Credit Card Companies Invite us to Refer Friends...for Inferior Signup Bonuses? (and how to work around the situation)

Chase and American Express offer some of the best credit cards available in the market today. They've got generous sign-up bonuses and reward ongoing spend. They like to get more people to sign-up and use their cards because many of them carry an annual fee and they all generate swipe fees.

In order to encourage more people to sign up for their cards, banks offer affiliate links to websites which meet their criteria. You need to have a lot of traffic, and a professional website aimed at their target market. Family blogs like this don't qualify. Even high quality travel websites don't always qualify - you've got to have sufficient traffic for them to want to maintain a relationship with you. This is different than the Amazon model where almost any website can become an affiliate - they just pay at a higher percentage for sites that refer more revenue-producing traffic.

If you're like me and you talk to a lot of family and friends about which credit card sign-up bonuses are best there's another option besides affiliate links and that's Refer a Friend programs. Both Chase and American Express offer these options but there's one a catch:

The signup bonuses are almost always inferior to the best available option.

What kind of friend would refer a friend for a bad offer? This is a terrible way to run a referral business. You want to refer a friend for a great product with a great signup bonus.

I wish the credit card companies provided ways for referrals of the best offers. I'm sure this is a common complaint of affiliates as well: "Give us the best links if you want us to promote your products."

There's nothing I can do to change this, but I can offer up an assessment of the current referral offers available for some of the best credit cards out there along with suggestions of how to work around the problem to get the best signup bonuses -and- a referral bonus as well.

Chase Sapphire Preferred

Chase offers a referral option for some of their cards, for certain cardholders. If you have this card you can check whether you're eligible to refer friends here: http://chasereferafriend.com

Chase invites you to refer your friends -
for an inferior signup bonus!

Refer a Friend Offer: 40k Ultimate Rewards (this is my referral link)
Better Offer: 40k + 5k for adding an authorized user, $95 annual fee (this is the standard link)

Workaround: None. If you refer a friend for the 40k offer the best you can do (with a lot of persistence) is get Chase to match the 5k authorized user bonus.

Guidance: If you're averse to arguing about signup bonuses go for the 40k + 5k authorized user bonus. You can probably go through a referral link and then request a match on the 5k authorized user bonus, effectively getting both the referral bonus and the 5k authorized user bonus. There was a 50k offer with a $125 annual fee for this card for a while there but it seems to be gone now unless you call in.

American Express Premier Rewards Gold

American Express offers a referral option by logging into http://americanexpress.com then Rewards - Refer a Friend. If you're eligible you should see this:

AmEx's referral program also has inferior offers
sent through emails you can't customize

The way AmEx does referrals is a little quirky. You have to send an email to your friend which includes a personal link. Since it's new to me I'm unsure if the resulting link in the email can be used by multiple people. But since the referral links for the best available offer for the Platinum and Gold cards I wouldn't recommend using them anyway.

All three of these cards are terrific - but only if you catch a peak signup bonus. Even then you may want to consider which cards to apply for concurrently because AmEx blocks signup bonuses for products from the same family. For example, if you currently hold a gold card you can't get the signup bonus for a platinum card. More on strategies related to this in a future post. (subscribe for updates)

Refer a Friend Offer: 25k
Better Offer: Card Match or Targeted 50k

Workaround: None. In my experience AmEx is not friendly about matching better bonuses. I even had to fight with them to get the standard 25k bonus on the AmEx SPG I signed up for this year.

Guidance: Check https://www.creditcards.com/cardmatch and/or log into http://americanexpress.com in an incognito browser window then go to Cards - Learn About Charge & Credit Cards - Your Special Card Offers

American Express Starwood Preferred Guest

25k might seem like a weak signup bonus compared to the big numbers other cards offer. But it's because Starwood points are very valuable. I'd estimate their worth a $0.02 a piece so even a 25k signup bonus isn't bad. Starwood points can be redeemed at their properties at favorable rates and - perhaps strangely for a hotel loyalty program - they can be transferred to a ton of airlines at a 20k to 25k ratio. Then, for example, you can redeem those points on Lufthansa for 34k roundtrip domestic flights within the US on United. Crazy, right?

Refer a Friend Offer: 25k (my referral link)
Better Offer: None right now. Best signup I've seen lately for this was 30k this past fall.

Workaround: Sadly, this is the only card of the bunch where the referral signup bonus is on par with the current best offer. If you're in the market for this card now, 25k isn't a bad signup bonus. I'm not sure whether use of a referral link (that I generated by emailing the offer to myself) will make me eligible for a referral fee. But it's worth a shot.

