What's next: Chase card applications

This is the second entry in my occasional series about what changes I see coming to my strategy for (nearly) free travel. In the first entry I discussed product changes, meaning my plans to change either from annual-fee to no-annual-fee versions (like the Barclaycard Arrival World MasterCard), or to more lucrative versions (Citi Dividend Platinum Select), of the cards I currently carry – while keeping my credit limits and age of accounts intact.

Going forward I'll be sharing my thoughts on my next round of new card applications, starting today with Chase.

Airlines vs. Hotels

Since I already have a US Bank FlexPerks Travel Rewards Visa Signature that gives me up to 4 cents per dollar in value on purchases at gas stations when I redeem my Flexpoints for paid airline tickets, I'm not too worried about paying for any upcoming flights.

Hotels on the other hand can get expensive very quickly, especially if I have to cancel or downgrade my Barclaycard Arrival World MasterCard in April, when my first annual fee is due (I'll ask to have the annual fee waived before I downgrade the card). I like to use that card to book my hotel stays since I earn hotel points and elite qualifying nights by booking directly through the hotel chain, and can then redeem my Arrival miles for travel purchases at an equivalent of 1.11 cents each, with partial redemptions allowed in increments of $25.

That's why my priority during this application cycle is to get a few cards that I can use to consistently manufacture large numbers of hotel points – hopefully also with a lucrative signup bonus.

Chase Ink Bold

I'll sign up for the Ink Bold with the standard signup bonus of 50,000 Ultimate Rewards points after spending $5,000 within 3 months, with a waived annual fee the first year.

Since my local gas stations haven't posed a problem lately, my plan is to split my $8,000 in monthly PayPal My Cash purchases between my US Bank Flexperks card and the new Ink Bold. Both cards earn 2 points per dollar spent at "gas stations."

The flexible Ultimate Rewards points earned by the Ink Bold can be transferred to Hyatt, where the standard room award chart tops out at just 22,000 points, or Marriott, which is not quite as good a value but can be worth doing under the right circumstances (for example to top up a 7-night Hotel + Air Package).

That leaves the question of what to do with my Chase Sapphire Preferred, which also has a $95 annual fee that is coming due in January. As I explained in this post, ideally you'll carry just 1 of the 3 "flexible" Ultimate Rewards cards, since each of them costs $95 annually. To justify paying $95 for another year of the Sapphire Preferred, I'd need to earn bonus points worth $95.

Valuing flexible Ultimate Rewards points at 2 cents each I'd need to spend $4,500 in the Sapphire Preferred's bonus categories, which isn't something I'm willing to commit to. After all, my no-annual-fee Hilton HHonors American Express and US Bank Cash+ cards also bonus restaurant spend (5 HHonors points per dollar in the former case or 5% cash back in the latter, capped at $2,000 quarterly). I'd be paying $95 to displace spend from (slightly less) lucrative, free cards. Besides restaurants, the Sapphire Preferred also bonuses "travel" purchases. Since the Ink Bold bonuses hotel spend, that mostly leaves things like cab fares, train tickets, and similar "miscellaneous" travel expenses, which are unlikely to add up to $4,500 during the year.

The two free options to downgrade my Sapphire Preferred are to a no-annual-fee Chase Sapphire card, or a second Chase Freedom account. The Sapphire account is tempting for the sake of preserving my restaurant bonus category, but ultimately I think I'll change to a second Freedom card. This year I was able to earn 7,500 Ultimate Rewards points in both the 1st and 3rd quarter bonus categories, and if even 1 of those lucrative categories comes back in 2014, I'll already be way ahead of where I'd be with a $95 Sapphire Preferred.

Chase Hyatt Credit Card

Since it's possible to apply for both a business and personal card from Chase on the same day, that raises the question of whether I should double down on Hyatt and also apply for the personal Hyatt Visa. It comes with a generous signup bonus of 2 free nights at any Hyatt in the world. Unfortunately, I'm no longer able to trigger the $100 statement credit that used to be offered when you reach the payment page on a new Hyatt reservation. On the other hand the standard offer now has no annual fee for the first year.

An additional benefit of the Hyatt card is an annual free night at a Category 1-4 hotel when you pay your annual fee each year – worth up to 15,000 Hyatt Gold Passport points.  A lot of bloggers will tell you that that annual free night makes the card worth its $75 annual fee.

I'll tell why I think that's baloney: manufacturing 15,000 Gold Passport points isn't that hard, since Hyatt is a transfer partner of Ultimate Rewards.  If you're manufacturing points at 1 point per dollar, sure, it'll cost you $118.50 in Vanilla Reload Network reload cards, plus whatever your cost is to liquidate them (although this cost can be lowered using one of my favorite techniques). If you're manufacturing 2 points per dollar spent (for example using the Ink Bold, above), then your cost is just $59.25, for example buying PayPal My Cash cards at 7-11. An intermediate case is if you're earning 5 points per dollar buying $200 gift cards at a cost of $6.95 each, for example at Staples, then the 15,000 Gold Passport points will cost around $100.

However, the advantage of all three of those methods over paying a $75 annual fee is that you actually end up with the points . That means there's no risk of "overspending" your annual free night certificate at a Category 1-3 property, or being "locked out" of using your certificate at a Category 5 or 6 property in your city of choice: just transfer slightly more or fewer flexible Ultimate Rewards points!

Don't get me wrong: in the real world, $75 for a hotel room – any hotel room – is a pretty good deal. For a room at a mid-range Hyatt, it's potentially a great deal. But the fact is, we can do better.