Best Uses Of Chase Ultimate Rewards Points

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Since United announced their award chart massacre late last week, the question I’ve been asked more than any other is whether the sky is falling as far as Chase Ultimate Rewards points go.

I think a lot of people in the US have been switching their credit card spend to Chase cards that accrue Ultimate Rewards points, and for good reason. After all, it’s tough to argue with the 2x points on dining and travel offered by the Chase Sapphire Preferred® Card and the 5x points offered on office supply stores, and on cellular phone, landline, internet, and cable TV services in the Ink Plus® Business Credit Card and Ink Bold® Business Charge Card in select categories (not even factoring in the huge sign-up bonuses). That has translated to cardholders earning bonus points on the bulk of their spend, which has been incredibly compelling.

Last time I valued Ultimate Rewards points I set my valuation at 1.8 cents each. So after United’s award chart devaluation, what do I value them at? I probably now value Ultimate Rewards points at 1.6 cents each.

It’s worth remembering that while United was generally the best Ultimate Rewards transfer partner, they weren’t the only “efficient” one. So in this post I’ll cover what I consider to be the best Chase Ultimate Rewards redemption options after February 1, 2014 (when United has devalued their award chart), and then will write a follow up post with how this devaluation would change my credit card spend strategy.

Chase Ultimate Rewards has 10 transfer partners, though ultimately I think United and Hyatt are the first that come to mind for most of us.

Chase-Ultimate-Rewards

Chase Ultimate Rewards transfer partners that generally aren’t worth considering:

Now, in select circumstances transferring to any partner program can make sense. For example, if you’re topping off an account for an award or a program is running a promotion (like IHG Rewards Club PointBreaks) then transferring points can make sense.

But generally speaking it doesn’t make sense to transfer points to Marriott Rewards, IHG Rewards Club, or Ritz-Carlton Rewards. I don’t think anyone could reasonably value those points at over a penny each, so that’s simply not a good use of Ultimate Rewards points.

Virgin Atlantic Flying Club miles are quite possibly the single least valuable mileage currency, so I don’t generally think of them as a worthwhile transfer partner either.

Amtrak could make sense, though to be honest train transportation isn’t really my area of expertise, so I won’t cover that too much out of fear of embarrassing myself.

In terms of the other transfer partners, though:

Hyatt Gold Passport

There’s no doubt Hyatt is the most useful Ultimate Rewards hotel transfer partner. Hyatt has the most reasonable redemption rates of any program for high end hotels, charging just 22,000 points per night for hotels that often retail for upwards of $1,000 per night. Here’s their redemption chart:

Hyatt-Gold-Passport

It’s tough to beat redeeming 22,000 Gold Passport points for properties like the Park Hyatts in Milan, Paris, Tokyo, Sydney, Zurich, etc.

They even have the most reasonable redemption rates for suites, charging just a ~50% premium over the cost of standard rooms:

Hyatt-Gold-Passport1

I value Hyatt Gold Passport points at 1.6 cents each, and this remains one of the best uses of Ultimate Rewards points.

Korean Air SkyPass

Korean Air’s SkyPass program is probably one of the most undervalued frequent flyer programs there is. That’s because when redeeming SkyPass miles you have access to SkyTeam first class award space. If you’ve ever tried redeeming Delta SkyMiles for international travel you’re probably aware that they don’t let you redeem for international first class.

So for SkyTeam first class awards there’s so much less competition than in OneWorld or Star Alliance.

It’s not unusual to see 2-4 first class award seats per flight at the saver level — there are very few other airlines out there with that kind of award space.

Korean-Air-First-Class

Korean Air is making some slight adjustments to their award chart as of April 1, 2014, but even so, they charge just 160,000 miles for roundtrip first class between the US and Asia when there’s probably better first class award space than with any other program.

Southwest Rapid Rewards

Ultimate Rewards partners with Southwest Rapid Rewards, and they have a revenue based redemption program. At the moment 60 points are required per dollar on a “Wanna Get Away” fare. While a redemption on Southwest perhaps isn’t aspirational, that is a redemption value of ~1.67 cents per point, which is pretty darn good.

It’s worth noting that redemption is being devalued as of March 31, 2014, as they’ll go from requiring 60 points per dollar to 70 points per dollar on “Wanna Get Away” fares, meaning each point will then be worth ~1.43 cents. Still not half bad for a currency that’s “good as cash.”

British Airways Executive Club

As I’ve written about many times before, I find British Airways Avios to be one of the most practical points currencies. Crunching the numbers on my own redemptions, I’ve actually redeemed more British Airways Avios for travel this year than any other points currency. Since they have a distance based award chart and no close-in ticketing fees, they’re extremely useful for last minute redemptions within North America, for example.

That being said, generally accruing British Airways Avios through American Express Membership Rewards is a more compelling option. That’s because they frequently have transfer bonuses, while Chase has a transfer ratio of 1:1 and hasn’t offered any transfer bonuses since they were added as an Ultimate Rewards partner.

