How to get 7.04 points per dollar buying fireworks on July 4th (7/04).
Happy Fourth of July! Today’s post is a silly challenge: how to buy fireworks on July 4th (7/04) and earn 7.04 points per dollar. This is similar to the Pi day challenge I did in March (see “Pie at 3.14X for Pi day 3/14”), but with an added twist: today we want to use a Chase Freedom card to make the purchase.
On Pi day, I took advantage of the Sapphire Preferred card’s 7% annual dividend to come up with a way to buy a Pie kit for 3.14X. With the Freedom card, things are a bit more complicated because the Freedom’s reward structure is more complicated….
The Freedom card has two great benefits that I’ll take advantage of here (besides its name). The first is that the card offers rotating 5X categories each quarter. This quarter the categories are restaurants and gas stations. Most gas stations carry firecrackers and the like, so we’ll buy our fireworks there. The second benefit the card offers is dependent upon having a Chase checking account. Once you have both the Freedom card and a checking account, you qualify for the Chase Exclusives program. With Chase Exclusives, your base rate increases from 1 to 1.1 points per dollar AND you get a fixed 10 points per transaction. Within a 5X bonus category you would earn 5.1 points per dollar plus 10 points.
Algebra
I had to send my brain back to 8th grade algebra to figure this one out:
Given, F = price of fireworks (after tax), our goal is to earn 7.04 points per dollar. In other words, we want to earn 7.04 x F points. Our formula then is:
7.04 x F = F x 5.1 + 10, therefore:
7.04 x F – F x 5.1 = 10, therefore:
1.94 x F = 10, therefore:
F = 5.154639
In other words, if we spend $5.154639 to buy fireworks at a gas station, we would earn 7.04 points per dollar. Unfortunately, most gas stations do not take denominations smaller than a penny, so we need to round down the amount. When we round down to a payment of $5.15, we see that we earn 36.265 points. Unfortunately, Chase is likely to round this down to 36 points which completely messes up the math. After playing with some amounts and accounting for rounding, I found that a payment of $5.11 results in 36 points which comes to 7.045 points per dollar. Sure, technically this is closer to 7.05X, but I’ll take it.
Buy fireworks for 7.04X
So, there you go. Simply get a Freedom card and a Chase checking account and register for this quarter’s 5X bonus categories. Then, go to a gas station that sells fireworks and find some in which the after tax price will come to $5.11. Easy as pie!
A word to my son
See! I told you that algebra comes in handy in the real world! And to think that you doubted me…
| Chase's 5/24 Rule: With most Chase credit cards, Chase will not approve your application if you have opened 5 or more cards with any bank in the past 24 months. To determine your 5/24 status, see: 3 Easy Ways to Count Your 5/24 Status. The easiest option is to track all of your cards for free with Travel Freely. |
| Chase 5/24 semantics ("Subject to" vs. "Count towards"): Most Chase cards are subject to the 5/24 rule. That means the rule is enforced in making approval decisions. In other words, you probably won't get approved if your credit report shows that you opened 5 or more cards in the past 24 months. Meanwhile, most business cards (such as those from Chase, Amex, Barclaycard, BOA, Citi, US Bank, and Wells Fargo) are not reported on your personal credit report. These cards do not count towards 5/24. Example: Chase Ink Business Preferred is subject to 5/24, so you likely won't get approved if over 5/24. If you do get approved, it won't count towards 5/24 since it won't appear as an account on your credit report. |
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| Applying for Business Credit Cards Yes, you have a business: In order to sign up for a business credit card, you must have a business. That said, it's common for people to have businesses without realizing it. If you sell items at a yard sale, or on eBay, for example, then you have a business. Similar examples include: consulting, writing (e.g. blog authorship, planning your first novel, etc.), handyman services, owning rental property, renting on airbnb, driving for Uber or Lyft, etc. In any of these cases, your business is considered a Sole Proprietorship unless you form a corporation of some sort. When you apply for a business credit card as a sole proprietor, you can use your own name as your business name, use your own address and phone as the business' address and phone, and your social security number as the business' Tax ID / EIN. Alternatively, you can get a proper Tax ID / EIN from the IRS for free, in about a minute, through this website. Is it OK to use business cards for personal expenses? Anecdotally, almost everyone I know uses business cards for personal expenses. That said, the terms in most business card applications state that you should use the card only for business use. Also, some consumer credit card protections do not apply to business cards. My advice: don't use the card for personal expenses if you're not comfortable doing so. |
