The credit card game changes the more you spend. If you spend $1,000 a month, your bonus options are different than someone spending a much larger amount.
Small business can often be placed in the latter category. With large, recurring spending happening every month, going after smaller credit card rewards may not be as beneficial as it seems.
It shocks me that the Chase United Club Card doesn’t get more press then. While the card doesn’t have a sign-up bonus offer in terms of miles – it does offer a $100 statement credit – the 1.5 miles per dollar spent is a significant competitive advantage. Here’s why.
Why The Card Is Underrated
The Club Card is underrated for three reasons: the aforementioned 1.5 miles, United Club membership and what I’ll call ancillary airline benefits. Lets dive in.
1.5 miles per dollar spent doesn’t sound as good as some other bonus categories. But unlike other bonus categories, the 1.5 miles on the Club Card is on every purchase with no limit. Think about that for a second – absolutely no cap on the miles you can earn and absolutely no work needs to be put in to categorize spend. We’ll revisit this in a moment.
United Club membership is another big benefit. While other rewards cards offer similar benefits, I am uncertain any lounge network matches United in terms of quality, quantity and accessibility. American Express offers their sleek Centurion Lounges, for example, but only have 12 locations worldwide. American Airlines also has fewer locations worldwide, usually at a lower quality. And Delta requires a same-day ticket on a Delta or partner flight, whereas United requires a same-day ticket on any airline.
Ancillary airline benefits are the third major benefit. Two free checked bags is very good, as is the no blackout dates on standard award tickets. But the biggest ancillary benefit is the waived fee on bookings made less than 21 days from departure. Nobody else offers a benefit like this, saving $75 every time you make a last-minute award booking.
Saving Money Without Spending
The two big elephants in the room are the $450 annual fee and lack of sign-on bonus. But both issues are put to bed depending on your flying and spending portfolio.
The $450 annual fee – partially offset by a $100 statement credit – is big, but depending on your flying preferences may be outweighed by the card benefits without spending a dime.
For example, if you frequently fly in economy and don’t have airline status then lounge access could be a huge value. Currently United Club memberships sell for $550, although your value is likely to be half that. The two free checked bags are valid for the primary cardholder and one companion, potentially $120 in value one way.
Again, this is more likely to save you a couple of bags at under $100 per year, but could be more. Finally, the waived last-minute fees are very real – anybody that books award tickets will do this once or twice a year at least, saving $75 each time.
What Constitutes Large Spending
The lack of sign-on bonus is probably the biggest question mark, especially with 75,000 miles being offered by the Citi AA Executive card. But consider the below scenarios with my hypothetical business owners, Frank and Alison.
Frank owns a small business and spends $15,000 a month on a variety of business expenses. The expenses don’t fall into a particular category – like travel or utilities – but instead are evenly distributed across a range of categories. Frank doesn’t have the time to manage multiple accounts and doesn’t want to hire someone to do so, instead opting for himself or his existing financial team to manage the card.
Spending $180,000 a year means Frank could opt to earn 255,000 American Airlines miles with the Citi AA Executive (75,000 bonus + 180,000 x 1 mile per dollar) at a cost of $450 in annual fee. Or, with the United Club card, Frank could earn 270,000 United miles (180,000 x 1.5 mile per dollar) at a cost of $350 in annual fee, less the statement credit. Frank would also receive a second checked bag for himself and United Club access with up to 2 guests, with otherwise similar benefits.
Alison, meanwhile, owns three restaurants and spends $100,000 a month on mainly restaurant and utility expenses. Alison wants to maximize every dollar she spends, so she looks into bonus categories on certain cards – like 2x on dining on the Chase Sapphire Preferred and 5x on utilities on the Chase Ink.
Let me pause here: a person should be very careful when looking into bonus categories. Often business expenses will strategically be excluded from the categories to keep a person from easily getting the bonus. In addition, there are almost always caps on bonus categories – for the above cards, the cap is $50,000 a year.
Alison gets a Chase Ink, Chase Sapphire Preferred and Citi AA Executive, spending only $450 in first year annual fees with an additional $180 on tap for the following years. With 250,000 bonus points in utilities ($50,000 x 5), 100,000 bonus points in restaurants ($50,000 x 2), 75,000 in sign-up miles (75,000 AA) and 1,200,000 points in regular spend ($50,000 per month), she would gain a total of 1,625,000 points and miles – quite the haul.
If she had gotten the United Club Card, however, she would have earned 1,800,000 miles ($100,000 per month x 1.5) that year. Additionally, she would have saved $100 in annual fees the first year and $180 each year thereafter. Then there would be the soft benefit of not adding that workload to an existing employee, or hiring someone else outright.
The above is meant as an all-to-basic outline of two large spenders. Realistically, a person could absolutely maximize every dollar he or she spends with bonus and sign-up categories. Small business owners could be applying for several credit cards a month, have a staff to manage them and still make the math work.
As always, it depends on your unique situation. But with as much press as the Chase Sapphire Preferred, Chase Ink and Citi Executive cards get, I hear surprisingly little from the most underrated large spending card of them all: the Chase United Club Card.