Tuesday, March 1st, 2016, 4:17 pm
Last week I wrote the pre-obituary on the mileage game. But every now and then something comes up that proves rumors of its death have been greatly exaggerated.
We don’t have reports yet of people applying for new Chase or AMEX cards under the new rules. And airlines will continue to devalue their miles. But as I wrote in that post, the banks and airlines have good reason to continue allowing exceptional mileage redemptions as otherwise they would never be able to compete with a 2% cash back card.
I always max out the $1,500 of 5x quarterly spending on the Chase Freedom Visa. That’s an easy way to pickup 30K miles per year. Last year it even offered up to 11 points per dollar in December as a special “5th quarter” promotion.
I use a United Club card for my everyday purchases as that earns 1.5 miles per dollar spent. That card has a whopping $450 annual fee, though I only pay $40/year for it as a lifetime club member and a United 1K. It’s a great card, but the miles are locked into United.
The only other card that gives 1.5 miles per dollar everywhere is the Amex EveryDay Preferred Credit Card. That card has a $95 annual fee and if you make 30 transactions per month you’ll earn 4.5 miles per dollar at US supermarkets, 3 points per dollar at US gas stations and Uber, and 1.5 points per dollar everywhere else. That card launched together with the Amex EveryDay Credit Card which has no annual fee and if you make 20 transactions per month earns 2.4 points per dollar at US supermarkets and Uber, and 1.2 points per dollar elsewhere.
Both of those cards can directly transfer points into miles, so they each offered something unprecedented between a card offering a transferable 1.5 miles per dollar and a no annual fee card offering transferable miles.
While the banks are trying their hardest to avoid card churning, they are increasing the stakes in earning points for spending. Chase clearly smells blood in the water and hopes to offer a knockout punch with the Freedom Unlimited Visa.
I’ve personally confirmed the following details about the Freedom Unlimited Visa with a Chase PR rep:
1. It will have no annual fee.
2. It will earn 1.5 Ultimate Rewards points per dollar spent everywhere without limits. It won’t have any category bonuses. You can cash the points out for 1.5% cash back or you can transfer them to cards like Sapphire Preferred or Ink Plus in order to convert these points into airline miles or hotel points.
3. It will launch sometime this spring, the exact date is not yet known.
4. You will be able to convert existing Freedom or Sapphire cards to Freedom Unlimited.
5. You will be able to apply for a Freedom Unlimited card even if you have an existing Freedom card.
6. Both the Freedom card and Freedom Unlimited card will continue to be offered by Chase for new applicants.
7. The signup bonus for Freedom Unlimited will be identical to the current Freedom promotion, 15K points (marketed as $150 cash back) for spending $500 in 3 months plus 2.5K points (marketed as $25 cash back) for adding a free additional user card.
If you value Chase points at 1.7 cents each then earning 1.5 points per dollar everywhere is like earning 2.55% cash back. It shouldn’t be hard to attain a value like that between Hyatt and airlines like British Airways, Iberia, Korean, Singapore, Southwest, and United.
If you value them at 1.6 cents each you would be earning 2.4% cash back. Even if you value them at just 1.5 cents each it would still be like getting 2.25% cash back.
Of course the beauty of miles is that the sky is the limit (see the end of this post for more on that or see this post for ideas for your miles). I’ve had redemptions where my miles have been worth 50 cents each. If you’re good at the game, it’s not difficult to get a value of at least 2 cents from your miles, which would mean this card would be worth 3% cash back everywhere for you.
You can pay your federal taxes for a 1.87% fee, so it can make sense to use this card to pay your taxes as long as you value Chase points at a paltry 1.2 cents each.
It won’t be worth using the card when you can get a better bonus elsewhere. In other words dining and travel purchases will still earn more with Sapphire Preferred‘s 2 points per dollar. Office supply and telecom spending will still earn more with Ink Plus‘ 5 points per dollar. The Premier Rewards Gold Card from American Express will still make sense for 3 points per dollar on airfare and 2 points per dollar on dining, US gas stations, US supermarkets, and Uber. But for everyday purchases, the Freedom Unlimited is a game-changer. Its’ only Achilles heel is that it requires that you, a spouse, or an authorized user on your account has a Sapphire Preferred or Ink Plus in order to transfer its points into hotel points or airline miles. As Chase allows you to upgrade to Sapphire Preferred and downgrade back to Freedom or Freedom Unlimited that’s a not a big deal though.
Will this launch a new wave of cards offering more miles per dollar for everyday spending?
Hit the comments!