Gabe wrote me an message on Monday with this question. I’ve been getting similar email more regularly. It’s a good question, and one I’ve answered here and there when reviewing each card individually. But I think we need a real debate and would appreciate input from all of you, too. Here’s Gabe’s email:
I guess the question really boils down to which program, Thank You or Ultimate Rewards, would better suit my needs. I want to use my points for international economy travel, primarily to Latin America and Asia (I’m based in NYC). I don’t really care about flying first or biz class, I just want to travel as much as I can without paying too much out of pocket.
My initial impulse would be to accumulate UR points using a combination of [Chase Sapphire Preferred] and the Freedom Card, but I’ve noticed a lot of people talking about using these points for aspirational travel, i.e. first or biz class flights. [ThankYou points] have recently caught my eye as they seem easier to redeem and if I’m booking non-premium rewards, they might have comparable value to if I transferred UR points to United to book an economy saver award. I would also get airline miles for the award itself and with the Premier Card, the award would be discounted 33%. I could pair the Premier card with the Forward Card to get 5x [ThankYou points] on dining and Amazon, which probably make up around half of my monthly spending (usually around $1000).
What do you think? Any insights or advice would be greatly appreciated.
The Case for Chase Sapphire Preferred
Both have very good benefits, but I am going to start out by saying what you already probably know: I love the Sapphire Preferred. I have top-tier status with their transfer partners United and Hyatt, and I can even transfer points to Korean Air to redeem for flights operated by Hawaiian Airlines or Alaska Airlines (two partners I typically associated with American).
Earning points is uncomplicated at 2 per dollar on anything travel related as well as restaurants and catering. Points can also be transferred and consolidated from other cards. The business Ink Bold and Ink Plus can be used to earn 5 points per dollar through the pre-paid AmEx trick, and the Freedom card can be used to earn 5 points per dollar through bonus categories that rotate quarterly (currently they’re gas stations and restaurants).
I value Ultimate Rewards points at 2 cents each, just to keep things simple. I can easily find that kind of value or even better through United and Hyatt, which have been my two main redemption options thus far. However, it’s important to note that you can also use them for purchasing travel through Chase’s travel agency at a rate of 1.2 cents per point. This is something that is often overlooked because it is pretty much the only selling point for ThankYou points yet it is one of the weaker redemption options for Ultimate Rewards points.
It is worth remembering because you may find yourself with more points than cash, and buying a $300 American Airlines ticket to Hawaii for 25,000 Ultimate Rewards points, when I need those AA miles to requalify for Executive Platinum status, is the kind of flexibility that is important when you least expect it.
Plus, points earned with the Sapphire Preferred also get a 7% annual dividend as a kind of anniversary bonus. Admittedly, this means if you want to compensate for the $95 annual fee and value the points at 2 cents each, you need to earn almost 70,000 each year. That is doable with the double points on travel and dining, but still tough. My perspective is that the card has otherwise awesome benefits and service (really, their CS reps are awesome) that are worth paying a bit each year. At least the 7% dividend gives you the potential to earn back the fee.
The Case for Citi ThankYou Premier
Earning ThankYou points is much more complicated than it is for Ultimate Rewards points. There is one category bonus to keep track of, 1.2 points per dollar at supermarkets, gas stations, grocery stores, and parking. You also sort of earn 2 points per dollar on flights.
Citi has a system called Flight Points where, if you purchase a flight with your Citi ThankYou card, you will earn Flight Points equal to the distance flown. These are then converted into bonus ThankYou points as you make any kind of purchase. So if you pay $300 for a 5,000 mile flight, you’ll earn 300 ThankYou points and 5,000 Flight Points. Of those Flight Points, 4,700 will remain and 300 will be converted, so you’ll end with 600 ThankYou points and a reserve of 4,700 Flight Points that will be converted in the future when you buy groceries, books, toothpaste, or whatever.
