Get At Least a 2.25% Discount On Life With This Credit Card Combo (Master of Coin #2)
Not even a decade ago, I owned ZERO credit cards. I think I had one debit card, maybe 2.
When my wife and I got together and began to combine our finances, it became clear we had different ways of doing things. Not saying one was better than the other… they were just DIF-FER-RENT. For starters, she had credit cards — and you know, debt.
BUT, she also had another thing I didn’t have: CREDIT. It’s not to say I had bad credit… I just didn’t have ANY. The way I looked at it, I didn’t have any debt and I certainly didn’t want any. So what did I need credit for? Well, I didn’t really. I’m living proof that you can thrive in life without using credit for an entire decade.
But as time went on, I began to notice and take advantage of the often-times incremental, and sometimes massive boons afforded to those with excellent credit. Also, I began to notice that if you utilize credit and debt correctly, life can become significantly cheaper in several areas — and as a Master of Coin might say, “That shit adds up!”
On top of that, credit cards offer tons of advantages and free stuff! Sure, you can get points… but that is really only part of the strategy.
Over the past several years I’ve done my fair share of credit card research and usage. And today I’m inspired to share a “points secret” for you points geeks out there that I personally use and that saves us roughly 2.25% on everything in life. Depending on how much you spend per year, that could be thousands of dollars in your pocket annually. (Credit where credit is due… I learned this from a website I love, thepointsguy.com — highly recommended if you’re interested in choosing a credit card.)
Before I dive into that specific strategy, I have to add a disclaimer of sorts. Credit card companies are obviously looking to make finance charges off you.(they gotta pay for those points somehow). Don’t be that guy! Make them work for you, not the other way around. So here are my simple rules of using credit cards as wisely and carefully as possible:
- Never carry a balance past the due date (unless it’s 0% interest) and never pay finance charges. If you pay finance charges, you’re basically defeating the purpose of any points strategy.
- Said a different way, don’t spend money on a credit card that you don’t have sitting in, or perhaps reliably coming into your bank account.
- Always pay your bill on time, 100% of the time (set up reminders or automatic pay).
- Putting money onto a 0% intro credit card and holding a balance during the period (and then obviously paying it off before the interest kicks in) can be a great way to build credit. If you do this, be super careful and make sure you have a plan for paying it off before the interest takes effect, else you could be left with some significant finance charges.
OK, now that I got those fairly basic rules out of the way, let’s talk about how we can maximize credit cards for US! (We bailed out the banks, so we DESERVE our slice, bitches!)
First off, 2.25% is not actually the most cash back you can get. Alliant Credit Union has this card that gives you 2.5% cash back on everything — and 3% in the first year. If all you want is simple cash back, that’s the best one I’ve found. You need to be a member, I believe, which I am, because Alliant is THE SHIT! Love them. They also have a different 2% cash back card with a 0% interest intro rate, if that’s what you’re after.
Having said that, I’m not after just simple cash back anymore because some credit cards give such amazing perks that the extra .25% is not worth it.
A word about 0% interest intro rates first…
As I mentioned above, 0% intro credit cards are a great way to build credit. I know from having boosted my score and my wife’s by 100 points in a year by using that method.
It’s pretty simple… you get a card that’s 0% interest for 12, 15, 18 months or whatever it is. You charge a bunch of crap you don’t need to it (kidding). And then you pay it off before the nasty ~20% interest kicks in — and you do that several months before to be safe.
However, 0% interest intro credit cards are generally a bad deal for points. There is however, one exception: The Chase Unlimited Freedom card. (that one’s an affiliate link)
No, it does not give you unlimited freedom. It ironically can give you unlimited bondage though, if that’s what you want. But it does give you 1.5% cash back on all purchases and depending on the offer, a nice little bonus to sign up (along with a 0% interest intro rate, right?). And there’s no annual fee.
If you want a 0% interest intro credit card, I think you should get that one. The main reason has to do with what’s coming next…
My 2.25%+ credit card combo strategy:
My favorite card is the Chase Sapphire Reserve.
The perks you get on this card are amazing if you travel even occasionally. They’re so good I may make a separate article about just one of them (the free Priority Pass you get). If you’re not a traveler and you don’t eat out at all, you may not actually like this card! (LOL, I kind of forgot to include that.) So let’s just say you’re human in the modern world and you travel at least occasionally and eat out sometimes, OK?
If you use these two cards together (Chase Sapphire Reserve and Chase Freedom Unlimited), you can do something pretty awesome…
You can transfer ALL the points you rack up on the Freedom Unlimited TO your Sapphire Reserve account. Why would you want to do that? Well, young pad wan, because when you redeem your rewards points for travel through Chase.com (which is essentially Expedia), you get an extra 50% in rewards!
Doing some simple math… 1.5% on everything X 50% bonus = 2.25%. There you go.
