One of the things that initially held me back with the whole credit card and travel hacking game is that I didn’t really understand where to begin. There was a lot of information that I needed to know if I wanted to play the game right and when you come in with no knowledge, it can be pretty intimidating to get started.
Looking back, what I really wanted was for someone to just tell me what to do. If I wanted to start travel hacking today, from scratch, what was the exact credit card (or credit cards) I should get?
Up until recently, even that question wasn’t completely clear thanks to some nuances that muddied the waters. However, some recent rule changes from Chase – changes that were designed to make it harder to accumulate points – have actually come with the side benefit of making the beginning process much easier for the new travel hacker. Instead of a myriad of card choices, under the current credit card rules, there’s basically just one or two cards that everyone should start their travel hacking journey with.
This post is the one that I wish someone had written for me back when I was first starting out on this whole travel hacking adventure. If you’re brand new to this world and you want someone to tell you what to do, this post will do just that.
What Should Be My First Card?
In my opinion, you’ve basically got three cards to choose from for your first card. These cards include:
The important thing to know is that you’ll only be able to get two of these three cards. Except in limited circumstances, going for these two cards will put you in the optimal position to maximize your points and miles.
In the past, it was possible to get all three of the above cards (and this was the best way to get started in the past), but a change to the One Sapphire Rule means that you can now only get one of the Sapphire brands of cards – either the Chase Sapphire Preferred or the Chase Sapphire Reserve. You can’t get them both now under the current Chase rules. And the loophole that used to exist – known as “double dipping” – no longer works.
Along with either the Chase Sapphire Preferred or Chase Sapphire Reserve, most people should also be able to get the Chase Ink Preferred as either their first or second card. This is a business credit card, so there are some requirements to qualify for it (namely, you need to have a business). Still, most people should be able to qualify for this card – in today’s world, we should all have a business, whether we know it or not.
Note, there are some prerequisites to think about. Travel hacking requires premium credit cards, and premium cards generally require a decent credit history. When I got into the whole travel hacking world, I already had ten years of credit history built up since I opened up my first credit card back in college. If you don’t have at least a year of credit history, take a year or two to build up your credit card foundation first before going for cards like this.
Chase Sapphire Preferred vs. Chase Sapphire Reserve
You’ve basically got three choices to go with for your first card. I’m going to start with the Chase Sapphire Preferred and the Chase Sapphire Reserve.
Both cards are personal cards, which means that there are no special requirements to get them beyond having a good credit score. If you’re new to credit cards and travel hacking, then the 5/24 rule probably won’t apply to you, but be sure to read up on the 5/24 rule to make sure you can qualify for these cards. The rule basically says that if you’ve opened up 5 or more credit cards in the past 24 months, you will not be eligible for most Chase credit cards, including the Chase Sapphire Preferred or Chase Sapphire Reserve.
As mentioned, in the past, it was possible to get both the Chase Sapphire Preferred and the Chase Sapphire Reserve. Chase then implemented a rule that said you could only get one of these cards. Thus, when starting out, you have to choose which card you want to get – the Chase Sapphire Preferred or the Chase Sapphire Reserve.
What’s the difference between these two cards? Both cards currently offer a 50,000 point signup bonus, which is worth at least $625 in travel. They also have some other differences that I’ve outlined below:
- Annual Fee: $95 (waived in the first year)
- Signup Bonus: 50,000 Chase Ultimate Rewards Points
- Annual Fee: $450 (not waived in the first year)
- Signup Bonus: 50,000 Chase Ultimate Rewards Points after spending $4,000 in the first three months
- Other Benefits: $300 in travel credits each cardmember year; Priority Pass; $100 Global Entry Credit
My recommendation. I think that given the current rules, the Chase Sapphire Reserve is the no-brainer option. Even though it comes with a hefty $450 fee upfront, you’ll actually end up getting $600 in travel credits in the first year.
