Sapphire Preferred, Starwood, Or Freedom? A Guide For Which Cards To Use For Any Purchase.

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AsherO, one of the most prolific DansDeals Forum members with over 8,000 helpful postings, posed that question yesterday. Basically should people be chasing after Starpoints or Ultimate Rewards points these days and which card will give the best bang for the buck at which stores?

The gist of the discussion as summarized by AsherO is this:
Sapphire Preferred:
-Dining and Travel
-Foreign transactions.

Starwood:
-Purchases over $90
-Purchases where you may need to dispute the charge, return the item to AMEX within 90 days, or may need an extended warranty year.

Freedom:
– Anything else

Scroll down to the bottom of this post for a much more detailed spending summary, or feel free to read through the logic behind the answer, as follows.
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First a quick refresher.

Ultimate Rewards is Chase’s point currency. You earn them on lots of different cards, but only someone with a Sapphire Preferred card or Ink Bold Business card can actually transfer them into real miles or points. The good news is you can transfer points between cards and even to different people. And while there are only 3 airline (Continental/United, British Airways, and Korean) and 3 hotel transfer partners for now, there is an option from all 3 alliances, so from there you can book travel on dozens and dozens of airlines. Plus you can transfer to Hyatt, Marriott, or Priority Club. Transfers are instantaneous and tax-free.

Starpoints can be transferred to dozens of different airlines and at a favorable ratio. 20K Starpoints can get you 25K miles on most airlines or even 50K on LAN. A notable holdout is Continental/United, where 20K Starpoints earns just 12.5K miles. Still you can always transfer 20K Starpoints into 25K on USAirways or Air Canada to book travel on Star Alliance carriers like Continental/United. Transfers are tax-free, but can take anywhere from a couple days to a couple weeks, which can be tricky if you have an airline award to book quickly. Of course Starpoints can also be used on hotel awards, like unrestricted nights/5th night free award, awesome cash and points awards, and combo awards like nights and flights. All of which now help you qualify for Starwood elite status.
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Now to figure out which card to use in each situation you need to set a value to each currency. That is hardly an easy task as value is very subjective. All I could do is tell you how I value them.

Now the beauty of “real” miles and points (as opposed to “fake” miles and points from Citi Thank You or Capital One) is that the sky is the limit. You can pick up a $100,000 worth of first class flights around the world for 200,000 miles and your miles are worth 50 cents each. Of course that’s not a typical redemption, that’s the beauty of them and what I personally strive for.

To be fair though I guess their value would be the lowest rate at which I would use a mile.
For Ultimate Rewards that would mean a transfer to Continental where I probably wouldn’t redeem a mile unless it saved me at least 1.9 cents. Hyatt points are normally worth slightly less. The most they could be worth would be about 6 cents each, but I’d probably give them a value of about 1.6 cents.  The nice thing about Hyatt is that even their ultra-luxury Park Hyatt line of hotels only charges at most 22,000 points per night, a small fraction of the points required for high-end properties at any other hotel chain.

Starpoints can be worth 1.25 or 2.5 times the value of the miles they are transferred into or can be used for hotel stays also at exceptional values. But for arguments sake I would probably not redeem them for less than 2.3 cents each.

Which gives us a ratio of 2.3 cents:1.9 cents, or 1 Starpoint being worth about 1.21 Ultimate Rewards point.

Now that we have that determined you can decide which card to use in different scenarios.

Starwood Consumer (First year free, then $65) gives 1 Starpoint per dollar spent and 2 Starpoints per dollar spent at Starwood hotels.

Starwood Business (First year free, then $65) gives 1 Starpoint per dollar spent, 2 Starpoints per dollar spent at Starwood hotels, and gives cash back on top of Starpoints when spending at Open Savings stores. (Airtran: 5%. Barnes & Noble: 5%, Fedex: 5%, Flowers.com: 5%, Hyatt: 3%, HP: 5%, Microsoft: 5%, Courtyard/Fairfield/TownePlace/SpringHill/Residence Inn by Marriott:5%)

Chase Freedom (No annual fee), assuming you have a Chase checking account, gives 1.1 points per dollar spent, 10 points per transaction, and rotating 5 points per dollar (up to $1,500/quarer) categories
(For 2011 these categories are:
Q1: Grocery Stores, Drugstores
Q2: Home Improvement, Lawn and Garden, Home Furnishings
Q3: Gas, Hotels, Airlines
Q4: Dining, Department Stores, Movies, Charity).
All of those points post to your account monthly.

