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Membership Rewards Vs. Ultimate Rewards: Which Program Is Best for a Middle-Class Family?

This post is long overdue and was prompted by upcoming changes to the sign-up bonus on Chase Sapphire Reserve (online applications only). Once upon a time,  I did a write-up where I compared the two programs. I’ve mentioned that for most families, getting Amex Everyday Preferred and focusing on MR points is the way to go. Of course, a lot can change in this hobby in the span of one year.

Membership Rewards vs. Ultimate Rewards

Additionally, many normal folks who come across this blog will only consider signing up for a credit card if they plan on holding on to it for years to come. There is nothing wrong with that, and I’ve mentioned before that you should do what you are comfortable with. If the above statement describes your feelings on the matter, this post is for you.

Do the math and decide if collecting flexible points is the right strategy for your situation

While I’m a big fan of flexible points, I recognize that collecting them via everyday spending is not for everyone. If you are someone who goes berserk at the thought of trying to keep up with various bonus categories (hello, husband!), or don’t like the idea of  studying award chart etc,  you may be better off with plain old cash back. There are several  choices and I recommend you see my list of best options for a middle-class family.

When it comes to simplicity, it’s hard to beat Citi Double Cash. If you are willing to do a bit more work, investigate Sam’s Club MasterCard and US Bank Cash Plus Visa. There are many other choices, and there is no “one size fits all” when it comes to maximizing points or cash back on everyday spending.

Who should consider flexible points? Well, those who like flexibility! With this type of rewards you are not locked in just one type of currency. Usually, you have a choice of statement credit, gift cards, hotel points or airline miles. There is also an option of redeeming points on revenue flights and getting better value compared to cash back.

This option is a decent choice for those who are a bit more organized and who go on several trips per year. It’s also good for those who have relatives in other states or countries. With that, for most families, I would recommend to focus everyday spending on either Membership Rewards or Ultimate Rewards, possibly both (for those who are ultra-organized). But how do you choose between them? Let’s dig in. Once again, see this post for reference.  I will highlight the changes in red.

Membership Rewards program

Best credit card combination: each spouse gets  Amex EveryDay Preferred (no change from my previous advice). 

Read my post on Amex Everyday Preferred The idea is to buy Visa gift cards at a grocery store with the second Amex in order to collect 4.5 MR points per dollar on up to $6,000 per year.

Total annual fees paid: $190

Pros: 

1) Points transfer instantly to most programs, including Avios, Air Canada, Delta and Jet Blue. Those will likely be your main uses of MR points. I wrote about some other good options for family here

2) There are transfer bonuses on a regular basis, which let you extract more value out of your stash.

3) There are quite a few partners, and all three airline alliances are well represented. You can transfer to Singapore program and redeem for flights to Hawaii on United metal (at a  cost of 35K miles roundtrip) Programs like Air France and Iberia open up many possibilities if you want to fly to Europe.

4) Amex EveryDay Preferred earns Membership Rewards points and   happens to be one of my top long-term picks for family. Amex card gives you an access to special savings program. So, with some effort,  it should be possible to offset your annual fee.

5) You don’t have to have a credit card with an annual fee in order to preserve your points. You can get Amex Everyday (or downgrade it from Amex Everyday Preferred).

6) Improved availability on Delta, with some awards starting at only 5,000 miles one-way. This is terrific news for Delta-hub captive readers.

7) Addition of Plenti as a transfer partner (read about it here). They even had a 50% transfer bonus last year and I anticipate it will come back at some point.

Cons:

1) Cut in transfer ratio to Avios. Instead of getting 1,000 Avios in exchange for 1,000 MR points, it’s now  800 Avios per every 1,000. This is a  big blow, but hopefully, they will have some sort of transfer bonus to make up for it.

2) Somewhat weak revenue program option compared to Southwest. MR partners with Jet Blue, but transfer ratio isn’t all that great and value per point is less (domestically) compared to what you would get with Rapid Rewards. While Jet Blue may be preferable to those who live near one of their hubs, in general, Southwest shines by comparison when it comes to family travel.

3) Delta is the only  domestic program out of the big three (Delta, American, United) that is represented. While there is a way to redeem MR points on United and American, you will not have access to standard level awards in those programs. That could be problematic if you need to fly last-minute.