Here’s how that works. The Chase Sapphire Reserve gives you a $300 travel credit each cardmember year, which is automatically applied when you purchase anything that codes as travel. Thus, as soon as you get the card, you’ll pay a $450 annual fee and receive $300 in travel credit that you can use over the next 365 days. Without even doing anything, the $450 annual fee is effectively a $150 annual fee.
The $300 travel credit resets each cardmember year. That means that 1 year later, you’ll be charged the $450 annual fee again, but you’ll also receive the $300 travel credit again. Chase gives you about 30 days to downgrade or close your card and get a full refund of the annual fee. You can, however, use up the full travel credit before you close or downgrade your card. So, in year 2, you’d use up the $300 travel credit right away, then downgrade the card to a no-annual-fee card like the Chase Freedom or Chase Freedom Unlimited.
If you’re doing the math here, in the first year, you’ll pay $450 in annual fees, but receive $600 in travel credits. You’re basically getting paid $150 to have the card in the first year. And that doesn’t count the other perks that come with it, which include the Priority Pass (free lounge access at a lot of airports) and Global Entry (get through lines quicker).
If you’re just absolutely terrified of paying any annual fees, then you can go with the Chase Sapphire Preferred as your first card. This card has no annual fee in the first year, which means that you’ll get the bonus without having to pay an annual fee up front. After the first year, you can downgrade it to a no-annual-fee card.
Chase Ink Preferred
If you’re feeling a little more advanced, the Chase Ink Preferred is the other option you can start out with. The thing to know about this card is that it’s a business card, which means that you need to have some sort of business to qualify for it.
Luckily, in today’s world, everyone should have a business. A business doesn’t have to be some sort of brick and mortar business like you typically think of. Nor does it have to be something that earns a ton of income. If you’re earning any income outside of your day job, that makes you a business. That includes things like reselling stuff on Craigslist or eBay, doing gig economy stuff like Uber, Postmates, and Bird, or anything that even has the potential to make money, such as having a blog.
When you apply for the Chase Ink Preferred, apply as a sole proprietor (unless you have some sort of incorporated business). On the application, the name on the card is your name, and the business name is just your name. So, if you deliver food on Postmates, your card name is your name, and your business name is your name. Your business ID would be your personal social security number (you don’t need a special tax ID to be a sole proprietor).
What makes the Chase Ink Preferred a good card is that it has the biggest signup bonus currently available for any Chase card. At a minimum, the signup bonus is worth $1,000 in travel.
- Annual Fee: $95
- Signup Bonus: 80,000 Chase Ultimate Rewards Points after spending $5,000 in the first three months
Business cards have the added advantage of not appearing on your credit report, which means that if you’re one of those people that think opening up new cards will hurt your credit, you can go with the Chase Ink Preferred and all it’ll do is show as a hard inquiry on your credit report. The actual account won’t appear on your credit report and can’t be seen by anyone.
If you want more information about how business credit cards work, you can check out this post: Business Credit Cards: The Ultimate Tool For Travel Hackers.
Continue On Your Travel Hacking Journey
If you’re a new travel hacker, these are the cards that you should be starting out with in order to optimize your entry into the travel hacking world. If you start with these cards – either the Chase Sapphire Preferred or Chase Sapphire Reserve, plus the Chase Ink Preferred – you’ll put yourself in a great position to fly for free.
To recap, if you’re brand new to the world of travel hacking and aren’t quite sure what to do, these should be your first two cards:
- Pick either the Chase Sapphire Preferred or the Chase Sapphire Reserve.
- Get the Chase Ink Preferred if you earn any income outside of your day job or do anything with the potential to earn income.
After those two cards, you’ve got a lot of options to choose from. In the interest of keeping things simple, I won’t touch on those next steps yet, but if you need ideas, you can check out my “What’s In My Wallet” page to see all of the cards that I’ve grabbed over the past few years.
There are a lot of credit cards out there. You can do a lot of things wrong when you start out, but if you follow this post, you pretty much can’t go wrong.