This is a really strange way to design a referral program (email only? what about Facebook and Twitter?). If you'd really like to make sure I get the referral bonus (5k) drop me an email and I'll send you one.

Chase Freedom

As I mentioned in this post this is a great card with no annual fee.

Refer a Friend Offer: 10k Ultimate Rewards
Better Offer: 20k Ultimate Rewards (expired)

Workaround: Apply through the refer a friend link. Then when you're activating the card (or shortly after via secure message) ask them to match the 20k offer. Chase is good about this in a case like this where the signup bonus has increased and the offer is otherwise identical.

American Express Platinum

I wouldn't apply for this card for less than a 50k signup bonus. For even semi-frequent travelers the $450 annual fee is easily justified by lounge access, $200 in airline incidentals (or gift cards twice a year), Global Entry (worth $100, good for 5 years and includes TSA PreCheck), and its Starwood/Hilton/National status (which can be matched to Hertz Five Star).

Refer a Friend Offer: 25k Membership Rewards
Better Offer: Targeted 100k (but hard to come by)

Workaround: None.

Guidance: Check https://www.creditcards.com/cardmatch and/or log into http://americanexpress.com in an incognito browser window then go to Cards - Learn About Charge & Credit Cards - Your Special Card Offers

Conclusion

I understand that banks have to abide by regulations in place to avoid consumers getting duped by unscrupulous characters. But I wish they'd learn from how Amazon sets up its affiliates program. Almost anyone with a website is eligible to participate in the program. The more products you sell, the more your referral percentage goes up.

This seems like a bright way to run an affiliate program because as small sites grow they're already familiar with your program. And with social media we're all potentially affiliates aren't we?

I hope this is helpful in navigating your way to the best sign-up bonuses while, in some cases, maintaining your referral bonus as well.

Pasta Genovese alla Nonna

Showing me the tricks of her trade, 2003

These days my sweet little Nonna remembers the faces of the people she loves but much else is just a haze.  Now that she doesn't cook, I am so grateful that 10 years ago I stood beside her in the kitchen and watched her make one of my family's beloved dishes.  To this day, mention of it makes my husband and my father's eyes light up.  

"Genovese" is what she always called it, though, there's no basil to be found.  This one is authentic from her childhood and is absolutely perfect for a cold Fall or Winter night.  This pasta sauce is "peasant style" which is the polite way to say it uses very inexpensive ingredients.  From humble beginnings come memorable cuisine.  It also happens to be super simple and one you should put on your must-try list.  

Pasta Genovese

2 lbs. of onions sliced thinly into strips

1 and 1/2 lbs. boneless chuck steak (cut the meat into 4 large cubes and remove visible fat)
1 lb. hot linguini cooked in salted water
Parmigiano Reggiano to taste

Cover bottom of a dutch oven or thick pot with olive oil

Warm the oil, season meat with salt and pepper, then brown the meat on medium high

Cook for 5 minutes then add the onions.

Add 1 cup of beef broth and bring to a boil,

Turn down heat to a simmer and cook, covered for 2+ hours, until meat is easily falling apart into sauce.

Season with salt and pepper to taste.

Serve over hot linguini with lots of freshly grated Parmigiano Reggiano.

I hope you enjoy a small part of the legacy that is my sweet little Grandma.

Maximizing the Value of the Chase Sapphire Preferred and Chase Freedom Credit Cards

Key Link: Sign up for the Chase Freedom for a 20K bonus (regularly 10K) for a limited time

I've had the Chase Freedom credit card for many years but it wasn't until just recently that I explored (and figured out) how to maximize its value. In its simplest use, the card offers 5% cash back on quarterly rotating categories and 1% on everything else with no annual fee.

That in itself makes it a good card to keep forever since the average age of your credit card accounts and the age of your oldest account has a meaningful impact on your credit score.

See also: 10 Reasons the Chase Sapphire Preferred is the Best Travel Credit Card

But there are two key concepts you need to understand in order to take the value of this card to the next level:

Trick 1: Pair it with an annual fee based Chase Ultimate Rewards card to enable quick conversion of points earned on the Chase Freedom into more-valuable-than-cash airline and hotel points

For many years I'd convert the points earned on my Chase Freedom into cashback. Cash is king right? Not necessarily. If you also have a fee based Chase card like the Sapphire Preferred or the Ink (business) cards you can combine the points earned on the Freedom with the points associated with your fee based card to transfer them to airline/hotel travel partners with favorable award availability and redemption levels like United and Hyatt. It pains me when I look back at my lowly past redemptions.