4) One point is worth only 1 cent toward flights.

5) Many international  routes come with fuel surcharges which can make your search complicated. While there are ways to get great value out of MR points without paying exorbitant fees, it will take time and effort. By comparison, if you have United miles transferred from UR program, you can just look for seats and book them online. There are no fuel surcharges, ever.  Easy peasy!

6) Very weak hotel partner list. Sure, there is Choice. But you can purchase Choice points for 1.1 cents each, so you will most likely want to preserve your MR stash. It’s an option, of course, but not near as lucrative as Hyatt.

7) Terrible “saver” level availability on American Airlines, which makes it hard to utilize Avios program within United States.

8) Lately, Amex has been taking the term “Big Brother” to the next level. There are many reports of them freezing  Membership Rewards accounts if they detect suspicious activity. One of my readers emailed me and said that he doesn’t do any manufactured spending, yet they still froze his account for review and he wasn’t able to transfer points to miles for a couple of months.

They also claw back bonuses for various reasons.  This is by far the biggest negative development and something you should take into consideration if you plan on accruing MR points via everyday spending.

 

 Ultimate Rewards program 

Best credit card combination: Chase Sapphire Reserve+Chase Freedom+ Chase Freedom Unlimited (used to be Chase Ink Plus+Chase Freedom) 

Chase Ink Plus is no longer available for new sign-ups, otherwise, it’s definitely a workhorse when it comes to maximizing your UR-earning potential. You may want to read my post on Chase Freedom Unlimited and Chase Sapphire Reserve

How to maximize your earnings: Use Chase Sapphire Reserve for travel and dining purchases (3 points per dollar), Chase Freedom for rotating 5% categories and Chase Freedom Unlimited (1.5 points per dollar) for everything else.

Total annual fees paid: $450 (but you would receive $300 annual credit toward travel purchases). 

Pros:

1) Points transfer instantly to Southwest, which is probably the best program for most middle-class families in America. It’s revenue-based, which means every seat is available on points. If you  book far ahead, you can usually get 1.6 cents per point. Flights are fully refundable and bags fly free. And let’s not forget Companion Pass.

2) Points transfer instantly to Avios on 1:1 basis. Avios has a distance-based program where some flights cost only 4,500 points one-way. Note that this pricing is no longer valid for flights that originate or end in USA.  The program also lets you pull miles into a family account, which helps to efficiently use up your stash.

3) Points transfer to Hyatt program on 1:1 basis. I wrote a post on some Category 1 redemptions (cost only 5,000 Hyatt points). There are also some very nice resorts that cost 15,000 points per night. Those can be a great deal during peak season and holidays.

4) You can combine points with those earned from Chase Freedom. That card doesn’t have an annual fee and offers 5 points per dollar in rotating categories throughout the year. This lets use supercharge your earning potential. Staples.com is now selling $300 Visa gift cards, but you will only benefit from it if you have Chase Ink Plus that earns 5 points on office supply purchases.

3) You can redeem UR points toward cash back on 1:1 basis.

6) You can get 1.5 cents per UR point when you redeem for travel as long as you have Chase Sapphire Reserve. This is yuuuge!

7) UR points now transfer to Air France, which lets you book Delta flights online. Unlike Korean and Virgin Atlantic, you can redeem miles for one-way tickets. See this post on Travelisfree for all the other cool stuff you can do with Flying Blue program.

8) You can now use Korean Sky Pass program (UR partner)  to book Sky Team awards online. Why should you care? Because you can fly on Delta to Hawaii roundtrip for only 25,000 Sky Pass miles. I presume that you will still have to fill out a gazillion forms if you want to book tickets for your relatives (read about one reader’s experience). 

Cons:

1) No transfer bonuses, ever.

2) No special savings offers in your credit card profile, ever.

3) A relatively short list of partners, which is now even more pronounced after the loss of Amtrak.

4) Somewhat weak program for Delta lovers (yes, they do exist). While you can use Air France, the prices start at 12,500 miles one-way within  Continental US. You will not have access to routes that run at only 5,000 miles via Delta’s own program.

5) An annual fee of $450 on Chase Sapphire Reserve, which allows you to transfer points to airline and hotel programs. This is very high no matter how much you try to sugarcoat it. Yes, you will get $300 credit, plus all the other goodies, but that kind of initial cash outlay will sting for most middle-class families.

