Monday, April 14, 2008

Chase Freedom Visa Points to Airline Miles

We’ve written that the Chase Freedom Visa is a 3% cash reward card (on up to $600 in spending per month, then it goes down to 1%). An interesting feature of the card is that you can convert your cash rebates to points (and vice versa, once per billing cycle). One use of the points is that they can be converted to United or Continental airline miles at the rate of 6,000 points for 5,000 miles.

Doing the math (which we were admittedly never very good at), the maximum you can annually earn at the 3% rate is $216, but you get a $50 bonus if you wait to redeem until you have at least $200 in rebates (instead of in smaller increments), thus giving you $266. With the miles-to-points conversion, you could switch to 21,600 Freedom points per year, which would convert to 18,000 United or Continental miles. Either way, the cash or points come from $7,200 in spending per year. (This is all assuming you just charge up to $7,200 for the 3% maximum, and then switch to another card or live with 1%.)

For comparison, $7,200 in spending on a United Visa or Continental MasterCard would get you.... 7,200 miles. Plus, the airline cards have annual fees (the Freedom card has no annual fee).

Hmmm, let’s see....

  • $266 cash (with the Freedom card cash rebate)
  • 18,000 United/Continental miles (with the Freedom card points)
  • 7,200 United/Continental miles (with an airline card)

We’d certainly chose to go for the cash over 7,200 airline miles from an airline card. (That represents $798 in cash before we’d even get to the level of a 25,000-mile economy ticket with an airline card.) And we’d be on the fence comparing $266 to 18,000 miles. But it gets interesting when you consider upgrades. If you want to get out of the cheap seats, those 18K miles can be as much as halfway toward a round-trip upgrade seat (for example, depending on fare class, United’s round-trip international upgrades are 30,000 or 60,000 miles). Comparing an economy seat at $1,200 (for a random-date DEN-LHR flight) to a $4,000 business-class seat, those 18,000 miles could be “worth” from $700-$1,400. That might be a worthwhile deal.

The final benefit we see regards what we touched on just recently – what happens if your airline goes under and you lose your miles? By leaving points in the Freedom program until you want to transfer them (they do have an expiration, but it seems to be 3-5 years from when earned), you’ll have another way to preserve your miles. And you can always switch to the cash reward if the Freedom points are getting close to expiring.

Of course, this type of credit-card juggling (using one card for some things, up to spending limits, other cards for different purchases) can be a pain. But the reward side can be pretty attractive.