In addition, purchasing cash equivalents like VISA Gift Cards does not count towards your travel bonus points!
Will I use it beyond the bonus period?
I may still use this card beyond the initial bonus period to gain points when purchases need to be made which are not in the "power" categories I mentioned previously. More than likely I will use additional Chase Cash Back and Rewards Cards to funnel points back to the Chase Sapphire Card for future use. This is how you get the most value from the full Chase Ultimate Rewards ecosystem.
AJ Mobile Money
Husband | Father | YouTuber | Former ATLien
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