Now you’re not going to use the Freedom Unlimited on everything simply because the Sapphire Reserve gives you 3x points on travel and dining, which in our lives, are a major expense. So in the end, we’re actually doing much better than 2.25% because a big chunk of that is really 4.5% cash back (3x points X 50% extra).
OK, you might say to me… “But David, what about the HUGE $450 annual fee???” Good question, kind of. You haven’t read the perks close enough it seems… (at least not yet — it’s not like I’ve given you a lot of time to do that!)
That fee is really $150 because once you spend $300 on ANYTHING travel related, they take it immediately off your bill — it’s crazy. This is literally what happened to us… we signed up, got the card, got charged $450, spent more than $300 on a plane ticket, and got credited $300 on our bill. So what’s our annual fee? $150. (In fairness, we pay $75/year to add an authorized user, which brings it to $225, if you plan on doing that.)
So how much do you need to spend in a year to make that back? At 2.25%, that’s $6666.66. (Wow, quite the coincidence!) Anyway, that’s peanuts for most people these days.
On top of that, the major perks I love about the Sapphire Reserve are:
- Huge points bonus up front.
- No foreign transaction fee.
- Essentially the highest insurances you can get for car rental, lost baggage, travel medical emergencies, and on and on. Basically you never need to pay or worry about insurance while traveling again.
- Free Priority Pass. So far I’d say we’ve gotten about $500 in real dollar benefit from this so far — and we don’t even travel THAT MUCH (compared to say, people who fly every week for work).
- Triple points on travel and dining, obviously.
- Free Global Entry credit (which includes TSA Pre — a must.)
- The 50% bonus when you redeem through Chase.com Ultimate Rewards.
- Possible extra warranty on items you buy with the card.
I also just like the Chase backend. It’s easy to use and it works. There’s no BS. The card goes through every time and getting in touch with Chase is easy. Shit, when you have the Reserve card they just pick up the phone immediately and say, “How can I help you today Mr. Eisner?”
And I like that they are very generous on what is classified as “dining” or “travel.” If you’re moving around, it’s gonna be travel (think Uber, Metro, etc.). If it’s food, it’s dining (think Starbucks or any fast food).
Overall, I have no complaints about the card, or the Freedom Unlimited for that matter. I’m pleased with Chase and I’m happy to recommend them to people.
Many sites will say to get the Sapphire Preferred instead of the Reserve. It has a lower annual fee and maybe 10,000 more points ($100+) up front. I suspect this may have something to do with the fact that there’s no affiliate program for the Reserve. I only learned that when I was going to find affiliate links for this article. I’m not writing this to make money so I’m just going to tell you what I think is best, regardless. *shrugs*
The perks are far better for the Reserve, in my opinion. And with the preferred, you only get a 25% bonus on travel redeemed through the portal. I guess it depends on your particular situation. Compare them side by side and see which one is better for you. You can use the Preferred in the exact same way for this strategy and still get many of the same perks but miss out on some key ones. For example, the insurance levels are significantly reduced, you only get 2x points on dining/travel, and you don’t get Priority Pass either… that hurts! But it’s up to you what works best for you.
Last thing…
You might ask, how is it redeeming your points through Chase Ultimate Rewards? Honestly, I like it. As opposed to other points and cash back cards, you get your points immediately when your billing cycle closes and applying cash back is immediate. As much as I like Alliant, I found redeeming cash back a clumsy process and it took a while to apply. With Chase, it’s extremely easy and fast.
The Ultimate Reward portal itself is powered by Expedia, which powers another site I use often, Orbitz. So there’s really not much of a difference in the ticket-buying experience for me. If you don’t have enough points for a whole ticket, they just use what you have and convert it to cash and you pay the difference. Like I said, no BS.
As for ticket prices, one time, I actually found a better deal in the portal than anywhere else! I was really surprised by that. But as expected, the best price won’t always be there. That’s not an issue though because flights are a big ticket item so you can use up all your points in just a few purchases a year that can give you competitive prices and the flights you want.
Said succinctly, I am a picky airplane traveler. Those who know me know I’ve been on hundreds of flights to over 50 countries (does this conflict with the “I don’t travel that much” statement??)… and I like to get the best deals and the best flights. While it may not be my #1 choice for booking a flight, I have absolutely no issues with booking through the Ultimate Rewards platform and getting my 50% bonus.
So that’s it. That’s my 1–2 punch of credit cards. They cover all our expenses except those that are required to be debited out our checking account directly. And that gives us a massive discount on life.
One extra pro tip: Pay your car insurance annually with your credit card if you can. You will probably save somewhere in the range of 7–9% simply for paying annually… and you’ll get the 2.25% back in points (redeemed through the travel portal, of course). We have AAA for car and home insurance — they save us tons of money on insurance compared to every other company and it justifies actually having a AAA membership. And as mentioned they let you pay annually on card. Even better than that, they pay out claims ridiculously fast. Highly recommended.
Til next time… thanks for reading.