Defending the Chase Sapphire Preferred as if it’s my firstborn…

Yesterday Gary made a post saying that Aeroplan’s recent addition of fuel surcharges isn’t changing his credit card spending habits. I responded saying that Membership Rewards is more or less dead to me for now (not because of that one change but because of all the changes we’ve seen over the past six months), and he responded saying that the sky isn’t falling.

Rather than rehashing all the posts go ahead and read ’em, cause this definitely isn’t a “mileage 101” topic.

Let me start by saying two things. First, Gary’s probably the brightest guy I know and we almost never disagree on mileage related topics since we have similar travel styles. I’m almost afraid to disagree with him, because he’s always right! But that’s what makes this fun, that I’m genuinely excited Gary and I can disagree on something in a positive way, hopefully without me being too far off. šŸ˜€

Second, I want to remind everyone what the title of my last post was: “Why Membership Rewards is more or less dead to me (for now)ā€¦”

I’ve bolded the two most important parts. First “to me,” because I’m not suggesting Membership Rewards points are suddenly worth a ton less to everyone. Let’s not forget there are people out there that redeem points for gift cards… oh, the humanity. Second, I said “for now” because I do have faith in Membership Rewards in the long run, that they’ll acquire new partners or at least run promotions. For the time being, though, my valuation of Membership Rewards points has dropped by about a third.

But to respond to some of Gary’s points:

I had written the following:

Well, you can use only 63,000 Membership Rewards points to fly Upper Class from New York to London on Virgin Atlantic by transferring to ANAā€¦ but youā€™ll pay $800 in taxes/fuel surcharges.

To which Gary responds:

And thatā€™s still a great deal! Only some of that is fuel surcharge, remember that about $300 is airport taxes, international taxes, and the UK ā€˜passenger dutyā€™ thatā€™s extortionate on premium cabin travel.

Thereā€™s a $500 fuel surcharge that you wonā€™t be hit with if you redeem 100,000 Continental miles, sure. But Iā€™d save the 37,000 miles by spending $500. And further, I expect the option to redeem Continental miles on Virgin to go away next year anyway.

The difference is that you can do so much more with those 100,000 Continental miles. You can originate somewhere else in the US and include your connecting flight to a Virgin Atlantic gateway, you can connect onwards beyond London after your Virgin Atlantic flight, you can have a stopover and an open jaw, and you don’t pay any fuel surcharges.

The ANA award wasn’t just great for people living in New York, but also good for people that needed to position themselves from elsewhere. I know I flew Virgin Atlantic in Upper Class on the award to New York, and had no problem booking a separate revenue ticket to/from the gateway because the deal was so spectacular.

What made the 63,000 mile deal on Virgin Atlantic so great was that there were no fuel surcharges. If we agree the fuel surcharges are around $500 and we value Membership Rewards points at two cents each, that’s basically a new “cost” of 88,000 miles. For anyone that’s originating anywhere but the east coast, or anyone that’s visiting more than one place in Europe, I’d say 100,000 Continental miles is a much better value.

What would you rather fly, New York to London roundtrip for 63,000 miles and $800, or Los Angeles to London to Istanbul with stops in both cities for 100,000 miles and $300 (or less, if you know how to minimize the UK air passenger duty)?

Then I had written the following:

You can use 90,000 Aeroplan miles to fly to Europe in business class through Aeroplan, though any domestic US segments will be booked into coach and if you fly Lufthansa transatlantic youā€™ll pay $600+ in fuel surcharges and taxes.

To which Gary responds:

Not true. Domestic segmentsĀ on ContinetnalĀ still book up front. Aeroplan is refusing to book domestic first class seats as part of a business class award, but Continental codes their front cabin as business class for award redemption so youā€™re good there. And the combined United/Continental will be coding their front cabin as business. Which means you only wonā€™t be able to include US Airways first class in an Aeroplan award (youĀ willĀ of course be able to include US Airways first class in a first class award).

I’m looking at the program for what it’s worth now, and you know as well as I do that all of transatlantic award availability is out of United and US Airways hubs! Charlotte, Chicago, Washington? Yes. Houston? Heck no! Newark? Yes, but good luck getting a Continental award ticket there from just about anywhere.