This makes Ultimate Rewards worth more than a penny if you like to travel and can redeem them effectively. For example, if you transfer 60,000 Ultimate Rewards points to United for a roundtrip ticket to Europe that would normally cost $1,600 that's a redemption worth $0.026 per point. This is much more valuable than redeeming for cashback. And the values get even more attractive when redeeming for premium cabin flights - especially internationally.

That's why I get excited about 5x Ultimate Rewards points (as opposed to 5% cashback). It's almost like 10+% back if you can redeem them effectively.

Trick 2: Maximize the 5x Categories by Category/Time Shifting and Manufacturing Spend

With the Chase Freedom, each quarter you can earn 5x (capped at $1,500 in spending) in rotating categories. That's 30k points per year for just $6k spent annually. Here are the categories for 2013:

A normal person would look at these and think "Hmm - I spend quite a bit on gas and restaurants. I should be able to get some nice 5x rewards." But in order to maximize these categories there are a few simple tricks you can leverage.

First, consider drugstores. Have you seen the massive gift card racks they have at drugstores like CVS? You can buy merchant gift cards for retailers like Amazon, gas stations, retailers and more. This is called category shifting. You spend money at drugstores (on gift cards) for 5x back and you spend the gift cards elsewhere.

Time shifting is when you buy these gift cards for future use. You want to maximize the $1,500 for the quarter but you're not going to immediately use the gift cards. So for example you buy retailer gift cards at a gas station when that's the bonus category -or- gas gift cards at Lowe's when that's the category and use them over the next couple months.

I'm personally not a fan of time shifting because I don't like to prepay for stuff. I prefer to "manufacture" spend. For example, at CVS they sell Visa gift cards and various "reload" cards that, for about a ~1% fee can generate bonused spend then be quickly liquidated. Since you're getting 5x (actually 10+% thanks to Trick #1) you can easily stomach a 1% fee. You then take these near-cash equivalents and liquidate them using various techniques. Loading Vanilla Reloads to Bluebird then paying bills (even your mortgage) or the credit card bill itself is the simplest and longest running scheme around. It sounds crazy at first but if you're interested it's not that difficult at all.

Sign-up Considerations

First, know your credit score and what goes into it. Read Does Churning Credit Cards Damage Your Credit Score for more info. If your credit score is south of 720 I'd work on improving your score up before playing any games with credit card sign ups.

Then, there are different things to consider depending on your credit history and the current cards you carry. If you've applied for a credit card within the past 90 days, especially another Chase card, I'd wait until 90+ days have passed before signing up for another.

If you already have a lot (as in, like, more than 6) Chase credit cards, especially if you've signed up for them within the last year, you might want to hold off on signing up for more. Chase allows users to have an indeterminate number of their cards but at some point you start to hit a wall with them. You can usually swap out a card you're not using when you apply and sometimes it requires a call to their reconsideration line if your application goes pending or is denied.

But you need to be choosy when picking your Chase cards because they have a ton of great ones and you only have so many "slots" with any one bank. I think the Chase Freedom is worthy of a slot though because:

1. It has no annual fee (so you can keep it forever and use it to build up your credit score)
2. It earns valuable and flexible Ultimate Rewards points (when paired with a fee based Chase card)

Sign-up Strategies

Again, everyone's situation is different. But here's what I'd do in terms of signing up for the Chase Freedom and Chase Sapphire Preferred with some family and friends in mind at various stages in life. Remember - you've got to have a fee based card to unlock the potential of the Chase Freedom card.

Young Single

I'd go for the Chase Freedom first to start building your credit history. Since it has no annual fee you can keep it forever and banks like to see that you've had one or two long standing credit cards in your portfolio.

Once you start accruing some points and are within striking distance (40k) of a desirable redemption sign up for the Chase Sapphire Preferred. Within the first year of having the Sapphire Preferred (before the annual fee hits) transfer the ponits to United, Hyatt, or other travel partner.

Single with Established Credit

Tough call here. There are so many great cards out there and if you're running enough natural spending through your credit cards (due to reimbursed business expenses and "other stuff") you can probably justify the annual fee of the Sapphire Preferred ($95). I'd go for the Sapphire Preferred first and supplement with the Freedom down the line when you have a better feel for how valuable Ultimate Rewards can be.

Married

This is really the sweet spot of the Chase Ultimate Rewards scheme. You can transfer points to your spouse without a fee so you only need to have one fee based Chase card per family. That means you can each have a Chase Freedom which effectively gives you $3,000 per quarter you can earn 5x with plus you can each have a Sapphire Preferred (one of which you'd likely cancel the first year after receiving the signup bonus).