| Manufacturing Spend Caution: Many, many things can go wrong when manufacturing spend. If you suddenly increase credit card spend, your accounts may get shut down. If you cycle your balance often (e.g. spend to your limit, pay the bill, repeat) within a billing cycle, your accounts may get shut down. If you repeatedly pay your credit card bill from an anonymous bill payment source, your accounts may get shut down. If you buy lots of gift cards you may lose money due to gift card fraud, theft, loss, or simply mishandling those gift cards (e.g. maybe you thought you already used a gift card and tossed it into your “used” bin). If you rely on only one method to liquidate gift cards, you may be stuck unable to pay your credit card bill when that method gets shut down. In other words, don’t try this at home unless you know what you’re doing, and you understand and accept the risks.. |
| Chase Ultimate Rewards points are super valuable and super flexible. At the most basic level, points can be redeemed for cash or merchandise, but you'll only get one cent per point value that way. A better option is to use points for travel. When points are used to book travel through the Ultimate Rewards portal, points are worth 1.25 cents each with premium cards (Sapphire Preferred or Ink Business Preferred, for example) or 1.5 cents each with the ultra-premium Sapphire Reserve card. Another great option is to transfer points from a premium or ultra-premium card to an airline or hotel program when high value awards are available (see this post for details). If your points are tied to a no-fee "cash back" Ultimate Rewards card, then first move those points to a premium or ultra-premium card before redeeming them in order to get better value. |
| Amex Membership Rewards points can be incredibly valuable if you know how to use them. In general, if you use Membership Rewards points to pay for merchandise or travel, you won't get good value from your points. One exception is with the Business Platinum card where you'll get a 35% point rebate when using points to book certain flights. This gives you approximately 1.5 cents per point value, which is pretty good. Another exception is with the Business Gold Card where you'll get a 25% point rebate when using points to book certain flights. This gives you approximately 1.33 cents per point value. If you don't have either card, then your best bet is to transfer points to airline miles in order to book high value awards. More details can be found here: Amex Membership Rewards Complete Guide. |
| Marriott points can be redeemed for free night awards, travel packages, airline miles, or experiences. 5th Night Free Awards: When redeeming points for free nights, the 5th night within a single reservation is free. Airline miles: Points can be converted to airline miles at a rate of 3 points to 1 mile. With many programs, a bonus is added on when you transfer 60,000 points at a time, such that 60,000 points transfers to 25,000 miles. Also, you'll get a 10% bonus when transferring points to United Airlines. Everything you need to know about Marriott's rewards program, Bonvoy, can be found here: Marriott Bonvoy Complete Guide |
| Editor’s Note: This guest post was written by the same guy who showed you how to fly round trip to Africa (DC to Senegal) for 50,000 points, how to book business class to Europe for 80,000 miles roundtrip, and more. You can find John’s website and award booking service here: theflyingmustache.com/awardbooking. -Greg The Frequent Miler |
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In order to meet minimum spend requirements, people often look for options to increase spend in ways that result in getting their money back. These techniques are referred to as "manufacturing spend". American Express has terms in their welcome offers that exclude some manufactured spend techniques from counting towards the minimum spend requirements for the welcome bonus offer. For example, most new cardmember bonuses have terms like this:
Eligible purchases to meet the Threshold Amount do NOT include fees or interest charges, purchases of travelers checks, purchases or reloading of prepaid cards, purchases of gift cards, person-to-person payments, or purchases of other cash equivalents.That said, many techniques for meeting minimum spend are perfectly fine. Here are some techniques that are safe for meeting Amex minimum spend requirements (click each link for more information): |
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| We have added this to our running list of Black Friday deals, which will be constantly updated through Cyber Monday with a mix of gift card deals, merchandise deals, and travel deals. Check back often. |
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Beautiful! Nice to see real world applications! Now, if only the high school textbooks would follow your example: “If Johnny had to get 7.04 poitns per dollar spent, how many firecrackers could he buy, and how many fingers would he have left over?” 🙂 Funny!
Nice post with the nice complexity we love from FM
“A word to my son
See! I told you that algebra comes in handy in the real world! And to think that you doubted me…”
This post has nothing to do with real world 🙂
You’re too funny. Thanks for the entertaining post. Happy 4th to you and yours!