Unbonused spend outlook for 2017

Earlier this month I wrote about the BankAmericard Travel Rewards credit card and Bank of America Preferred Rewards Platinum Honors, and favorably compared that combination to some of the best deals in travel hacking:

• A Chase Ink Plus and Sapphire Reserve, earning 7.5 cents per dollar towards paid travel on office supply store purchases;
• an Ink Plus and Southwest Companion Pass, earning up to roughly 16 cents per dollar on your office supply store spend;
• and an American Express Premier Rewards Gold card and Platinum Business card, earning 4 cents per dollar towards premium cabin airfare on supermarket purchases.

Those are great values. But if your appetite for manufactured spend is higher than your office supply store and supermarket purchase or liquidation bandwidth, you may be interested in manufacturing unbonused spend, as well.

With that in mind, here are some of the best current deals in unbonused manufactured spend.

Southwest Companion Pass

Earlier this month there was much hullabaloo about the impending loss of the ability to earn a Southwest Companion Pass through hotel transfers. But it's still possible to earn the Companion Pass through credit card spend (as well as signup bonuses).

The $99-annual-fee Southwest Rapid Rewards Premier card earns 6,000 Rapid Rewards points each account anniversary, while the $69-annual-fee Plus card earns 3,000 points. That works out to 1 cent per anniversary point, which is not a great value if you're already planning to manufacture large amounts of lower-cost spend on the card.

It's easy to overstate the case for earning the Companion Pass through unbonused spend, so let's be clear about the tradeoffs involved. For example, the Chase Freedom Unlimited earns 1.5 Ultimate Rewards points per dollar spent everywhere. On $104,000 in unbonused spend, which would earn 156,000 Ultimate Rewards points with a Chase Freedom Unlimited or (with the Companion Pass) the equivalent of 208,000 Rapid Rewards points redeemed for companion tickets, you're being paid $520 to "lock in" your preference for Southwest over Chase's other Ultimate Rewards transfer partners. That's the cash value of the 52,000 Ultimate Rewards points you don't have to earn to get the same value in Southwest flights.

The more highly you value the flexibility of Ultimate Rewards' transfer partners, the less willing you should be to lock in Southwest as your earning preference. In other words, paying twice as much for a Southwest ticket than you would if you'd earned a Companion Pass may still be worthwhile if you're getting three times more value from Hyatt or United transfers, which is not unreasonable at prestige properties or in premium cabins.

American Express Blue for Business

It's currently possible to sign up for a Blue for Business American Express card that earns 2.3 Membership Rewards points per dollar spent everywhere, on up to $50,000 in purchases during the first year of cardmembership. Mechanically speaking, you earn 1 bonus point per dollar spent, on up to $50,000 in spend, and then a 30% bonus on base (but not bonus) points earned at the end of the first year.

Since Membership Rewards points — even fixed-value, non-flexible Membership Rewards points like those earned by this card — are worth 1 cent each towards paid travel, if you book paid travel through the Membership Rewards portal you can treat this as a 2% cash back card that earns a bonus $150 in travel at the end of the first calendar year (if you reach the maximum of $50,000 in bonused spend).

Of course the real value of this card is unlocked when you combine it with a flexible Membership Rewards-earning card, allowing you to transfer your points to an American Express travel partner, or with a Platinum Business card, doubling the value of your Membership Rewards points when redeemed on one airline of your choice or when redeemed on any airline in a premium cabin.

Discover it Miles

The Discover it Miles offers 1.5 "miles" per dollar spent on all purchases, which can be redeemed against travel purchases made with the card or as an electronic deposit to your bank account. At the end of the first year of cardmembership, all the miles earned during that first year are doubled.

That means the Discover it Miles card earns 3% cash back on all purchases for the first year of cardmembership: 1.5% cash back on each statement, and another 1.5% cash back at the end of the year.

High Spend Bonuses

Finally, you may choose to manufacture unbonused spend on cards that don't offer a particularly high earning rate but give valuable benefits to cardholders who reach high spend thresholds:

• Delta SkyMiles Platinum and Reserve personal and business American Express cards offer bonus redeemable and elite-qualifying miles upon reaching certain spend thresholds;
• the Citi Hilton HHonors Reserve card offers an annual weekend night, redeemable at any Hilton property worldwide, to cardholders who spend $10,000 per year on the card;
• Club Carlson Premier and Business credits cards offer an annual free night certificate, redeemable only in the United States, at the end of each cardmember year you spend $10,000;
• The Chase Hyatt credit card, even after the transition to World of Hyatt on March 1, 2017, apparently will continue to offer up to 10 elite-qualifying night credits for $40,000 in spend per calendar year. Since that amount of spend will also earn 40,000 World of Hyatt points, you're sacrificing 20,000 World of Hyatt points compared to manufacturing the same spend with a Chase Freedom Unlimited card, or $20 in cash value per elite-qualifying night. If you expect you'll earn 45 elite-qualifying nights in 2017 through paid stays, those 10 bonus nights might be enough to earn you Globalist status through February, 2019.

Conclusion

Earning 2% cash back is a good baseline for unbonused spend, and one I use myself. Still, opportunities exist to get more value than that by taking advantage of card-specific bonuses. You can take advantage of the benefits most valuable to you, and then work your way down the ladder of value to that 2% baseline where you're confident you're not leaving any money on the table.