On top of this, you can add each other as authorized users (if desired) to one another's cards. Typically, I find that one of the two partners in a marriage are interested in points and miles. The other just goes along and is willing to tolerate it. For situations like this, add the point junkie as an authorized user of the cards with bonused spend categories that have a quarterly cap so they can do the hard work for both spouses.

Caution: Adding a person as an authorized user of a card will make the balance and usage of that card appear on their credit score. So only do this in cases where it's worth it. For me, it's worth it if 1) The card gives you points for adding an authorized user (the Chase United card gives 5k) or 2) The card continually needs to be accessed to rack up points and miles in bonused categories.

Advanced Maneuvers

Do you have a small business? Even a fledgling one? Have you ever thought of starting a fledgling one? The Chase Ink business cards that carry an annual fee also earn Ultimate Rewards, come with a lucrative 50k point sign up bonus and earn 5x at office supply stores and telecom services. The 5x at office supply stores presents a perpetual category shifting opportunity. These cards pair brilliantly with the Freedom and Sapphire Preferred, but to minimize fees you only need to carry one fee based Chase card per family any time you want to transfer to airline/hotel partners.

You could sign up for the Chase Sapphire Preferred and then the Chase Freedom and earn a signup for both. Then, I've heard you can "downgrade" the Sapphire Preferred to a fee-free Sapphire variant of the card OR a second Freedom card and have both a Freedom MasterCard and a Visa. This could effectively give you even more ceiling with which to earn 5x in rotating categories and would be worth pursuing so long as you have one fee based card you can use (either your spouse's or an Ink business card). I haven't tried this maneuver yet so I can't comment on how it's working recently.

If you sign up for the card through the link below I'll get 5,000 points for referring you and you'll get 10,000 points. I wish I could tell you that you could sign up yourself then refer friends or your spouse to get additional miles. But the current Chase Refer a Friend promotion is only available to existing cardholders as of the date the promotion started. Hopefully they'll run this same promotion down the road and you too can earn referral bonuses. But if you had a Sapphire Preferred -or- a Freedom before this offer started running you can refer your spouse or your other friends and family. To see if you're eligible to refer go here and enter your name/zip/last 4 digits on your card.

Conclusion

The Chase Freedom card is a terrific card to get if you like to travel and don't mind interacting with your cards enough to maximize its value. By pairing it with a fee based Chase card like the Sapphire Preferred you can maximize the value of the points earned with the no fee Chase Freedom card.

Key Link: Sign up for the Chase Freedom for a 20K bonus (regularly 10K) for a limited time

Feel free to drop me an email if you have questions.

10 Reasons the Chase Sapphire Preferred is the Best Travel Credit Card

Key Link: Get 50,000 Ultimate Rewards points after spending $4,000 in 3 months on the Chase Sapphire Preferred card

I've spent a lot of time researching and refining my strategy related to credit card signup bonuses this year. I've shifted away from a mostly cashback approach in favor of travel rewards after realizing I was leaving a lot of money on the table. I took the time to research how credit cards affect my credit score and learned that signing up for new cards can actually help my credit score in the long run.

I saw that I was able to refinance our mortgage without incident even though I'd recently signed up for a bunch of new credit cards. After racking up a bunch of points and miles in my first round of card applications I realized it was important to build a foundation in points programs that have flexible redemption options because you never know how your travel interests might change in the future and it's good to keep your options open.

See also: Maximizing the Value of the Chase Sapphire Preferred and Chase Freedom Credit Cards

When I talk to friends and family about this interest I get mixed responses. Some people just don't want to bother with it. They've had bad experiences trying to redeem miles for free flights when they want to travel or they're just not interested in interacting with their finances in this way. Others really are interested and quickly catch the bug and are just a few steps behind me exploring this space. And finally there's the rest of you who are interested in "getting 80% of the benefit for 20% of the effort". They want the condensed summary: Just tell me what one thing I should do right now.

For this group, I think a "once a year" churn strategy is in order. Each year sign up for one or more new cards and then re-visit whether the card is working well for them when the annual fee comes due.

And if you're going to sign up for one card this year I think the best card to get is the Chase Sapphire Preferred. The card comes with a 40,000 "point" signup bonus after spending $3,000 in the first 3 months. The best way to use those points is to transfer them 1:1 to airlines like United, Southwest, or British Airways. Or to hotel partners like Hyatt and Marriott. Or even Amtrak. So rather than locking yourself into one airline or hotel partner you have access to many.

