How You Can Afford More Vacations

Life feels more expensive than ever, especially considering the high inflation we’ve experienced in recent years. We feel the tug at our wallets at the gas pump, the grocery store, and during our holiday shopping. Keep reading, and you’ll see how to use financial judo to earn and afford more vacations based on your existing spending habits.

With the cost of living rising, you can take some of that pressure off of your budget by making intelligent use of your credit card points. Spending responsibly on credit cards and paying off the balance every month, essentially treating it like a debit card, can yield non-trivial benefits. On the other hand, debit card users may be leaving money on the table.

Since credit card rewards result from payment processing fees being shared with the cardholder, merchants often raise their prices to account for these fees charged by companies like Visa, American Express, and Mastercard. That means debit card users are paying more and getting no extra benefit, effectively subsidizing credit card users.

The point is, you don’t need to play the consumer game on hard mode.

Even so, not everyone is comfortable using credit cards or other debt instruments, and it’s essential to be honest with yourself about your knowledge, comfort, and ability to use credit cards responsibly. I wrote about that in my article covering credit scores.

That being said, let me tell you about an entry-level strategy and how you can afford more vacations without changing much about your spending or lifestyle.

The Chase Trifecta

As it sounds, the Chase Trifecta is a nickname for a strategy encompassing wide-ranging spending categories with three cards. These cards synergize and capture different areas of spending with various multipliers. This all works to develop a pretty robust strategy with only a few cards.

The 5/24 Rule

Chase is among the stricter credit card issuers. Specifically, they have a policy dubbed the 5/24 rule. Chase tends to deny credit card applications when the applicant has applied to five different credit cards within the last twenty-four months or two years. Other issuers may have similar policies, but Chase is notorious for being one of the strictest.

In practice, if you are planning a long-term credit card strategy, it makes sense to start with Chase. If you apply for the Chase cards first, you can avoid being flagged under the 5/24 rule and apply to other issuers once you have what you need from Chase. Either way, the cards that make up the Chase Trifecta are staples in my daily usage, and I highly recommend them for anyone serious about upgrading their credit card game.

The Key to Afford More Vacations

Another key to the Chase Trifecta being so effective is that you are earning Chase Ultimate Reward Points or URPs. URPs are some of the most flexible reward points in the entire ecosystem. They can be exchanged at one cent-per-point (CPP) for cash and even higher rates for certain offers like select Apple products. You may stretch their value further through the Chase travel portal and get up to 2.2 CPP by transferring these points to airline and hotel loyalty programs 1:1.

Which Cards are in the Chase Trifecta

Firstly, these cards come with the standard Chase multipliers, which are 3x points for restaurants, 3x points for travel and drug stores, and 5x points for spending in the Chase travel portal. From here, each card brings its unique benefits to the table:

Chase Freedom Ultimate:

With a 1.5% unlimited cashback multiplier, this serves as the “catch-all” card in the build. It offers a competitive multiplier for any spending that doesn’t otherwise fall into a bonus category, such as most online purchases. This will be your main workhorse card, and it comes with no annual fee and offers a 25,000 URP bonus after spending $500 in the first 3 months.

Chase Freedom Flex:

The sibling of the Freedom Ultimate, the Freedom Flex offers 5x bonus points in a category that rotates quarterly. These categories can be somewhat hit-or-miss, but they are often quite valuable and cover up to $1,500 of spend per quarter at the 5x multiplier.

Some excellent categories are when they include Apple Pay or PayPal. This unlocks a ton of spending to max out the juicy 5x bonus because it applies to anything I can do through digital wallets. This could be gas pumps, restaurants, and online purchases. I’ve noticed that when the 5x multiplier is a category that overlaps with the default multipliers, such as McDonald’s, I earn the 5x on top of the 3x I’d usually earn at restaurants for a total of 8x!

Other valuable categories are Walmart, groceries, Amazon, and more. Even with my niche spending habits, I can regularly hit decent spending on the rotating categories but leave the card unused every few quarters. Overall, the categories tend to be fresh and viable.

