One of the things we’re doing to prepare for our upcoming travel is to take advantage of some credit card offers. I had long been a proponent of absolutely no debt, but alas some of the sign up bonuses are just too good to refuse. (Standard disclaimer: if you don’t pay your balance in full, credit card interest is apt to quickly erode any bonus benefit.)
I’d like to show you what I mean by sharing some of the offers that we have worked on in the last few months. Today I’ll start with the:
I wanted to highlight this card now, because there is a 100,000 point sign up bonus through this weekend if you apply in branch, which goes down to 50,000 thereafter. (More on this found here, here and here.)
- $4,000 required spend in 3 months
- $450 annual fee that is not waived
The annual fee ought to jump out to you. It’s very high, and thus needs to be justified:
- $300 annual travel credit
- 100,000 Ultimate Rewards Bonus Points
- Global Entry / TSA Pre-Check Reimbursement
- Priority Pass Select Membership
- 3X points on Travel & Dining
- 1X points on everything else
- No Foreign Transaction Fees
The first two bullets above basically justify the annual fee – at the very least for the first year. Let’s see how.
For one thing, the $300 travel credit is per calendar year. So that’s $300 for 2017 and $300 for 2018. If you’re going to be spending money of travel (Chase includes all sorts of things like airfare, hotels, Uber, etc.) in the next year you’d already be ahead here. You’d effectively be prepaying $450 and receiving $600 worth of reimbursement in year one.
Now two notes should be made. First, if you’re not going to be traveling, the reimbursement is not a benefit. And two, after the first year you’d be paying $450 for the $300 reimbursement – the $600 “double dip” only works out in the first year.
The second item of note is the 100,000 Ultimate Reward bonus points. That’s a whole lot of points, which can be used for all sorts of things. The value ranges dramatically.
You can turn that into cash at $0.01 a point or $1,000. This alone more than pays for the annual fee.
If you use it for travel through Chase’s website, points are worth 1.5X giving it a value of $1,500.
Beyond that, there are all sorts of travel partners that can add even more value. For instance, transferring the points to Southwest could mean around ~$1,700 in flights. Or transferring them to IHG, especially on point breaks, could mean up to 20 free hotel nights – a value of perhaps ~$2,000. And you can stretch this even more, but let’s keep to the conservative side.
At a minimum in the first year the value would be ~$1,600 against the $450 annual fee. Clearly that’s worth it. It may not be conventional, but it’s worth it.
In year two the value is going to be the $300 travel credit, plus any extra benefit that this card can provide above and beyond others.
The “breakeven” at a minimum for paying $450 a year would be 7 or 8 years.
Our plan is to use the card quite a bit while traveling in the first year (on travel and dinning its effectively 4.5% cash back if used through Chase for additional travel). Once the annual date comes up, we’ll review.
One option is to keep it as is, but we’d also consider canceling or “downgrading” depending on our priorities. It’s always going to be about the value that it can deliver.
Outside of this calculation, there are other benefits that will be nice for our travels.
There’s the Global Entry / TSA Pre-Check reimbursement that could save some travel time. There’s a free lounge pass that can be used around the world. And other nice things like primary rental coverage, baggage and trip delay insurance and even trip cancellation reimbursement.
Overall we’re excited to add this card to our travel toolkit and take advantage of the benefits in the coming year.