Just when I was getting into this travel rewards thing, all travel options ceased to exist. Like many people, I had to cancel a handful of vacations and am left with some rewards balances in limbo. As the world has hit pause, I’ve hit pause on signing up for any new credit cards an am less aggressive in my points pursuit than I had been. Nevertheless, I wanted to share my version of a credit card rewards starter kit.

My interest in credit card rewards happened somewhat organically. I already had an existing account with Chase and felt comfortable with their offerings. I fly Southwest all the time, so I added their card. Marriott is my preferred hotel brand, so I added their card. So on and so forth. My next step is to branch out to another bank’s cards. In the meantime, Chase Ultimate Rewards points are very valuable for their transferability, and their cobranded cards align with my preferred hotels and airlines.

The Chase 5/24 Rule

Little did I know, many credit card enthusiasts start with Chase as well. The difference is they do so with a little more strategy in mind. Because of something called the Chase 5/24 rule, which limits your ability to sign up for five Chase cards within a 24-month period, Chase is often the place to start. Five cards in two years is a pretty quick turnaround for someone who grew up with an aversion to cred it cards. But the name of the game is to seek out as many fat sign-up bonuses as possible in a relatively short amount of time. By knocking out Chase cards first, you’re starting the clock on that 24-month period before moving on to other banks.

I took more of a 5/120 approach, opening a card more than a decade ago and then waiting another seven years before my next sign up. If I wanted to, I could keep adding Chase cards because I’ve only opened three within the last two years. If you’re looking for five Chase cards to get you started, I’ll give you a look at the five I have in my wallet in the order that I signed up for them. You can take it from there.  

I’ll include the annual fee associated with the card, along with the sign-up bonus I received. Sign-up bonuses change all the time, so keep an eye out for special offers. Also know that not all rewards are treated equally. Generally, a rewards point is worth about a penny. Chase Ultimate Rewards points, however, are valued at 2 cents. The Points Guy’s valuation chart is a good reference and will help you understand why 60,000 Ultimate Rewards points are better than 100,000 United Explorer points.

What’s in my wallet?

As a final obligatory word of warning: make sure you don’t get into the credit card rewards game if you aren’t in the habit of regularly paying off your monthly bill. It’s a dangerous game if you don’t have the ability to pay off your cards on time. The interest you’ll pay on credit card debt will negate most if not all of your reward value.

And of course, don’t make purchases strictly for the points. You can make some purchasing decisions based on point value, but you shouldn’t spend on anything you wouldn’t have purchased anyway in an effort to reach a sign-up bonus.

Now for my Chase credit card rewards starter kit:

Chase Freedom Unlimited

Annual Fee: $0

Sign up-bonus: None

The Chase Freedom Unlimited is my longest cardholding relationship, and for a long time was the only credit card in my wallet. For this reason, it’s imperative that I keep it. Age of credit history has a decent impact on credit reports, and my Freedom card is the rising tide that lifts my wallet to respectability. That said, age of credit is still the worst mark against my credit report. Aside from a decade of Freedom ownership, I don’t have another card older than three years.

In the ignorance of my credit card youth, I used to take the cash back from my Chase Ultimate Rewards balance. In truth, I really needed the cash. If that’s your situation, absolutely take the cash and make sure the bills are paid. Once you start nerding out on credit card rewards like I did, you’ll find that the points are more valuable as points. But sometimes nothing beats the cold hard cash.

The Freedom Unlimited card is solid as part of my credit card rewards starter kit for a couple reasons. First and foremost, there’s no annual fee. That’s a nice soft landing for your first card. But the value comes from its rotating 5% bonus categories, which are an easy way to rack up Ultimate Rewards points. Chase switches these categories every quarter, and some are more valuable than others. Last quarter’s 5% back on groceries, at a time when I bought more groceries than ever before in my life, was as good as it gets.  

Southwest Plus

Annual Fee: $69

Sign up-bonus: 50,000 points

There are multiple tiers of the Southwest card ranging from $69-149, and with so little difference it’s probably best to just pony up for the Premier. The high-end version of this card, the Premier includes a $75 Southwest travel credit, which means you’re really only paying a $74 annual fee as long as you take one Southwest flight a year.

Since this was the first annual fee that I ever paid for a card, I dipped my toe in the cheapest waters with the Southwest Plus. Southwest is the best bang for your buck of any airline for domestic travel and is usually my airline of choice. If you live near a hub for any of the other major airlines, it makes more sense to find a cobranded card with them. But even if Southwest is your backup airline I would recommend putting their card in your wallet.

The benefits aren’t tremendous, with only 2x on Southwest purchases and 1x on everything else. It comes with a 3,000 annual reward, which is roughly equivalent to $30. That knocks my annual fee down to $39, in theory. Pretty cheap for an annual fee.

