Why I Cash Out All of My Chase Ultimate Rewards
Chase Ultimate Rewards is a the favorite points currency of many, although that has been changing. Indeed, Ultimate Rewards enable lucrative redemptions. I’ve received outsized value from Ultimate Rewards in the past, primarily in conjunction with my previously-held Chase Sapphire Reserve. However, I now cash out all of my Ultimate Rewards instead of using them for travel.
Prior to continuing, I understand that many, and probably most, of you get more value from Ultimate Rewards by not cashing out. However, cashing out is the best redemption option for my situation. Here’s why!
#1: Limited Partners (For Me)
Chase Ultimate Rewards has an impressive list of transfer partners. However, for my situation, the only worthy partners are Hyatt and, to a lesser extent, Southwest and United. I’m a fan of Hyatt’s quality and consistency, and I’ve found solid value by transferring for redemption. I also describe in another article how I love Southwest. Transferring Ultimate Rewards to top off a United account has come in handy, also. Other than that, however, no other Ultimate Rewards transfer partners or travel redemptions interest me.
To further highlight how limited Ultimate Rewards travel redemptions have become for me, let’s talk about Disney World. I obtained a great Ultimate Rewards redemption for our January 2018 Disney World trip. Via the Chase Ultimate Rewards Cruise and Tours department, I booked our Contemporary Resort stay and all Disney World tickets with Ultimate Rewards. Also, I got 50% more value from the Ultimate Rewards for this redemption by holding the Chase Sapphire Reserve card. However, later in 2018, Chase removed the ability to redeem Ultimate Rewards for Disney World Resort redemptions.
This unwelcome development undoubtedly shook my confidence in the Ultimate Rewards program. I consequently saw no point to continue holding the Chase Sapphire Reserve with its hefty annual fee. Also, I started redeeming Ultimate Rewards for cash back, an option I had not previously or seriously considered. Chase also lost valuable transfer partner Korean Air SKYPASS around this time as well.
#2: Healthy Points and Miles Balances
But wait, didn’t I just say I value Ultimate Rewards transfers to Hyatt, Southwest, and United? Yes, but I have no need to transfer to those partners. Why? Because I have enough of those currencies to meet our travel goals for the next few years. This hobby, thankfully, enables me to easily earn points and miles. At times, so easily that I have the fortunate problem of not redeeming them as quickly as I earn them. This gap between earning and burning can be very wide.
While it is fun watching points and miles numbers pile up in my loyalty accounts, I prefer to use Ultimate Rewards via currencies that can grow (cash). In addition to using the cash back to travel exactly the way I want, I also would rather use the cash for bank account bonus activities, interest-bearing accounts, or investing. For me, leaving the Ultimate Rewards in my Chase account would devalue the points in comparison to some of the activities I would use the cash for. Remember that points almost exclusively lose value where cash gives you the opportunity to increase its value.
For those of you who don’t cash out but want to mitigate against point devaluation, I recommend keeping your Ultimate Rewards in your Chase account until you are immediately ready to redeem with a transfer partner. Ultimate Rewards have been consistently guaranteed at one cent each by Chase (cashing them out), while transfer partners periodically devalue their points currencies.
#3: Avoiding Annual Fees
By cashing out all Ultimate Rewards, I quickly cut my annual fees on Chase “point” cards to zero. I product changed my Chase Sapphire Reserve to a Chase Freedom. I downgraded my Chase Ink Preferred to a Chase Ink Cash. By not caring about transfer partners, which is a primary value of many Chase cards, I quickly cut my costs. My only remaining Chase annual fee is $49 for Chase’s legacy IHG card, which I rationalize keeping for the annual free night certificate.
Before making the above product changes, I considered the reality of not having the quick ability to transfer points to partners. However, knowing I could easily upgrade one of my multiple Chase Freedom accounts to a Sapphire for transfers, I confidently made the changes to no annual fee cards.
Of course, annual fees for the Sapphire Reserve and Preferred are justifiable depending on your redemption strategy. The savings from one transfer partner redemption or Chase travel portal booking can easily exceed the card’s annual fee. However, if you use the Chase travel portal to book, ensure the rate is equal to or better than what you could obtain from a cash booking. Referral bonuses from either of these cards can also outweigh the annual fee.
#4: Excellent Cash Back Rates
I can earn five (insert your favorite Ultimate Rewards partner here) points per dollar? Why would I want cash back? In the past, I’ve focused on the outsized value I can get from Chase Ultimate Rewards, while conveniently ignoring the undeniably substantial cash back value right in front of me.
Which Chase Cards I Use
I focus all of my Chase spending on two card products: Chase Freedom and Chase Ink Cash. I earn 5% cash back on all Chase spend, since I only use these cards in the specific bonus categories. By holding multiple accounts for each of these Chase card products, I can earn a not insignificant amount of cash back.
Increasing 5% Cash Back Access
You can easily enable this multiple card account option for yourself by product changing cards as I described above. These product change benefits are two-fold: in addition to zeroing out the annual fee, you obtain more ability to earn 5% cash back. For example, I previously held one Chase Ink Preferred account and one Chase Ink Cash account. By simply downgrading my Chase Ink Preferred to a second Chase Ink Cash account, I increased my access to 5% cash back earning from $25,000 to $50,000 spend per year while avoiding the Preferred’s $95 annual fee. Similarly, by downgrading Chase Sapphire Preferred or Reserve to a Chase Freedom, you increase your 5% cash back earn rates by $6,000 annual spend each time.
One More Product Change
Also, by deciding to only care about cash back with Chase, my Chase Freedom Unlimited card became useless. I can earn 2.5% cash back on my American Express Blue Business Plus card (when paired with the Charles Schwab Platinum), and 2% cash back on my Citi Double Cash cards, so 1.5% cash back from the Chase Freedom Unlimited wasn’t worth considering any longer. So, while the Chase Freedom Unlimited has no annual fee, I easily decided to product change this account to yet another Chase Freedom account.
#5: Improving Travel Freedom
I’ve previously described how I prioritize travel freedom over brand loyalty. While Ultimate Rewards are a very flexible point currency, it’s not as flexible as cash. By redeeming for cash back rather than a partner currency or Chase travel portal redemption, I am freeing myself from that currency/portal limitations and taking more control over how I travel. Consequently, I use that cash back redeemed from my Chase cards to travel exactly the way I want and maximize the discounts I can obtain while earning rewards with the selected travel entity (and portal bonuses, etc).
Chase Ultimate Rewards Cash Out – Final Thoughts
When I decided to start cashing out all Chase Ultimate Rewards, it was an easy, empowering choice in my situation. I realize this is not the optimal move for many travelers for lots of reasons. If you have a massive pile of points that are continually being devalued, maybe a change to cash back is a good move for you, too. I encourage you to evaluate your spend and redemption habits to determine how to most effectively meet your travel goals, whether it be via travel rewards or cash back redemptions.