This is a great deal if you have lots of travel and lots of spend on your card. If you fly 100,000 miles a year, that’s potentially 100,000 bonus ThankYou points–if you also spend $100,000 on your card (or less if you spend it within the 1.2X bonus category). I may fly that much, but I certainly don’t spend that much. Given that Gabe, like me, isn’t a big spender, this approach won’t work. Instead he thinks he can make it up by pairing with the Citi Forward card, which earns 5 points per dollar on dining out, etc.
Gabe still needs the ThankYou Premier card to use those points for trave, and I feel compelled to correct one point he made in his email, that if he booked a ticket with ThankYou points he would save 33%. Citi’s marketing material claim that you get points worth 33% more. More than what? More than if they decided to make them worth less, a horrible selling point.
As a Premier member, you can redeem points for 1.33 cents per dollar for most flights booked through Citi’s travel agency. If you hold the lower-status Preferred card, you can’t redeem points for travel, and they are worth only 1 cent for most redemption options. This question about which card is better, ThankYou or Sapphire, would no longer be an issue.
The problem I have with ThankYou points is really the lack of flexibility. Heck yeah it’s great to get a free flight that’s still eligible for earning miles, elite status, and free upgrades! But I can’t do anything else with these points that’s worthwhile. If you aren’t earning your points in a bonus category, then that’s a fixed 1.33 cents back on every dollar charged to this card, not much better than most cashback cards.
UPDATE: One of my readers pointed out that I overlooked the 15% discount on a domestic companion ticket if you have the ThankYou Premier card. While this can be useful, it’s worth noting that there are often fare restrictions that require you to buy a more expensive ticket first in order to get the second one at a discount. I’m still not convinced this is a huge savings, as even if you could buy the cheapest ticket, the savings on a $300 fare would only be $45 per year. Citi doesn’t disclose exact terms on its application website, but you can read more in this FlyerTalk thread.
Which One Wins?
It really comes down to your travel and spending habits. I like to pay for coach flights. A lot of them, because I earn elite status and miles. Citi’s card is good for this because the TY points I earn can be redeemed for free revenue tickets. But so can Chase’s UR points, just at a slightly lower rate (to be exact, UR points are worth 10% less when redeemed this way). I don’t consider this difference significant enough to make UR points a loser. And there are certainly lots of other good ways to use UR points at a higher value.
However, Gabe says he’d like to book saver economy awards, so we shouldn’t put too much stock in the ability to transfer points to other programs. The flexibility and convenience that both Chase and Citi provide through their travel agencies is going to be enough in most cases.
Instead, I think the bigger difference between the two cards is how many points he earns. Gabe is not a big spender, so he’s not going to benefit as much as he could from all those Flight Points. But he is making a lot of purchases in categories that earn 5X with the Citi Forward. In the short run, that’s good enough. If he spends $500 a month on restaurants, that’s 2,500 ThankYou points redeemable for $33.25 in free travel. If he uses a Sapphire Preferred card instead, that’s only 1,000 Ultimate Rewards points redeemable for $12 in free travel (more if he goes through the hassle of booking an award trip). So Gabe should get the ThankYou duo for now.
This conclusion is different from my original reply email in which I argued about how important flexibility was. I’ve had time to mull over his specific situation. But your situation may be different, and I do think in the long run he’s going to find more options with Ultimate Rewards. If he were to get the Ultimate Rewards Triple Threat (Sapphire Preferred, Freedom, and Ink Bold/Plus) he could earn a lot of points worth almost as much or more and with much less hassle.
Gabe gets another $10 bounty for pointing me to a better offer than the one I had from Million Mile Secrets! You can get a 50K point sign-up bonus for the Citi ThankYou Premier instead of 30K. Read more about these cards and the bounty program on the Bank Points Cards page. (Note that offers do sometimes vary; these links are set to update automatically to the best current offer, but I don’t always go back and change the offer terms in the text of older posts.)
- Chase Sapphire Preferred – 50K points after $5,000 in three months
- Chase Freedom MasterCard – 10K points after $500 in three months
- Chase Ink Bold – 50K points after $10,000 in three months
- Citi ThankYou Premier – 50K points after $2,500 in three months
- Citi Forward – 10K points after $650 in three months