The 80/20 Rule for Credit Card Points: Most of the Value, a Fraction of the Effort - 12/26/22
We’ve had a couple of episodes that have touched on credit card point hustling, but neither of them were really a “how to,” because no episode is ever a “how to” about its subject matter. But I do think CC hustling/travel hacking, can be valuable, and it’s also widely overlooked.
On an hourly basis, it’s tough to beat a $750 sign-up bonus1 for filling out a credit card application. It’s also nice to encounter very little variance when earning credit card points.
I think the reason more people don’t take it seriously is that lots of things you can buy with points are stupid (i.e. iPads or similar), and the other stuff seems very out of reach (like first class flights to the Maldives).
In this post I will lay out what I am calling the Pareto Point Hustling Principle, which will capture 80% of the value out of credit card points, with much less than 20% of the total credit card hustling knowledge/effort.
Open a Chase Sapphire Preferred card2 (current sign-up bonus of 60k points).
Transfer the points you earn to Hyatt. Do not spend them in the Chase travel portal3.
When you need more points, open a Chase Ink Cash card4, which carries no annual fee (current sign-up bonus of 75k points).
Repeat Step #3 as necessary, continuing to transfer your points to Hyatt5. For avoidance of doubt, yes you can open more than one of these cards.
There are a million ways you can make travel hacking more complicated, but the steps outlined above will make it so that you have very low annual fees related to your credit cards, and you also can take advantage of the best point redemption on a value over replacement basis.
Just to illustrate my point, here is an example hotel booking where the points are transferred to Hyatt, rather than booked through the portal. I just picked a random weekend in April at the Hyatt Regency Tamaya (a hotel in Albuquerque that we like).
The cost is 28k points/night through the portal, and 12k points/night if you transfer the points to Hyatt. This is roughly typical.
Chase Portal Cost
Transfer to Hyatt Cost
If you don’t have any interest in going to Albuquerque6 you can use this map to find the hotel you’re looking for. The map will even display the price denominated in points.
Three Scenarios
To further illustrate the point, let’s assume that you open two credit cards as I propose above. So you will have a Chase Sapphire Preferred which carries a $95 annual fee, along with a Chase Ink Cash card, which has no annual fee. Based on current sign-up bonuses (which change all the time) you would also earn 150,000 Chase points after completing the initial spend requirements. Here are some scenarios for spending the points through Hyatt.
Absolute Thrift. Stay ~25 nights at Hyatt Places and Hyatt Houses. These will be totally fine hotels, typically clean, and not fancy in any way.
Middle of the Road. Stay 10 nights at places like Thompson Chicago or Eliza Jane New Orleans, which are good hotels and also not expensive.
Family Vacation. Stay four nights at a hotel like Grand Hyatt Kauai.
Note that a good part of the advantage of transferring the points to Hyatt is that they don’t charge taxes or resort fees on points bookings.
My wife and I actually do a mix of the three scenarios above, depending on where we’re going. One thing I’ve really enjoyed in the process is seeing random stuff that I didn’t know I wanted to see. We stayed in suburban Kansas City at a very cheap Hyatt Place and I really enjoyed suburban KC!
We also stayed at the Hyatt Place Los Cabos, which is not in Cabo San Lucas. It is in the town of San Jose Del Cabo. We spent 5k points and enjoyed walking around the town. If not for the strategy in this post, we likely never would have seen that town.
Here is a list of Hyatts that we’ve stayed at since Thanksgiving of 2021: Eliza Jane New Orleans, Grand Hyatt Kauai, Tommie Austin, Hyatt Regency Tamaya Albuquerque, Thompson Chicago, Hyatt Place San Diego, Hyatt Palm Springs, Park MGM Las Vegas (formerly bookable with Hyatt points), Hyatt Regency Huntington Beach, Hyatt Place Kansas City, Hyatt Place Des Moines, Hyatt Ziva Puerto Vallarta, Hyatt Regency Waikiki Beach, Tabacon Thermal Resort Costa Rica, Andaz Papagayo Costa Rica, Andaz Condesa Mexico City, Hyatt Regency Indian Wells, Houndstooth Inn Yosemite, Thompson Central Park New York, Andaz Maui, Hyatt Place Los Cabos, The Cape Cabo San Lucas, Andaz Singapore, Hyatt Regency Phuket, Chalets at Blackheath New South Wales, Hyatt Regency Sydney, Hyatt Regency SFO, Hyatt Regency LAX.