Chase Sapphire Preferred (First year free, then $95) charges no foreign exchange fees, and gives 1.07 points per dollar spent, 2.14 points per dollar spent on dining, airfare, hotels, car rentals, charges in airports, travel agencies, caterers, timeshares, trains, buses, taxis/limos, ferries, bridges, tolls, and parking, and 3.21 points per dollar if booking travel via the Chase booking tool.
Having the Sapphire Preferred card also allows all Chase points to be converted into real miles/points.  The extra .07/.14/.21 bonuses post to your account every January or February.

When to use each one?

Let’s take a $50 transaction at the ballpark.
Freedom: 65 points, at a value of 1.9 cents=$1.24 rebate
Starwood: 50 Starpoints, at a value of 2.3 cents=$1.15 rebate
Sapphire Preferred: 53.5 points, at a value of 1.9 cents=$1.02 rebate

What about $100 at the ballpark?
Starwood: 100 Starpoints, at a value of 2.3 cents=$2.30 rebate
Freedom: 120 points, at a value of 1.9 cents=$2.28 rebate
Sapphire Preferred: 107 points, at a value of 1.9 cents=$2.03 rebate

What about $5,000 on new furniture and appliances?
Starwood: 5,000 Starpoints, at a value of 2.3 cents=$115 rebate
Freedom: 5.510 points, at a value of 1.9 cents=$104.69 rebate
Sapphire Preferred: 5,350 points, at a value of 1.9 cents=$101.65 rebate

Once you get past $90 per transaction you start earning more of a rebate (given my values of each currency mind you) when using Starwood.  The more you spend in a transaction the more skewed it will become towards Starwood. For $90 and less though you will actually do better by using Freedom.

If the appliances have a 1 year warranty though for example, you may find that putting the charge on the AMEX is invaluable as their warranty coverage often provides a full refund of the purchase price in the extended warranty year.
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What about spending $50 on a taxi?
Sapphire Preferred: 107 points, at a value of 1.9 cents=$2.03 rebate
Freedom: 65 points, at a value of 1.9 cents=$1.24 rebate
Starwood: 50 Starpoints, at a value of 2.3 cents=$1.15 rebate

Obviously go with Sapphire Preferred there.
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What about spending $50 at a museum overseas (assuming a 1:1 exchange ratio)
Sapphire Preferred: 53.5 points, at a value of 1.9 cents=$1.02 rebate
Starwood: 50 Starpoints, at a value of 2.3 cents=$1.15 rebate, less 2.7% ($1.35) forex charge=Negative $0.20
Freedom: 65 points, at a value of 1.9 cents=$1.24 rebate, less 3% ($1.50) forex charge=Negative $0.26
Obviously go with Sapphire Preferred there as well.
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What about spending $50 on Airtran?
Starwood Business: 50 Starpoints, at a value of 2.3 cents=$1.15 rebate. Plus 5% ($2.50) Open Savings Rebate for a total rebate of $3.65.
Sapphire Preferred (booked via Chase airfare tool): 160.5 points, at a value of 1.9 cents=$3.05 rebate
Sapphire Preferred (booked via Airtran.com): 107 points, at a value of 1.9 cents=$2.03 rebate
Starwood Consumer: 50 Starpoints, at a value of 2.3 cents=$1.15 rebate.
Freedom: 65 points, at a value of 1.9 cents=$1.24 rebate

Starwood business comes on top there. Of course if it was any other airline or if you don’t have a Starwood Business card then Sapphire Preferred would rule.
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What about spending $50 on charity this month?
Freedom: 265 points, at a value of 1.9 cents=$5.04 rebate
Starwood: 50 Starpoints, at a value of 2.3 cents=$1.15 rebate
Sapphire Preferred: 53.5 points, at a value of 1.9 cents=$1.02 rebate

Then there are the intangibles.
AMEX is much better than everyone else at disputes, return protection, and extended warranty.

Head spinning yet?
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Here’s the more detailed summary of where to spend on which card:
Sapphire Preferred:
-Foreign transactions.
-All dining, airfare, hotels, car rentals, charges in airports, travel agencies, caterers, timeshares, trains, buses, taxis/limos, ferries, bridges, tolls, and parking that are above $11. If they are below $11 then you’ll do better on the Freedom card.
Exceptions to the above rule:
-Airtran, Hyatt, Courtyard/Fairfield/TownePlace/SpringHill/Residence Inn by Marriott spending should go on Starwood Business card.
-Starwood hotel spending should go on any Starwood card.
-If you have your own personal car insurance that covers car rentals you should use a card like Continental OnePass Plus or United MileagePlus Explorer that give free primary CDW insurance so that you don’t have to file a claim with your own insurance first.
-Check to make sure that the purchase isn’t covered by a Freedom 5 point per dollar rotating category like Dining in Q4.