So, what program should you focus on?

My old advice favored collecting  Membership Rewards. Why? Because I’m cheap. I liked the idea of erasing the annual fees on Amex Everyday Preferred cards via “Offers for you” program. And I still do. But I have to reluctantly admit that all the recent changes in UR program make  a strong case for focusing on that program instead.

While the initial sign-up bonus of 100K points on Chase Sapphire Reserve is VERY compelling (after  tomorrow it will go down to 50K points for online applications),  I think it’s a great card to hang on to as well. Full disclosure: I personally won’t be renewing it because most of my everyday spending goes toward sign-up bonuses. I simply can’t justify this high of an annual fee, no matter how many perks come with it.  But this post is not meant for people like me. If you are not sure, my advice is to apply for CSR in order to lock in the 100K points’  bonus. You will have a year to decide on whether it’s a keeper or not.

Obviously, you could focus on both programs, but I honestly think Ultimate Rewards will be a better fit for majority of middle-class families who fly at least a few times per year. If you regularly have to buy trip insurance and value airline lounge access, CSR card is very useful indeed. Yes, you will have to do some work and switch Chase cards as needed in order to maximize your rewards. But the points will surely add up if you do.

To me, there are three main reasons this program is more compelling compared to Membership Rewards:

1) You can redeem UR points toward statement credit on 1:1 basis. No such thing with MR program, unfortunately. Sure, you can get certain gift cards at 1:1 ratio, but it’s not exactly the same thing as cold hard cash.

2) You can redeem UR points toward travel and get 1.5 cents in value if you have Chase Sapphire Reserve. You will only get 1 cent per MR point toward flights if you have Amex Everyday Preferred.

3) I don’t like how Amex is handling its MR program as of late. Audits for no reason and freezing accounts out-of-the blue don’t instill confidence, do they? When you choose to accumulate  flexible points, you put faith in the fact that they will be available when you need them. Otherwise, what’s the point, right?

There are currently two main reasons I can think of that would  prompt me to recommend Membership Rewards program over Ultimate Rewards: Delta and Jet Blue. If someone regularly flies short, expensive Delta routes that go for 5,000 miles one-way, I would say, Membership Rewards points may be the way to go. Jet Blue has some fantastic deals as well, where you can get 2 cents per point on flights. Also, see this post for other decent uses of MR points.

But all in all, I have to admit that UR program is king…again.

Readers, what are your thoughts? Yay or nay?

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Author: Leana

Leana is the owner and founder of Miles For Family. She enjoys beach vacations and visiting her family in Europe. Originally from Belarus, Leana resides in central Florida with her husband and two children.

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16 thoughts on “Membership Rewards Vs. Ultimate Rewards: Which Program Is Best for a Middle-Class Family?

  1. I am curious why you are recommending that each spouse gets their own Amex Everyday Preferred – thus paying two annual fees – instead of simply getting one card and making the other person an authorized user. Many of the Amex offers that are available on the primary card also appear on the authorized user card. Unless you are going for the weak signup bonus or are spending more than $6K on groceries per year, I don’t think it makes sense unless you are 100% certain that you can cover the AF in Amex Offer credits (which, honestly speaking, are weak much of the year until they open the floodgates in the 4Q). Keep in mind that if you are also playing the Chase Ultimate Rewards game, they usually have a quarter where gas, groceries, or warehouse clubs pay out 5X URs.

    Besides Citi Double Cash, Discover is really strong for pure cash back if you use it exclusively for Discover Deals online shopping and the quarterly bonus categories. If the Discover Deals merchant is also covered under the rotating quarterly bonus, you can often get 10% back or more because it stacks. Wal-Mart, Sam’s Club, Lands End, and Kohls fans will benefit since those stores are often 5% back for much of the year in Discover Deals. As an example of how this works, in Q4 2016, warehouse clubs were in the 5% bonus category and Sam’s Club was a 5% Discover Deals shopping portal merchant. I ordered an iPad that was on sale at samsclub.com via Discover Deals portal, paid with Discover, and 4-6 weeks later received 10% cash back on that purchase. There is no annual fee and if you find that you are exceeding the $1500 rotating category rebate, simply get another card (example: if you have Discover More then get the Discover It).