United MileagePlus

So United’s new award chart sucks and it’s easy to write them off, but we’re unfortunately faced with a simple realization — there aren’t really any great programs for redeeming in Star Alliance premium cabins:

  • US Airways blocks Lufthansa first class award space and some ANA first class award space (though is otherwise probably the best, but they’re out the door soon)
  • Aeroplan imposes massive fuel surcharges for travel on Lufthansa, and most of their other partners
  • AviancaTaca Lifemiles has some of the most archaic award rules imaginable and is known for making devaluations without any advance notice whatsoever

United’s hard product on most of their longhaul fleet is fully flat, so it’s not actually an unpleasant way to fly. The MileagePlus redemption rates for travel on United aren’t bad either.

If the longhaul segment is on United, we’re looking at one-way business class redemption rates like:

  • 57,500 miles between the US and Europe
  • 67,500 miles between the US and Japan
  • 70,000 miles between the US and the Middle East, Africa, Australia, and most of Asia

Those are perfectly reasonable redemption rates. The only challenge is that United controls award pricing and now controls award availability (since previously you could book partner airlines, and United has no control over how much award space they release), so actually finding that space will be difficult.

But still, I’d be hard pressed to value United miles at under 1.4-1.5 cents, given that they don’t impose fuel surcharges and for the most part have pretty generous award rules.

Even flexible points currencies fluctuate in value:

Even when you accrue points in a “flexible” points currency, you’re still not entirely safe from devaluation. For that matter, the value of points fluctuates pretty regularly, both up and down.

Take American Express Membership Rewards, for example, which is probably Chase Ultimate Rewards’ most direct competitor. I valued Membership Rewards points at 2.0 cents in 2010, at 1.6 cents in 2012, and at 1.8 cents this year.

Why the fluctuation? A few years back, Membership Rewards lost Continental OnePass as a transfer partner, Aeroplan hugely devalued their award chart and added fuel surcharges, and British Airways devalued their award chart, all within a few months. Those were the three best uses of Membership Rewards points at the time, and easily decreased their value by 20%.

But similarly, some redemptions using Membership Rewards points have gone up in value in the meantime. For example, they also partner with Singapore KrisFlyer, and it’s now possible to redeem KrisFlyer miles for Suites Class on the A380 at the saver level, which wasn’t previously possible.

Similarly, the airline that releases the most award space between the US and Australia is Virgin Australia, and the best program through which to book that is Delta SkyMiles. Back in 2011 Delta still imposed fuel surcharges for redemptions on Virgin Australia, so in addition to the miles you’d pay ~$900 for a roundtrip redemption. They’ve since dropped those fuel surcharges, which has greatly increased the value of such a redemption.

But is it worth continuing to focus your spend on a Chase Ultimate Rewards card, or should you look elsewhere? Stay tuned!

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Comments

  1. @ Ethan — Changed it to 1.6 cents, because of course as you mention Ultimate Rewards points can’t be worth less than Gold Passport points.

    That’s kind of the issue with valuations. For example, when Starwood had a huge adjustment of hotel categories (for the worse) earlier this year and also devalued cash & points, their value went down in theory. But on paper that was tough to do, since you can still convert Starpoints into airline miles at a 1:1 ratio, with a 5,000 point bonus for every 20,000 points transferred.

  2. First Class Acela trip from WAS to BOS in 6.5 hours for 12,000 Amtrak points. That is a nice trip with some good views up north, plus all the free food and (adult) beverages you can drink. There’s also a big chance you’ll be on the same train as the business or political elite. I love the Acela first class. Black out times on weekdays during rush hours makes it less convenient, though.

  3. Lucky, if you value Hyatt points at 1.6 cents each, you have to value Ultimate Rewards points at least 1.6 cents also, not 1.5. UR points can’t be exchangeable for, more flexible than, and cheaper than Hyatt points all at the same time!

  4. actually, i would argue that UR would have to be greater than Hyatt – why would you value a flexible and a non-flexible currency the same if the flexible one can be converted 1:1?

  5. If anything, Chase points should be valued .05 to 1 cent higher than it’s highest transfer partner just due to the value of flexibility.

    So if Hyatt is 1.6 then Chase would have to be a 1.65 or 1.7

    In theory at least.

  6. @ jettyboy — You’re definitely right, and this is where I struggle with the valuation of points. A flexible currency should take a premium over a non-flexible currency, but at the same time as a relative matter I can’t value them at 1.7 cents each, because that would represent just a 0.1 cent devaluation, which doesn’t account for the severity of the United devaluation, in my opinion.

    When it comes to valuing points I tend to think the assumption needs to be that you don’t have more points than you could reasonably burn within a few months. In other words, someone that has 100,000 Hyatt points should value them different than someone that has 10,000,000 Hyatt points, since the latter couldn’t reasonably be redeemed in a short amount of time.