Starwood (Consumer or business):
-Purchases greater than $90
-Spending at Starwood hotels.
-Purchases where you may need to dispute the charge, return the item to AMEX within 90 days, or may need an extended warranty year.

Starwood Business:
-Purchases at Open Savings partners go on Starwood Business (Airtran: 5%. Barnes & Noble: 5%, Fedex: 5%, Flowers.com: 5%, Hyatt: 3%, HP: 5%, Microsoft: 5%, Courtyard/Fairfield/TownePlace/SpringHill/Residence Inn by Marriott:5%) as they earn Starpoints on top of cash back.

Freedom (with Chase Checking)
-Everything else, namely:
-Purchases under $90 that are not dining/airfare/hotels/cars.
-Purchases under $11 that are dining/airfare/hotels/cars.
-Purchases that won’t take AMEX.
-Purchases (up to $1,500/quarter) in a 5% rotating category (after registering online)
(For 2011 these categories are:
Q1: Grocery Stores, Drugstores
Q2: Home Improvement, Lawn and Garden, Home Furnishings
Q3: Gas, Hotels, Airlines
Q4: Dining, Department Stores, Movies, Charity)

Want to maximize your purchases even more?

Get the Chase Ink Classic Business card which gives you 5 points per dollar on wireless, landline, cable services, and office supplies, and 2 points per dollar on gas and lodging all year long.  With a Sapphire Preferred or Ink Bold card all of those points can be transferred into airline miles or hotel points.

The American Express Premier Rewards Gold Chase Card gives 3 Membership Rewards points per dollar spent on airfare and 2 points per dollar spent on gas and groceries but carries a hefty $175 annual fee after the first free year.

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42 Responses to “Sapphire Preferred, Starwood, Or Freedom? A Guide For Which Cards To Use For Any Purchase.”

  1. sky121 Says:
    1

    Great ARticle! It def DOES have my head spinning but very well written!! Thanks for the great info!

    ReplyReply
  2. pennypincher Says:
    2

    Great!! I especially love how you assign values to the points so all of use newbies out there know how much to redeem our points for. Is it possible to give us your value of membership reward points in $ as well? With Amex platinum and insite on certain sites I know I get 4x MR points which I would assume would make it the best option, is that correct?
    As always thanks a lot

    ReplyReply
  3. Yitzi Says:
    3

    Awesome roundup! These type of posts are great, keep them coming. Thanx

    ReplyReply
  4. Dan Says:
    4

    @pennypincher:
    Membership Rewards best redemption right now is probably Air Canada Aeroplan. I’m not much of an Aeroplan user (their expiration policy and risk of charging fuel surcharges in the future on partners like they do for Air Canada flights scare me off), but maybe I’d give that a value of 1.65 or so.

    The loss of Continental, the recent devaluation of Air Canada’s award chart, and the likely devaluation of the BA chart next month has really stung Membership Rewards pretty hard.

    @sky121:
    @Yitzi:
    Your welcome.

    ReplyReply
  5. AsherO Says:
    5

    Nice roundup. I put a few charges on my Ink Bold, so we’ll know about the 20% next week IY”H.

    ReplyReply
  6. Dan Says:
    6

    @AsherO:
    Thank Asher. I didn’t get the 20% on my first Ink Bold statement, so I’m looking forward to seeing if the 3 month thing is for real.

    If you do get the 20% bonus on Ink Bold it pretty much put that on par with SPG. Of course no 10 points per transaction, so we’ll have to run the numbers again against all the other cards…

    ReplyReply
  7. david Says:
    7

    great article!!
    love reading these posts (even though i don’t have cc-yet!).
    seriously how long did this take you to write up?!?!
    abt the saphirre preffered do you open and close them, or do you pay the annual fee?

    ReplyReply
  8. interested Says:
    8

    LOVE this article!!
    Your so smart that you have the ability to sift through all info for each card and write down the comparisons side by side.

    Thanks dan for another well written informative article

    ReplyReply
  9. interested Says:
    9

    Also, when does the extra 7% for sapphire post? at the end of the calendar year?