  2. Erik, that’s a valid question on Amex Everyday Preferred and I should have clarified it when I recommended getting two cards. It’s explained in my linked post, but I should have mentioned it here as well.The idea is to buy Visa gift cards at a grocery store in order to collect 4.5 MR points per dollar on $6,000 per year. Basically, it helps you supercharge your MR earnings. Also, some large families do spend close to $1,000 per month on groceries but I realize, it’s a bit on a high side. Of course, not all grocery stores sell Visa gift cards, so it’s most certainly the case of YMMV I do agree with you on Amex offers being a bit weak till last quarter of the year. But when it rains, it pours, right?

    However, as I’ve mentioned in the post and as you correctly pointed out in the comments, Chase Freedom usually offers 5 points per dollar on groceries during one quarter of the year. That and all the other reasons made me rethink recommending MR points as your primary program. Majority of normal people will only pick one, and right now I think UR program is the way to go.

    On Discover card, I totally agree with you. It is on my list of recommended long-term cards for middle-class families. I have one myself, though I probably don’t take advantage of stacking as often as I should. I mostly shop at Amazon for simplicity.

    • Ah, OK….the manufactured-spend “Visa at grocery store” angle. i don’t typically go that route unless I am desperate for points, it is more hoops/time to liquidate the Visa GCs these days than I’m willing to spend.

      In my opinion, it’s good to participate in both MR and UR programs. You never know when there might be a flash sale that works to your advantage. My family visited Paris one year thanks to a Delta flash sale award that was made possible because I topped off my SkyMiles account with some MR points. Also, a few FF schemes like BA Avios and Singapore Krisflyer cross both programs, so conceivably you might transfer points to them from MR and UR to obtain a particular award. At least with MR, there is a no-annual-fee option with airline transferability (the plain Everyday) that you can use to keep your account active if you have chased PRG or Platinum signup bonuses and have no immediate needs (just make sure you transfer the MR points to your Everyday card BEFORE closing those accounts).

      You need to rediscover Discover. It is especially lucrative during a new card’s first year if you maximize your Discover purchases in the quarterly categories and the Discover Deals portal, because Discover doubles ALL cash back earned at the end of that year. With this doubling scheme, even non-bonused purchases earn 2%. Discover now calls this first-year benefit “CashBack Match” (see https://www.discover.com/credit-cards/resources/earn-more-rewards-with-cashback-match). Amazon is usually a 4Q bonus category. I specifically got a second card to take advantage of that double cashback offer and made a bunch of money. Discover often has a signup bonus of $50 or $100 statement credit which makes that first year even sweeter.

      • @Erik Oh, for sure! It definitely makes sense to collect both currencies, and I said if you are ultra-organized, go for it. But most “normal” people aren’t going to bother. Too complicated. I have to keep in mind that my blog is for semi-normal families, so I write accordingly. Maybe I’m just delusional because very few semi-normal families will search Google for this stuff. But I write for those freaks! 🙂

        As far as buying Visa gift cards at a grocery store, I was thinking it wouldn’t even have to be MS route. Folks could just spend them on car payments via Plastiq or pay power bill. But yeah, it does involve hassle. Yet another reason I think UR program is a superior option.

        I hear you on Discover. I actually have a personal referral link in the post I’ve mentioned and I can see why you think I should rediscover it. My problem is with the weak sign-up bonus, plus I’m lazy. I would be mostly interested in 5% categories and Discover Deals. But the former would potentially cannibalize my Freedom spending on overlapping categories. I’m just not a high-spender, so have to choose carefully which card to use. Well, my husband is looking into buying a laptop later this year, it might be something I need to consider. Getting 10% back is nothing to sneeze at.

  3. To be fair, Amex has seemingly only taken these aggressive steps with the “leaked” 100K pt promotions — not unreasonable. Luckily my wife and myself have both already gotten 100K Platinums, and 75K MB Platinums, etc. I would warn anyone who does not want additional scrutiny into their mile/pts hoarding to not apply for leaked targeted offers. Just don’t do it. Don’t be short sighted! I think the MR program is weaker than in years past, but they do have a ton of great Amex offers through the year and especially around the holidays that make up for it. It’s also nice that you can get a Schwab Amex and basically cash out your pts at 1.25 cents pp.