  7. To follow up on what @Nathan said — Amtrak points can be quite useful if you are otherwise going to buy an Amtrak ticket, because in my experience they have very limited capacity constraints, so you can pretty much always count on being able to get a free ticket. Last-minute one-way coach tickets on the Regional (non-Acela) train between NY and DC can cost $120+, so being able to use 3,000 points instead can be a great value.

    However, if you live outside of the Northeast Corridor, the poor reliability and infrequent service of train options would make this option worthless. And, even if you live in the Northeast, that same trip could probably have been booked in advance for less than $50, so it’s really only in very particular situations where you get a big bang for your buck.

  8. @Bgriff, one of my best UR redemptions has been on the Pacific Coast Starlight from LA to Seattle for a 1 Bedroom

  9. I’m a big fan too of Amtrak Guest Rewards for the NE Corridor… I think that it’s 4000 points though… I’ve seen fares as high as $166 which is a solid redemption

    FDW

  10. I’ve been thinking about doing a one room Amtrak as a fun way to redeem some miles, as it’s been a long time since I’ve taken the train. But last time I took Amtrak (some time ago) they would always do these annoying announcements over the loudspeaker at every half hour or so. That was in coach – do they still do that in the sleeper sections?

  11. I think you have to take one for the team and do a UA business out, first return to Europe. I’ve been to scared to tip my toe in the pool.

  12. Echoing others, but it’s irrational to value UR and GP points exactly the same, because of the necessarily nonzero value of the embedded optionality in UR.

    Also re: Amtrak – the analysis is actually very simple. There is a lot of value to be had (sometimes upwards of ~5 cpp) in the northeast corridor (and really only the northeast corridor) for last minute trips on NE regional trains. Amtrak recently revised their fare structure to work similarly to airlines, in that they have separate inventory buckets with advance purchase restrictions, meaning close-in tickets can be very expensive. Since train travel is not something many people generally book very far in advance, this can save quite a bit.

  13. A bunch of people have mentioned Amtrak points. My two cents are that they are of little use to most people who either don’t live between Boston and DC or who live there but don’t travel between these cities much. However, I live in DC and do travel Boston-NYC-DC a fair amount. For me, having Amtrak as a partner increases my valuation of UR points from 1.5 to 1.9 points. I usually get 2.5-3 cents per point on Amtrak redemptions. Most importantly to me, my Amtrak redemptions are not discretionary luxury redemptions (see 80 hour round the world trip). Rather they are trips I have to take that I would be paying for out of pocket without the UR points. So, while for most people Amtrak doesn’t mean much if anything, for me it is probably the most important partner as it allows me to use points when I have the greatest need and least flexibility.

    For reference, I do know about the bus and take it when time is not a factor or on the weekends. However, when leaving DC or NYC at rush hour, the bus is too inconsistent to be a viable option.

  14. I guess if you are traveling to celebrate a special occasion, I would say Hyatt sounds great at 22k per night.

    But for my regular travels, I am sure I would fall into the 12k to 15k category which fluctuates between 200USD and 240USD in value. Unfortunately, Hyatt has a limited number properties around the world.

    To me UA is still the #1 partner, and like it or not I will have to swallow this devaluation.

  15. @Jorge

    it was 160,000 skypass miles + ~$380 fuel surcharge/tax, but it was well worth it.(retail cost of KE 1st class $10K~$15K easily).

    Great customer service as everyone might know, I loved the bar/lounge part on the second deck.

  16. @Sam Wow that is a very attractive redemption, and I have heard nothing but very positive opinions of that airline. Great option to consider in my future travels to Asia.

    Thanks !

  17. Ben,
    Marriott may make sense if you are an united gold or above since you get some bonus points for transfer to United.
    Also, with the 25% united bonus, if you redeem a Marriott travel package, you are getting more than 1 united mile for 1 Marriott point.

  18. @Ben Doesn’t Korean impose YQ/YR if you’re redeeming using their miles? What sort of YQ should we expect on premium cabin North America to Asia redemptions?

  19. @ Yucci — While the ratio has definitely gotten better, the best transfer ratio from Marriott to United is 112,000 points to 50,000 miles. Even with the 25% bonus that isn’t very tempting, in my opinion.

  20. I transfered 200,000 UR points to Korean Skypass for a first class redemption to Thailand from America. The seat was on sale for $16,000. So point worth 8 cents. Why simplify valuation to implicit values?

  21. Quote: “Yes, they still do the announcements in the sleeper cars, but only during waking hours.”

    It always blows me away how people (including Amtrak, obviously) consider the most common daily schedules to be normative–to the extent that others don’t really even exist.

    Especially during travel, people’s schedules can vary. This is one more reason I won’t be considering Amtrak for long-distance travel anytime soon.

  22. perhaps you could update this to reflect the hyatt devaluation, and the addition of Singapore Airlines as a transfer partner.

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