The Freedom Flex is a wildcard that can give a juicy multiplier if the categories align with your consumption needs. Making the best use of these categories may require shifting some spending around, for example, buying a bulk order from Walmart because the categories are about to rotate out. This also requires manually activating the bonus category every quarter and knowing what Chase offers. Fortunately, the Freedom Flex has no annual fee and provides a 20,000 URP bonus after spending $500 in 3 months.

Chase Sapphire (Preferred or Reserve):

This flagship credit card is the lynchpin of the Chase Trifecta. The Sapphire cards are a necessary piece of this strategy because they unlock the value of Chase Ultimate Reward points and come with other value-added benefits that you may find worthwhile.

Owning the Sapphire Preferred allows you to redeem your points for 125% of their value through the Chase travel portal, whereas the Reserve will enable you to multiply the value of your points used in this way by 150%! Owning one of these cards also allows you to combine all your URPs from all Chase cards to the Sapphire card and then trade them out to hotel and airline partners at a 1:1 ratio. This last step is how we supercharge the cents-per-point value.

Both Sapphire cards are premium Chase cards that come with an annual fee. Since you cannot own both simultaneously, the Sapphire variant you use is best determined by which one offers the most competitive introductory bonus and benefits. The balance seems to favor the Sapphire Preferred, the lighter of the two cards, at a $95 annual fee. In addition, the Sapphire Preferred offers an annual 10% bonus on your points earned for that year. For comparison, the Reserve currently boasts a $550 fee that cardholders look to offset with a $300 travel credit and other premium benefits.

Not only is the Sapphire Preferred arguably delivering more value for the cost at the moment, but it is also paying the same intro bonus of 60,000 URP after spending $4,000 in the first 3 months. These hefty intro bonuses, albeit with reasonably steep spending requirements, are arguably the juiciest part of the Sapphire offering. 60,000 is on the lower end of the spectrum. Sometimes, Chase will offer 80,000 and as high as 100,000 URPs as a sign-up bonus if you catch them at the right time.

That being said, you can only earn a sign-up bonus on any Sapphire card once every 4 years, so one might be better off starting the clock sooner than later to be eligible for their next generous sign-up bonus. Since no one can predict what Chase will do in this regard, your mileage may vary.

Hot-Girl Summer: A Case Study of a Free Vacation

I will illustrate a case study to show how someone might use the Chase Trifecta to earn a free luxury vacation. I intend to use Jessica as an example to show how easy it is to afford more vacations in your life!

Jessica, aged 27, is a young marketing professional. Since she sought a financial planner early in her career and is vigilant about her finances, she is doing a great job saving for retirement and keeping her spending down as her income increases. Though Jessica is careful not to overspend, social outings are essential for her, and she attends several gatherings with colleagues and friends every month. She also buys coffee from Starbucks a few times weekly because she finds the quality superior to what she makes at home.

One of Jessica’s goals within the next few years is to fund an all-expense paid resort trip to Jamaica. Even though she practices smart saving and spending strategies, she could use extra help to fund this trip responsibly. After speaking with her financial planner, Jessica realizes she can do this by incorporating intelligent credit card usage into her daily life since she only swipes her debit card.

Jessica currently has two starter credit cards she got several years ago: a branded card for a large retail store and the other is a basic card with no extra benefits. She doesn’t use either of these cards except for emergencies. Jessica realizes that the Chase Trifecta strategy meets her goals of being a relatively straightforward and lucrative multi-card strategy that covers her spending habits well.

The first card Jessica applies for is the Chase Sapphire Preferred. The Preferred has the most significant spending hurdle to achieve the generous intro bonus, so she must focus on this card for now. Jessica knows she has a big holiday shopping trip and uses that as an opportunity to put a dent in the $4,000 spending requirement. Her apartment also offers an online portal where she can pay with her card. She hits the 3-month spending target by putting one month of her rent on the card in addition to the other purchases. The payment processor charges a 3% fee for this, but it is worth meeting the spending requirement for 60,000 ultimate reward points.