    Each family, and each situation is different. Like you, most of our “everyday” spend (rent, utlities, etc.) goes toward signup spend/bonuses. But we will be keeping CSR as long as the benefits stay in tact. With the $300 Travel Credit (good for even tolls!) the fee is really only $150. So what do we get for that besides 3x UR on dining? We spend ~$6K each on our Freedom cards annually = 60K pts. We have an Ink Plus where we spend about $50K per year worth another 250K pts. If we are targeted, we will do a CSP or the new Ink Biz. Even if you count just the 310K pts from the Freedom/INK Plus the CSR is giving us an additional 50% redemption value on those points. Our plan is start taking annually Disney cruises starting this year and to deplete our UR pts annually with this method. Although we’ll likely use some discounted Disney GCs to pay the tips.

    • @Joe That sounds like a lot of UR points. I really want to try a Disney cruise someday, but that price, boy is it high! Argh, I’m just too cheap. I don’t have Ink Plus, but do try to maximize 5X earnings on Freedom when they have drug stores listed as a bonus category. I usually shop at Walmart, so grocery stores are mostly good for gift cards to places like Amazon. I tried to buy a Visa gift card at Winn-Dixie, but it was a fail.
      I plan to buy gas with Freedom for the next few months, but it’s not going to add up to a huge amount. My main focus is on sign-up bonuses as long as we keep getting approved for new cards. Obviously, things may change down the road. I totally understand why you plan on renewing CSR. In its current form it’s a very compelling card, with lounge access, travel insurance and access to 1.5 cents per UR point towards travel.

      I agree with you on MR program. I definitely think it has an edge on UR program in some areas, specifically when it comes to transfer bonuses. It really depends on what you are looking for in flexible points and I have no doubt that for some families, MR points are the way to go. But I truly believe UR program will be a better fit for 80% of normal folks (maybe more). I also agree on Amex offers. Those are great! Of course, you can get them with any Amex card, it doesn’t have to be one that earns MR points.

      On freezing accounts: the reader who contacted me didn’t apply for the leaked offer. That’s why it just seemed crazy that they singled him out. Also, rumor has it that Amex has formed a special team to handle MR program abuses. They basically comb through accounts looking for problems. Obviously, they are entitled to do what they want in order to protect their bottom line. I just would be a bit nervous holding onto a huge stash of MR points. But maybe I’m just paranoid.

  4. Great post. I have the csr and the Amex platinum and prg..I got the platinum through a leaked link so haven’t used any MR yet but think it’s important to have both UR and MR points.

    • @Natasha I totally agree with you! MR program can fill the gap in some areas. Namely: Delta discounted flights, Jet Blue and transfer bonuses. It’s good to have both currencies if you can manage to maximize bonus categories on Amex Everyday Preferred and Chase trifecta of cards. If I stop chasing new offers, that’s probably the route I will take. But most normal folks like to contain costs. Those annual fees can add up, hence, my preference towards UR currency.
      Congrats on getting Platinum! Be careful and don’t do any MS on it.

  5. Thanks. I don’t MS at all but I’m sure my points are still frozen. I applied for csp today and was denied due to 10/24..

    • @Natasha Sorry to hear about your CSP denial! Maybe next time. I seriously doubt I’ll get approved, but I’ll give it a shot anyway ( in branch, of course).

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  8. Hi Lena, this is my first visit to your blog, nice article. A few thoughts, Avios doesn’t have 4500 pt domestic flights anymore, you do mention this update in the link. Expanding on your thoughts in an above comment to use for bills on Plastiq,etc. These could also be used for just general spend, movie theater, Target, wherever. It’s essentially a 4.5% card everywhere without the MS.

    • @DW Welcome to my blog and thanks for reading! You are right about 4,500 miles Avios redemption no longer being available domestically. It is still very much alive overseas and can come in handy on certain trips. But I will clarify it in the post because most of my readers focus on domestic redemptions that originate in US.
      As far as using Amex Everyday Preferred for regular bills, once again, you are correct. I’ve actually mentioned it to my reader Erik in my earlier comment. You an just use Visa gift cards on regular bills, so no MS or Plastiq necessary.

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