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We all have our preferred ways for how we like to redeem points. There are better values than others, but ultimately the most important thing is that points help you reach your travel goals, whatever they may be.
With that in mind, most transferrable points currencies can either be redeemed as cash towards the cost of a travel purchase, or can be transferred to an airline or hotel partner. In general my preference is to transfer points, since you can typically get outsized value for first & business class redemptions, given how much they cost in cash.
However, increasingly transferable points can also efficiently be used as cash towards the cost of a travel purchase. There’s no card where that’s more evident than the Chase Sapphire Reserve℠ Card.
The two best ways to redeem Ultimate Rewards points
You can earn Chase Ultimate Rewards points on the Chase Sapphire Preferred® Card, Chase Sapphire Reserve℠ Card, and Ink Business Preferred℠ Credit Card, and there are two best ways you can redeem these points.
One way is to transfer your points to one of the Ultimate Rewards airline and hotel partners. Points transfer at a 1:1 ratio, and this is generally my preferred use of Ultimate Rewards points. The partners are as follows:
|Aer Lingus Aer Club||IHG Rewards Club||Singapore KrisFlyer||World Of Hyatt|
|Air France KLM Flying Blue||Korean Air SkyPass||Southwest Airlines Rapid Rewards|
|British Airways Executive Club||Marriott Rewards||United MileagePlus|
|Iberia Plus||Ritz-Carlton Rewards||Virgin Atlantic Flying Club|
However, the other potentially good way to redeem your Ultimate Rewards points is to simply use them towards the cost of a travel purchase directly through the Ultimate Rewards website, which is a bit more straightforward. The value you get per point varies based on which card you have:
- If you have the Chase Sapphire Reserve℠ Card, you can redeem points for 1.5 cents each towards the cost of a travel purchase
- If you have the Chase Sapphire Preferred® Card or Ink Business Preferred℠ Credit Card, you can redeem your points for 1.25 cents each towards the cost of a travel purchase
Note that you can pool your Ultimate Rewards points, so if you have multiple cards, you can redeem them all at whatever the highest rate is. In other words, if you have both the Chase Sapphire Reserve℠ Card and Ink Business Preferred℠ Credit Card, you could redeem all your points for 1.5 cents each towards the cost of a travel purchase.
Personally I think redeeming points for 1.5 cents towards the cost of a travel purchase could be a good deal, while I don’t think redeeming points for 1.25 cents each represents a good deal, so under those circumstances I’d definitely prefer transferring to a travel partner.
Why you should redeem the points as cash towards flights and not hotels
Assuming you want to redeem your Ultimate Rewards points at the rate of 1.5 cents each towards the cost of a travel purchase, does it matter what type of travel purchase you use your points for?
One important thing to remember is that you need to book through the Ultimate Rewards website (or by phone) to get these rates. So this isn’t like other cards where you can make a travel purchase and then have it reimbursed as a statement credit after the fact, but rather you’re redeeming directly for the purchase you want.
Travel experiences you can redeem your points towards include flights, hotels, cars, and activities. I imagine a vast majority of people want to redeem for flights or hotels, so in this post I wanted to briefly talk about why one of those options is significantly better than the other.
“But 1.5 cents towards travel is 1.5 cents towards travel, no?” Not really. Booking through the Ultimate Rewards portal counts similarly as booking through an online travel agency like Orbitz, Expedia, etc.
When it comes to booking flights, there’s not much downside to booking through an online travel agency:
- Typically you’ll still earn miles for your flight, it will still be upgradeable, etc.
- Typically fares are the same through an online travel agency as directly through the airline
- You’ll still receive the same great travel protection offered with the Chase Sapphire Reserve℠ Card when booking through the Ultimate Rewards portal
In other words, for airfare you’re truly getting pretty close to 1.5 cents per point of airfare. The only real opportunity cost here is that you’re forgoing 3x Ultimate Rewards points per dollar spent for your purchase (since the card ordinarily offers triple points on travel). I value those points at 1.7 cents each, so you’re missing out on a ~5.1% return, meaning that you’re really getting ~1.42 cents of value per point.
However, when it comes to booking hotels through the Ultimate Rewards portal, there’s a much bigger opportunity cost:
- Major hotel chains typically publish “members only” rates as a way of getting you to book directly with them, so you typically won’t find a rate that’s quite as low through the Ultimate Rewards portal as you’d find directly with the hotel chain; furthermore, you can’t book AAA rates, senior rates, etc., through Ultimate Rewards
- Typically hotels don’t honor elite benefits and/or credit points or award elite nights when booking through a third party
- Even for independent hotels there’s an opportunity cost, since websites like Rocketmiles will often award you a significant number of miles for booking hotel stays through them
For example, take the Hyatt Regency O’Hare, where the standard rate is $119, the member rate is $114, and the AAA rate is $108:
If booking through Ultimate Rewards, the number of points required is based on the $119 rate:
Personally I prefer to use the points I earn on the Chase Sapphire Reserve℠ Card for points transfers to the Ultimate Rewards airline and hotel partners. Korean Air SkyPass, Singapore Airlines KrisFlyer, and World of Hyatt are among my favorite transfer partners.
However, I know many people prefer redeeming their points for 1.5 cents each towards the cost of a travel purchase, and I don’t blame them one bit. This is much more straightforward, and in many cases will get you the most value. If you are going to redeem your points towards the cost of a travel purchase, though, there is a big advantage to redeeming for flights rather than hotels. If you want to redeem your points for hotels, consider transferring Ultimate Rewards points to World of Hyatt and booking a hotel that way.