And if you can't find reward availability on the dates you want to travel you can redeem them for travel on any airline at a 20% discount. Or you can just cash out at a penny a point. It's really the best of all worlds.

Here's 10 reasons why I think the Chase Sapphire Preferred is the best travel credit card...

1. Flexibility

You never know what life is going to throw at you. You may be living in one city where there's a dominant air carrier then unexpectedly move to another part of the country. You might have a new baby in the family and want to take it easy on the travel for a while. That's why I like this card - you can find a reward option that suits your needs. The best way to use the points is towards international airfare. But even if you can't use the points for that you're still getting good value out of them.

2. Transfer Partners

Their list of transfer partners isn't the longest, but they've established relationships with key partners: United, Southwest, and Hyatt. They're each great partners because they have some of the best award availability in terms of being able to redeem award travel at "saver" levels with reasonable advanced notice. For the most part, their partners haven't devalued their award redemption schedules. And their partners are well diversified for international and domestic travel.

3. Sign-up Bonus

Ultimate Rewards are worth a penny a point towards cash back. They're worth more if you transfer them effectively to travel partners. If you book a flight from the US to Europe on United worth $1,500 for 70,000 that's 2.5 cents per point which would make the sign-up worth $1,000. The key here, on top of the generous sign-up bonus, is flexibility.

4. Bonused Spend Categories

The card earns 2x at restaurants and on the broad "travel" category. 2x at restaurants is really nice in itself plus airfare, hotels, taxis, parking and more are included in the travel category so this is much nicer than just "airfare" (like the AmEx Preferred Rewards Gold car) or "hotels" (like the Chase Ink business cards).

5. Access to the Ultimate Rewards Shopping Portal

Certain Chase cards are included in the Ultimate Rewards shopping portal where you can earn extra points on top of the regular points you'd otherwise earn on the card for initiating online shopping transactions through the Ultimate Rewards portal. Check http://cashbackholic.com and http://evreward to make sure you're maximizing your value when shopping online.

6. No Foreign Transaction Fees

When using your credit card outside the US some cards have foreign transaction fees and others do not. This card does not. That's a good thing.

7. Turbo Charge your Chase Freedom Ultimate Rewards Points

If you happen to already hold a Chase Freedom card, the Chase Sapphire Preferred makes an excellent partner. Whereas with the Chase Freedom card you can only redeem your points for gift cards and cashback, once you have a Chase Sapphire Preferred card you can redeem all of your Ultimate Rewards at maximum efficiency. Specifically you can transfer the points earned on the lucrative rotating 5x Freedom categories towards airline/hotel transfers.

8. 3x at Restaurants on the First Friday of Each Month

This is a recent addition but a tasty one. On the first Friday of each month you'll earn 3x points (instead of the usual 2x points) at restaurants. This is a great reason to enjoy a special dinner out once a month. You can earn this more than once each first Friday - breakfast, lunch, dinner and even gift card purchases at restaurants can qualfify!

9. Heavy Duty Metal Card

This is totally subjective but everyone who receives this card notices - it's really substantial. All things equal I'll take it as a card benefit. When/if you cancel they send you a postage-paid return envelope to safely dispose of the card because it cannot be shredded. It's kind of like a really heavy bottle of wine - it doesn't guarantee a superior product but it does suggest that the producer wants to denote quality.

10. Provides Multiple Ways to Rack Up United and Southwest Miles and Points

One of the best things about Chase's tie-ups with United and Southwest (they issue their cards exclusively) is that points earned through the Sapphire Preferred card can be stacked with points earned through the United and Southwest cards. So if you want to fly a family for free you can sign up for both the Chase Sapphire Preferred and the United/Southwest cards. This isn't possible with programs like JetBlue and Virgin America where it's hard to earn miles through credit card sign-ups beyond their own card.

Conclusion and Recommendations

So there you have it - 10 reasons why I think this is the best travel rewards credit card to get.

The $95 annual fee is waived the first year. After the year is up see whether the card benefits outweigh the annual fee. I think they do - but be sure to call and ask for a retention bonus after about 11 months. If you don't like the card benefits you can downgrade to a no annual fee version of the card and the 40,000 Ultimate Rewards points - and all the bonused spend you've racked up - will be yours to keep.

Key Link: Get 50,000 Ultimate Rewards points after spending $4,000 in 3 months on the Chase Sapphire Preferred card

Questions or comments? Let me know by dropping me an email or pinging me on Twitter: @RobertDwyer

Further Reading: Maximizing the Value of the Chase Sapphire Preferred and Chase Freedom Credit Cards