Once Jessica meets the spending requirements for the Sapphire Preferred, she decides to apply for both the Freedom Ultimate and Freedom Flex simultaneously. Each boasts a $500 spending requirement over 3 months, much less than the $4,000 on the Sapphire. Jessica can quickly meet the more minor spending requirement for both cards in the same period. She receives another 25,000 and 20,000 from these two cards, respectively, and has a total balance of 105,000 URPs from the intro bonuses alone.

Here is an example of what Jessica’s other spending looks like during the first year of implementing this strategy:

As Jessica researches her flights, she finds the most cost-effective option with the least layover for this particular trip is to book through the Chase travel app and use her points at a 125% value, a benefit of the Sapphire Preferred. This cost 63,000 points for a round trip, which would have cost almost $800 if she had paid in cash.

She will arrive in Jamaica early Thursday afternoon and return home that Monday at 9:00 AM. This means she would spend 4 nights at the all-expense paid resort in Montego Bay. She chose this location for its lush landscape, beautiful views, and azure waters. She is especially looking forward to the tropical drinks, Jamaican food, and getting her tan on. She was finally ready to lock in her Hot-Girl Summer!

Jessica knows that World of Hyatt points tend to be the most generous, valued at upwards of 2.2 CPP. To this end, she decides to see how many Hyatt points the resort will cost her and transfer them from her URP balance accordingly. She can stay in a junior suite with a king bed for 30,000 Hyatt points per night, equal to 30,000 Chase URPs. She would pay $443/night for the same stay if she paid in cash, or $1,772 total. Once she double-checks her math and itinerary, she transfers 120,000 URPs to the Hyatt program to reserve her stay.

Jessica managed to book a 4-day all-expense paid getaway in Jamaica with a round-trip flight for 183,000 Chase Ultimate Reward points. If she decided to cash these points out, she would get $1,830 for them. If she made these travel arrangements in cash, she would have paid $2,572 for them. She is getting about 1.4 CPP on this trip, or a 40% boost compared to cashing out for 1 CPP.

When combining the boosted point value with the blended multiplier on her spending, Jessica effectively gets a 4.14% total return on her credit card spending. That’s a fantastic arbitrage for the relatively small effort involved and doesn’t include the value of the intro bonuses!

During this same time, Jessica incurred about $230 in fees when paying her rent on her credit card to meet the intro spending and the two instances of the $95 annual fee. She could easily use The Sapphire Preferred’s other bonuses and benefits, such as the $50 yearly hotel credit from her business travel, to offset and even overtake the annual fee. Even so, during this time, she unlocked $2,500 of value she would leave on the table with her debit card.

All this means is that with a bit of strategizing and not changing her lifestyle much at all, our protagonist was able to earn what is arguably a free trip in 2 years with a nice chunk of points left over. As you can see, she managed to afford more vacations than she was used to without sacrificing much at all!

Conclusion

The best part of this case study is that Jessica is not maximizing her spending rewards. A deeper analysis of her spending habits and a long-term credit card strategy using multiple issuers could boost her rewards, not including other stackable benefits like rebates. That is the beauty of the Chase Trifecta—it delivers a lot of value and is pretty comprehensive for the relative simplicity of the strategy.

We merely scratched the surface of credit card strategies in this article, so subscribe to my newsletter to hear about more lucrative strategies and builds as I publish them.

Also, if you got value from this article and want to apply for any of the credit cards listed, consider using my referral links to help me take more vacations! Using my link gives me a modest bonus in URPs at no cost when you get approved. Read the fine print and ensure these cards and strategies are in your best interest before applying.

Check out my comprehensive guide to credit as a primer to responsible credit card usage.

This is the referral link for the Chase Freedom Cards

This is the referral link for the Chase Sapphire Cards

As a Certified Financial Planner with experience in the banking industry, I help young professionals and business owners set up and execute customized credit card strategies to unlock as much value as possible. I offer advanced credit card consulting as a standalone service or a synergistic part of my holistic financial planning offering.

In practice, incorporating intelligent, disciplined credit card strategies means more vacations and extra cashback and promotes a focus on responsible spending. In particular financial situations, using credit cards well can materially increase one’s net worth and standard of living.

Schedule a 15-minute chat with me to see if customized credit card consulting or holistic financial planning is right for you and how you may afford more vacations!