Is the Credit Card Flipping Game Ending?

Is the Credit Card Flipping Game Ending?

The game of flipping credit cards to earn free travel may be nearing an end.

Here is why.   There is talk in Washington that the Republican legislature may seek to limit the interchange fees that credit card companies can charge to small vendors, and to peel back legislation that previously forbade offering a discount for cash payments.  These actions would significantly limit the ability of credit card issuers to become profitable quickly with virtually each new cardholder.

JP Morgan Chase, the largest credit card issuer in the US, is already limiting the ability of cardholders to flip cards through its 5-24 rule.  As we discussed in this article, the rule is being applied with a heavy hand, regardless of the number of transactions, number of business cards or other transactions that you conduct with bank.  Chase has control of many of the most attractive areas of this market and driven this market.  Its actions would seem to indicate that, even without legislative change, it may not be so easy to rack up travel rewards through just quickly flipping credit cards going forward.

See the best credit card sign up bonuses.

As the game ends, or at least gets a little more challenging, it is time to look at the best strategy for continuing to maximize the money you receive from your credit card usage, and to plan to keep the cards that work best for you and your needs while discarding those where your recurring spend may not work as well.

See the best credit travel and reward cards for recurring spend.

As you do that, here are some things that I recommend.

First, consider going back to what you were doing before you started the flipping game.  For me, the Starwood card provided the most value for more than 2 decades.  While Amex only lets you get the sign up bonus twice (once for a personal account and once for a business account), the points have always had real value, arguably even more now that they are convertible to Marriott points at 3 to 1.

Second, look at those cards that provide added value over the long term.  The Amex Platinum card provides all sorts of purchase protection that other cards do not offer, the Chase Sapphire cards offer better liability protection for rental cars, and the Citi Prestige card offers a fourth night free on hotels booked through the card’s service center.  These cards have hefty fees, but may be worth renewing if the value is there. And, importantly, you probably should not cancel them with the intent of getting them again later for a new bonus, as that may no longer be possible soon.

Third, consider those cards that give you the most flexibility.  In our view the cards that provide the most flexibility are the Barclays Arrival World Elite Mastercard which sets your redemption value at 2.10%. and the Bank Americard Travel Rewards Credit Card which sets your redemption value at 2.625% and requires that you have $100,000 on deposit with either Bank America or Merrill Lynch.  Among the major point earning programs, Chase gives you the most flexibility and when you are done flipping, the Chase Freedom Unlimited is well worth a look.  It provides you with 1.5 points on every dollar spent, and those points can be transferred to a host of great travel partners so long as you also maintain a Sapphire Reserve, Sapphire Preferred or Ink Plus account. 

Image: Courtesy: Fairmont Orchid Hawaii

Editorial Disclosure: Opinions expressed here are those of the author, and have not been reviewed, approved or otherwise endorsed by any bank advertiser, card issuer, airline or hotel.

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Have You Been Rejected for the Chase Sapphire Reserve Card Because of the 5-24 Rule?

Have You Been Rejected for the Chase Sapphire Reserve Card Because of the 5-24 Rule?

Chase has been forcefully implementing a new rule designed to stop people from churning credit cards.  The rule, known as the 5-24 rule, bars people from getting a new point-earning credit card if they have applied for more than 5 credit cards in the last 24 months.  The rule applies to credit cards received not just from Chase, but from all credit card issuers.   The rule currently applies to all Chase Sapphire products, Chase Ink products and Chase Freedom products.  It does not apply at present to other Chase-branded cards such as the United card, the Fairmont card, the Hyatt card and their Marriott and Ritz Carlton cards.

BestCashCow thinks that Chase’s 5-24 rule is entirely misguided.   As it applies universally to all customers, including those who have records of having spent thousands monthly through Chase products, it prevents their most loyal and highest spending customers from upgrading to their new products.   These customers are then driven to competing products, such as the American Express Platinum card and the Citibank Prestige card, in order to take advantage of the higher level of service that Chase is now offering.   Because it applies to business cards as well as personal cards, the rule disproportionately discriminates against small business owners and entrepreneurs, many of whom need to frequently open multiple cards at once for accounting and legal purposes.

Quite oddly, Chase’s entire marketing strategy for the Chase Sapphire Reserve Card is to advertise on Bankrate’s ThePointsGuy website, a website which is designed to advise young kids in their 20s how to effectively rack up tons of points and miles through flipping credit cards.  Essentially, Chase has given Bankrate a present which will have unintended consequences for them (similar to Putin’s decision to undermine the US election system and install Donald Trump as President).  In the case of Chase, they are attracting those customers who have not demonstrated loyalty in other Chase product offerings and who present a much higher credit risk than those in their 30s and up who they should be attracting for this product. 