Then I said the following, which Gary disagrees with me the most on:

I had a longtime client with tons of Membership Rewards points email me wanting to travel from Detroit to Tel Aviv in business class. In the past we transferred to Continental and usually had a nice one-stop routing on Lufthansa for 120,000 miles in business class. Now the only option is to transfer to Aeroplan and pay 135,000 miles plus about $1,000 in taxes/fees. If we want to avoid Lufthansa and the fuel surcharges associated with them, we would have to add two additional stops (based on availability for his dates) and the domestic segments would be in coach.

Gary responds:

Iā€™d argue that Benā€™s approaching this wrong. For Detroit to Tel Aviv in business class with American Express points, itā€™s not ā€œthe only optionā€ to transfer to Aeroplan and pay 135,000 miles plus fuel surcharges to get a one-stop award.

Instead, Iā€™d offer that I would rather transfer 90,000 points to All Nippon for that very same award and pay fuel surcharges. Thatā€™s 45,000 fewer miles, And the last time I did this on ANA, total taxes and fees inclusive of fuel surcharges were $611.

Totally valid point, with one major issue — All Nippon Airways is one of the few Membership Rewards transfer partners that doesn’t offer instant points transfers. Furthermore, they don’t hold award tickets unless you have the miles in your account. Gary, you know as well as I do from booking award tickets that award availability can change radically over the 2-4 days it takes to transfer points from Membership Rewards to ANA. And as we’ve both written about many times before, the beauty of programs like Membership Rewards and Ultimate Rewards is that you don’t have to make speculative transfers. With instant transfers and the holds most airlines allow, you can hold the ticket, transfer the miles, and then purchase the ticket, all without any risk.

If it were my travel I’d have no issue risking it, though I’d have a hard time presenting an itinerary to a client and telling them to transfer points with the disclaimer that the award space may or may not be there when the miles arrive.

Lastly Gary writes:

About half the year thereā€™s a transfer bonus, sometimes as high as 50%, for moving Amex points to Delta. Say I earn 3 Amex points per dollar on airfare spend via theĀ American Express Premier Rewards Gold card. With that 50% transfer bonus Iā€™m earning 4.5 Delta miles per dollar. That means I can literally spend double the Delta miles and come out ahead compared toĀ Chase Sapphire PreferredĀ for the same award ticket. But of course, if you followĀ my adviceĀ you should be able to avoid spending double the Delta miles on many awards.

Gary, I know we’ll agree on this one, because we have the same mileage redemption preferences. How many SkyMiles does it take to fly Air France or Korean Air first class? šŸ˜€

The thing I’ll concede on is that you’re probably better off putting gas and groceries on the Premier Rewards Gold card (two points per dollar) vs. the Chase Sapphire card (1.07 points per dollar). But as far as airfare, travel, and dining goes (which constitutes about 90% of my spend), I’m sticking to the Chase Sapphire Preferred card.

So is two points per dollar on gas and groceries worth paying a $175 annual fee for? Well, unless they count fuel surcharges in the “gas” category, I’m going with no. šŸ˜€

Anyway, for the two of you that still don’t have the Chase Sapphire Preferred card, more on it here.

Comments

  1. I’m somewhere in between the two of you here. I hate ANA as a program. The 7 days rules and delays in transferring are infuriating.

    That said, while I hate the fuel surcharges, I’m with Gary that the AE fuel surcharges (and, in limited circumstances, the SQ and BA ones) are more than offset my the availability of flights, points requirements, and ease of using the points.

  2. For gas, the PenFed card is probably the absolute best. Unlimited 5% cash back with no annual fee, aside from a one time $25 donation to a military charity for those of us that aren’t eligible for the card without the donation (i.e. in the military or family member of, or belong to one of many military groups).

  3. @ sjs — But what can you book with Aeroplan miles that you can’t book with United miles through the Chase Sapphire card? United has more flexible routing rules, typically lower mileage requirements, no fuel surcharges, and no ban against domestic first class on business class awards.