    ReplyReply
  10. Yitzi Says:
    10

    @AsherO
    Wat 20% ? Is there a promo on the bold now?

    ReplyReply
  11. Itzik Says:
    11

    I’m not sure what you mean by “real miles” and how you can get 50 cents for each one of these real miles. Anyone care to explain?

    ReplyReply
  12. Dan Says:
    12

    @david:
    You can churn the card if you want.
    Or companies will often waive the annual fee or give you miles to stay after the first free year.

    @interested:
    Thanks!

    @interested:
    “The extra .07/.14/.21 bonuses post to your account every January or February.”

    @Yitzi:
    Apparently if you have Ink Bold and a Chase checking account you get a 20% bonus, but I have yet to actually see someone who got the 20% bonus, so I didn’t include that in this article.

    @Itzik:
    Real miles meaning miles from the Airline of Hotel that don’t have a set value.

    Capital One “fake” miles are worth 1 cent. No more, no less.
    Whereas “real” miles have no such caps, so you can do much better if you are creative, or even not so creative. With the set rates you can take advantage of a first class trip around the world that would have cost $$$$$$ for a a small fraction of the fake miles you would have needed.

    Or even a last-minute ticket from CLE-NYC can cost $1,500 or 150,000 Capital One miles but would be just 20,000 Continental miles as there are no caps on their value.

    ReplyReply
  13. Yossi Says:
    13

    Great Post! Q. When I transferred all my amex membership points to Continental (Last week) I was charged a $99 fee ? Is that for everyone?

    ReplyReply
  14. Anonymous Says:
    14

    @Dan:

    I guess I won’t laminate my wallet version just yet 😉

    ReplyReply
  15. cshia Says:
    15

    Thanks dan again for ths one.

    I want to open up another few cards, have good credit was thinking of doing the 3 in 1 wanted to know which one i should take as i want to get status by a airline for spending or using the miles, ill be able to spend allot by allot i mean 100k a month on avg. but don’t want to take amex charge card as i don’t want the fr so what you recommend?

    ReplyReply
  16. Mow Says:
    16

    What do u mean by charity more then 10 percent back on freedom ? Every charity ?

    ReplyReply
  17. Dan Says:
    17

    @Yossi:
    Yes, AMEX passes on the tax to transfer points to domestic programs.
    Starwood and Chase do not.

    @cshia:
    Lots of great Chase offers out there. Armed with this article and the one from earlier this week you should be able to find the 3 best cards to suit your needs.

    @Mow:
    As long as the merchant is categorized as a charity/non-profit org you will get that back on the freedom card for up to $1,500 until the end of this year if you register for it.

    ReplyReply
  18. cshia Says:
    18

    @Dan:

    Thanks for the reply

    Would recommend a charge card? or a credit card? and also what would you say about aa should i get aa and try to make it 1 mill in the next 12 months? or should start working on united and using the miles to fly and get status that way? and is chase easier with FR?

    Thank you Again

    ReplyReply
  19. Emax Says:
    19

    Any of the 2x categories under $10 should go on the Freedom card, shouldn’t it? I buy a sandwich at the deli almost every day that I could put on it.

    ReplyReply
  20. Itzik Says:
    20

    Thanks for the explanation Dan!

    ReplyReply
  21. Dan Says:
    21

    @cshia:
    All good questions, make your way over to the DansDeals Forums where they can be better addressed.

    @Emax:
    That’s right, even on the sapphire preferred double points categories if its under $11 you’re better off with Freedom than Sapphire Preferred.

    ReplyReply
  22. AsherO Says:
    22

    @Dan:

    BTW, they told me that to be eligible for the 20% bonus, it has to be a linked business checking account, just to be clear.

    ReplyReply
  23. DovidR Says:
    23

    No Chase banks in Massachusetts; can’t get a Chase checking account to link to my Freedom card 🙁

    ReplyReply
  24. cshia Says:
    24

    @Dan:
    Thanks

    ReplyReply
  25. Yitzi Says:
    25

    @AsherO
    my bold has my name on it- I opened it as a sole proprietorship. Will it work if I link it to my personal checking since they both have the same name on account?

    ReplyReply
  26. Mordche Says:
    26

    Guys,

    If I have the ability to spend 10-15k on landlines and only want to have 1 CC what would you recommend?