Nevertheless, the reality is that if you apply for this product and are rejected, you have very little recourse.  Your first line of recourse to get them to make an exception is to call the Chase Credit Card reconsideration line at 888-270-2127 (the Business Credit card reconsideration line is 800-453-9719).   The Chase credit analysts who answer the phone may not change the outcome of your application, but they will inform you how many cards Chase has a record of you having applied for in the last two years and when you will be eligible to apply for the Chase Sapphire Reserve Card.

If you visit a branch to seek reconsideration for your application, you will be encouraged to apply for a Chase Private Client account.  These accounts require $250,000 to qualify and are part of Chase’s latest bank-wide efforts to get into the money management business and compete on some level with Bank of America Merrill Lynch and Morgan Stanley.   Even if you have the ability to do this, you may want to pause and consider the following:

  1. Anecdotal evidence is that Chase’s Private Client system isn’t tied to their credit card system.  While Bankrate’s ThePoints guy brags of having defeated the 5-24 rule through his having a Chase Private Client account, plenty of customers are opening these accounts and then getting rejected a second time for the Chase Sapphire Reserve card.
  2. The benefits of the Private Client account really do not justify having the account.  While Chase offers these clients free ATMs, no foreign currency exchange fees, a free safe deposit box, free checks and free money orders, these services do not compete with the access and services that Merrill Lynch and Morgan Stanley provide.  
  3. If you are moving $250,000 in cash to qualify for Chase’s Private Client status, your cash will be earning 0.05% or less at Chase.  That same cash deposited at one of the leading online banks will earn over 1%.  Hence, you will be foregoing over $2,500 a year in interest.  See the best savings rates here.   (Note: You can also transfer assets in kind to Chase to obtain Private Client status).

In short, if you get rejected for Chase Sapphire Reserve, you should fear not and take a look at the other great cards you can get:

Find the best credit cards for travel sign up bonuses

Find the best credit cards for travel rewards

Find the best business credit cards for travel rewards

Image: Courtesy: Pexel

Editorial Disclosure: Opinions expressed here are those of the author, and have not been reviewed, approved or otherwise endorsed by any bank advertiser, card issuer, airline or hotel.

Advertising Disclosure: This site may be compensated for hosting offers.

Stop Opening Accounts with Worthless Loyalty Programs

Stop Opening Accounts with Worthless Loyalty Programs

I was walking by a major big box retailer in New York City the other day, and I saw a sign in the window that said “Open a Credit Card and Get 5x Points Today”.  I briefly got very excited before I realized that the store has nothing that I would want to buy and therefore the points are completely worthless to me.

Some loyalty points provide extraordinary value and can be worth keeping your loyalty with an establishment to continue to earn.  In particular, your “loyalty” to airlines (see how the programs compare here) and hotel chains {see how these programs compare here) has real value.  When you recognize that just for opening a new credit card, you can easily earn well over $500 in value with an airline or hotel chain (or points that transfer into either), you also recognize that you can throw out your Starbucks and Subway loyalty cards.

Find the best travel rewards credit card sign up bonuses.

And, to boot, it simply isn’t necessary to be a member of too many programs, especially if you are just getting going with travel rewards.  By joining Singapore’s Krisflyer program, you can earn the full value of all miles flown on all United or Jetblue flights, as well as any Star Alliance program members, and transfer points from all four major transferable point currencies (Chase, Citi, Amex, and Starwood).  We also like the American Airlines program as there are several credit cards from Citibank and Barclays that can feed into it.  British Airways also provides good value on short haul redemptions.  Delta’s program is worth joining if you can still bear to fly it.

Within the hotel area, most people will find tremendous value in the Starwood – Marriott program, especially post-merger now that all sorts of great redemption opportunities have opened up through the 3:1 fixed transfer ratio.  Hyatt is also a tremendously valuable program.  You can also get a couple free nights at a Conrad by flipping a Hilton card, but the program is – like the other major hotel programs – substantially less valuable than Starwood and Hyatt for regular spend.

Once you are a member of the 3 or 4 airline programs and the 2 or 3 the hotel programs you need, it is time to stop.  Every one of these places is selling your name, phone number, address and all sorts of other information about your purchasing habits.  In this day and age, you just don’t need everyone to have your information in return for less than nickel in value.

Image: Courtesy: American Airlines

Editorial Disclosure: Opinions expressed here are those of the author, and have not been reviewed, approved or otherwise endorsed by any bank advertiser, card issuer, airline or hotel.

Advertising Disclosure: This site may be compensated for hosting offers.