  4. @ Nancy — Yes, but I’d rather avoid the fuel surcharges and book through United, forgoing the three Membership Rewards points per dollar in favor of the 2.14 Ultimate Rewards points.

  5. I’m happy with my approach. United Mileage Plus Select for everyday spend:
    – 3 miles per $1 spent on eligible United and Continental purchases.
    – 2 miles per $1 spent on eligible gas, home improvement purchases, groceries, dining and Star Alliance purchases.
    – 1 mile for everything else

    Plus up to 5,000 EQM for purchases made on United.com per year.

    Once my RCC membership ends at the end of the month, I’ll probably add a Presidential Plus card to pay for RCC membership and get 2 miles on on hotels and car rentals. It’ll also have no foreign transaction fees and earn some EQMs as well.

    Between those two, I figure I’m pretty well covered. I can buy hotel nights through United.com, where they actually have some pretty good point redemption rates. Plus those count as revenue stays, not reward stays.

  6. I agree with you 100%.
    It’s time to move on to Chase Sapphire as the most versatile card.
    MR points have been so devalued that it’s not even funny.
    Personally, I have canceled the Platinum card and the Gold will follow soon.
    Currently, I only have Gold Bus that I got 2 weeks ago but plan to spend only $10,000 to hit the bonus points.

  7. Lucky,

    I’d like to see you and Gary talk about how much you actually spend on credit cards vs actual flying. Gary still swears that AmEx MR is still king for gas and groceries, but for my wife and I, that’s 12,000 points annually. It’s going to take years to save up for a premium cabin ticket, all the while accruing $175/yr in fees. Where’s the sense in that?

  8. @Lucky,

    For Gas purchases, the best card is the Costco Amex True Earnings business card. You get a 4% rebate on gas purchases with the business version of the card (2% on restaurants, etc.)

    The card has no annual fee and works for those that spend enough at Costco for the exec level membership to work. Exec level members get an annual rebate on their costco purchases (separate from the Amex card) and if that rebate at least equals the difference in cost between regular membership and exec membership, the membership pays for itself. The difference is currently $55 and the rebate is 2% on “most items”.

    -David

  9. just to be clear the 2% rebate on most costco purchases is separate from the AMEX trueearnings costco business card rebates.

    You get 2 rebate checks if you have exec level membersip and the AMEX card.

    You can, of course, consider both rebates when calculating the net cost of the exec level membership over the cost of the regular membership.

    -David

  10. @LIH 4% with lots of fine-print (which you may already qualify for) versus 5% with a single $25 joining fee shouldn’t even be a close call. Take a look at PenFed.

  11. @oleg

    good point on Pen Fed and it bolsters our meta point that AMEX PRG is not the best card for gas purchases. We know about at least 2 better choices and there are probably more out there.

    -David

  12. I am puzzled that so few people mention the Amex Blue Preferred.

    6% cash back at supermarkets would seem to beat anything else by a lot. Then it’s perhaps good to use for 3% cashback at department stores (not sure exactly what defines that spend).

    Otherwise, don’t use it.

  13. The PenFed Amex (I believe Murphy was talking about their Visa for gas) offers 5 pts for airfare and no foreign transaction fees.

  14. There are only 2 of us without the Sapphire card? Who is the other one besides me? šŸ™‚ I plan to get one eventually. But I am buying a car soon so I want to wait until after that is done.

  15. @toomanybooks 6% back on groceries if fine. But, for example, considering if one values miles at 2 cents per mile, then anything that gives you 3 miles per dollar spent is equivalent to the 6% cash back. Considering the card has a $75 annual fee, you have to spend $1250/year on groceries just to break even on that card. That’s not an extreme goal, but if I spend some money on an annual fee, I want to receive a broader range of valuable earnings to more quickly recoup the fee costs.

  16. Ok what ON EARTH is going on with ANA charging a $450 fuel surcharge for redeeming for Continental flights? CO doesn’t even charge fuel surcharges! It’s a made up fee, and there’s only 1 word for that… Fraud! Plus they hide/lump it into taxes to boot!

    So out of my $503 in “taxes”, $53 goes to Continental to actually pay my taxes, and ANA lines their pockets with $450? wow

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