    ReplyReply
  27. Jason Says:
    27

    @Dan, what about Amex Blue? It’s a free card with 5% back on all gas, drugstore, and grocery purchases after you hit $6,500 spending in the year. Basically, the more you spend, the closer your effective rate is to 5% in these categories. It’s also .5%-1.5% on everything else. There’s also a preferred option that costs $75/yr but you earn 6% cash back on gas, drugstore, and grocery purchases right from the start. How do these compare to Starwoods, Freedom, and Sapphire?

    ReplyReply
  28. Yitzi Says:
    28

    @DovidR:

    Open it online?

    ReplyReply
  29. Dan Says:
    29

    @DovidR:
    You can’t open an account online?
    If you can’t get Freedom with checking then most of the advantages of Freedom over Sapphire or Starwood go out the window.

    @Mordche:
    “Get the Chase Ink Classic Business card which gives you 5 points per dollar on wireless, landline, cable services, and office supplies, and 2 points per dollar on gas and lodging all year long. With a Sapphire Preferred or Ink Bold card all of those points can be transferred into airline miles or hotel points.”

    @Jason:
    The 5% AMEX Blue is discontinued, you can’t apply for that anymore.

    The new blue preferred card is very intriguing though. I’ll make a post on that in the future.

    ReplyReply
  30. al Says:
    30

    @asher
    ” You can pick up a $100,000 worth of first class flights around the world for 200,000 miles”

    i know its a fluke but can you explain a scenario in which that it possible? or even if its not as an amazing deal, can you think of a similar case?
    thanks

    ReplyReply
  31. boruch Says:
    31

    wow, great post! very valuable info.

    just wondering, is the 25k the best offer for the spg for now?
    (10k after 1st purchase + 15k after spending 5k in 6 months)

    thanks again for the post!

    ReplyReply
  32. Anonymous Says:
    32

    is it poss to earn status on any airline when flyin on a mileage ticket ?

    ReplyReply
  33. Yossi Says:
    33

    R’ Dan,

    Thank you very much! This is the PERFECT breakdown. Have a great Yom Tov.

    ReplyReply
  34. Yitzi Says:
    34

    Ink bold offers primary CDW

    ReplyReply
  35. Victor Says:
    35

    I’ve been a Amex platinum business card holder for years. I often book hotels thru travel platinum to take advantage of the perks they offer. Reading this article though, makes me wonder if I shouldn’t be using a different card instead.

    We also have a Southwest Premier card that we recently received for the bonuses miles. My wife doesn’t like Southwest, however, because their planes are dirty. Should I switch to the Starwood card (we are SPG members) from the AMEX platinum business card or close the southwest card and go to a delta or continental card?

    Thanks!

    ReplyReply
  36. eli Says:
    36

    I dont understand the 90 threshold for starwood card. Why does the point earning ratio increase at 90?

    ReplyReply
  37. Leah Preiserowicz Says:
    37

    When my son applied for the sapphire card, he made a mistake and reported only his income rather than the household income. When the application, was submitted, it came back as pending and he will be notified. If he is denied, will that affect his credit rating? Also, can he re-apply with the correct numbers?

    ReplyReply
  38. zlt123 Says:
    38

    hi dan i just want to ask i have a freedom card alredy for 2-3 years and i didnt get any signup bonus can i now apply for a new card and get the bonus? and should i first cancel my freedom card (&shift over the credit line of course) or apply and than call recon? whats your advice

    ReplyReply
  39. RealtedToMendy Says:
    39

    Dan, the rotating bonus categories for Chase Freedom give %5 back per Dollar, not 5 points per dollar. This is a Huge Difference.

    (Currently: Eating out $100 dollars with Sapphire Preferred would net you 200 points, but only 105 points with Freedom)

    Am I wrong?

    ReplyReply
  40. skas Says:
    40

    relatedtomendy: wrong.

    ReplyReply
  41. john Says:
    41

    @RealtedToMendy: @realtedtomendy, yes, you are wrong. First…5 points per dollar is the SAME as 5% back per dollar…. (5% being 5 cents…or 5 points from the eyes of Chase.

    Second…your point of spending $100 at dinner netting $105 on freedom is saying they just tack on extra 5 points…or you have it confused as 5 points per HUNDRED dollar…

    simply put….the 5% deal meal is ==> $100 spent on dinner, get 500 points back.
    $500 spent on dinner, get 2500 points back

    Yea, its THAT big…is why they cap it at $1500 per each quarter.

    ReplyReply
  42. stephen Says:
    42

    If i were to open a card (with annual fee) get the signup bonus but not want to pay the fee, you mentioned above to churn it? what do you mean, because i already got the signup binus…?

    ReplyReply

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