Southwest’s biggest travel reward though, and really the granddaddy of all travel rewards, is the Companion Pass. If you can work your way up to 125,000 Southwest points, you’re allowed to pick one person to travel along with you on any flight for the remainder of the calendar year and the next full year, absolutely free. There’s almost no limit to the value that couples receive with the Companion Pass.

Chase Sapphire Preferred

Annual Fee: $95

Sign-up bonus: 60,000 points

The Sapphire cards are favorites in the personal finance space, and for good reason. Many prefer the much more expensive Sapphire Reserve, the premium version of this card, which recently raised its annual fee to $550. The Reserve comes with a travel credit and some other nice perks, but for a credit card newbie like me, the Sapphire Preferred is… preferred.

The Sapphire Preferred is my daily spender. I would recommend this card before any cobranded cards, unless a bonus offer is too good to pass up. If I’m not working to reach the minimum spend for a sign up bonus, or swiping the Freedom for a bonus category, I’m using my Sapphire card. With it, I get 2x points on all travel and dining expenses (Reserve gets 3x), which happen to be my two highest expenses. Like the Freedom, these points go to the very flexible Chase Ultimate Rewards program. They can be redeemed through the site, but they are even more valuable when transferred to a partner program such as Southwest,  Marriott or United. As it happens, those are the other three cards in my wallet.  

Marriott Bonvoy Boundless

Annual Fee: $95

Sign-up bonus: 100,000 points

I’ve got my airline in Southwest, and now I need my hotel. Marriott’s rebranded Bonvoy rewards have not gotten off to a great start, but I still don’t mind having this in my wallet for the time being. With 30 brands and 7,000 locations across 130 countries, they have a great variety of quality hotels all over the world.

I plan on eventually signing up for cobranded credit cards for Hilton, Hyatt and IHG, but Marriott is a good place to start. In fact, I’ll probably hang on to the Marriott card because of the annual award certificate. This award certificate essentially covers the cost of the annual fee, and then some. Most rooms, even at their 35,000 maximum redemption value, are going to cost you more than the $95 annual fee.

The reason I went with Marriott first was to take advantage of a 100,000-point offer for spending $5,000 in the first six months. Bonus offers will likely determine which hotel chain I sign up with next. As for the Bonvoy Boundless, I get 2x on all purchases and 6x at all Marriott properties. They’ve also added a 6x rate on groceries during shelter-in-place orders, which I’ve taken advantage of.  

United Explorer Mileage Plus

Annual Fee: $95 (waived in the first year)

Sign-up bonus: 60,000 points

Why a second airline? The plan was to collect a nice bonus on my United Explorer card and transfer those points for international flights within the first year of opening the card. That plan did not get off the ground, figuratively or literally. As a result, I’ll probably end up paying the annual fee to buy myself another 12 months of travel options.

Even still, there are a few things I like about the card, which include a couple of lounge access passes. When things return to some semblance of normalcy, I look forward to feeling like a VIP in one of those spaces. The reason I signed up is because United has nearly 40 transfer partners with international airlines, which was supposed to come in handy for me this summer. Alas, those planes will have to wait.

The bonus structure on this one was a little different. I earned 40,000 points for spending $3,000 over three months, and am working toward another 20,000 points by spending $10,000 over nine months. This was originally six months, but was extended due to COVID-19. Good for me, as I would not have earned the extra 20k bonus points.

As for collecting points, I get 6x back on any United purchases, and 2x back on travel and dining expenses. I’m likely going to use my Sapphire Preferred for those, so I may not have much use for this card after a year or two.

A Word About Annual Fees

It seems counterintuitive to pay for something just to be able to pay for something. Add it all up and I’m paying $354 in annual fees. To me, there’s enough value in the annual member bonuses or award certificates from the cobranded cards, and simply from everyday use with the Sapphire Preferred, for me to justify the expenses. You gotta spend money to earn money, I suppose.

You will want to keep an eye on your annual fees and make sure that you are extracting enough value. When I’m ready to cancel any of these cards, I’ll call and ask if they can waive the annual fee for another year, or give me some kind of bonus incentive to stick with them. Otherwise, I’ll cut bait and find my next offer.

Summary of My Chase Credit Card Rewards Starter Kit

There you have it, my accidental credit card rewards starter kit. Like everything else in the personal finance space, I backed my way into travel rewards. In many ways I feel like I’m playing catch up. But the more I learn, the better I feel about starting with the five cards that I currently carry.

Time will tell when we can all use our rewards points comfortably, but you can treat this period as an accumulation phase. Use this time to research your next card and put together your own credit card rewards starter kit. Rack up points on grocery spending and other routine purchases.

Sooner or later, we’ll all be able to reap the rewards.