To give you a sense of how outsized the value can become, we used 60,000 points to stay three nights at the Andaz Papagayo in Costa Rica. It’s very nice, located in the same gated development as the Four Seasons. We were upgraded to a suite that sold for an average of $2,000/night (this is not a typical experience, although we got the suite because we have Hyatt Globalist which we achieved using the strategy contained in this post). So to go back to the credit card spend required to generate those points - we spent $6k on a credit card, which generated points used to stay in a room that would have cost $6k.
Note that our use of Hyatt points also requires that we have cheap flight options, which we get with the Southwest Companion Pass. But you wouldn’t need that element. You can keep it simple. You could even focus on hotels within driving distance.
Why Not Some Other Variation of the Strategy?
Why not get a Chase Sapphire Reserve instead of a Preferred? Why not get an Amex card and transfer the points for international business class flights? Why not focus on manufactured spend?
If you want to do any of these things, knock yourself out.
But the strategy above is intended to keep annual fees very low, while still capturing great value. All of the credits/perks/benefits offered by the cards with higher annual fees (Amex Platinum, Chase Sapphire Reserve, etc) require some amount of effort in order to capture their value. They also require some incremental commitment to spending. I think a lot of people are not honest with themselves about how much these cards increase their spending/consumption.
I have an Amex Platinum Business card that includes $400 in Dell credits, which sounds cool until you realize that Dell sells mostly garbage.
All of the induced spending and the time required to capture the value of credits has a negative effect on ROI.
The strategy I propose also allows you to postpone learning the esoteric world of airline award availability. Note that even if you do eventually move into the world of business class flights, you will still need to find hotels. So having Hyatt points can even be useful in that context.
Strategy Efficiency
You may have heard of Chase’s 5/24 rule, which introduces a drag to the velocity that you can apply for credit cards. However, this strategy is meant to be efficient in light of Chase’s 5/24 rule. The Chase Ink cards do not count toward your 5/24 total. So not only do they have low/no fees, but you can also get more of them as compared to personal cards. Also, this strategy is very credit score friendly. Ink cards count as business cards, which means that the spend you put on them does not count toward personal credit utilization, which improves your score.
One last word is that this stuff is always changing, so this is the strategy that I think is most valuable today. Maybe in 12 months some other strategy will offer the lowest hanging fruit.
Note that all of this commentary assumes that you are capable of carrying no balance on a credit card. If you carry balances, then CC hustling is not for you.
You could also opt for a Chase Sapphire Reserve if you prefer that route, although there is a specific reason that I argue for the Preferred, which I discuss later in the post.
There is some incremental value in looking at the Chase portal as it increases optionality for spending your points. Hyatt won’t always be the most efficient, but this post is about getting most of the value with the least amount of knowledge and effort.
If you don’t have a business that you think qualifies for a Chase Ink card, maybe you have a side hustle for which you’re the sole proprietor. Chase’s approvals tend to be pretty lenient for business cards. The reason that it might be good to choose a Chase Ink Cash (as compared to their other business cards) is that it earns 5X at office supply stores, which may be useful in order to meet minimum spend requirements. You could time shift spending forward by buying Amazon or Visa gift cards.
You can increase the returns to this strategy by adding a P2 - a spouse or friend that you play the game with. When you have multiple people involved you can then add in ability to generate referral points. Current referrals for Chase Ink cards at 40k points to the person referring. Note that these referrals will generate a 1099, whereas most credit card points probably are not taxable.
My wife and I have been there twice this year and we liked it both times. We took day trips to Santa Fe, visited the Bandelier National Monument, rode the tram to the top of the Sandia Peak, and ate a lot of enchiladas.