Understanding the 7% annual points dividend for the Chase Sapphire Preferred card

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UPDATE: The 7% annual points dividend is no longer a feature of the Sapphire Preferred Card, see current offer for full terms.

I’ve written a lot lately about Chase Sapphire Preferred® Card, which I consider to be the best all around credit card nowadays thanks to the double points on dining and travel, no foreign transaction fees, valuable transfer partners (Continental, United, Hyatt, etc.), reasonable annual fee, access to the Ultimate Rewards shopping mall, and last but not least, the 7% annual points dividend.

I’ve gotten a couple of emails lately asking for more details on the 7% annual points dividend, so I figured I’d make a quick post explaining what exactly the benefit entails.

The benefit is described as follows:

Receive a 7% annual points dividend on all new points earned — even on points already redeemed

And the fine print reads as follows:

You will receive a yearly bonus of 7% of all points you earned in the previous Year. (“Year” means, for your first year as a cardmember, the period beginning with your enrollment date through your December statement date of that same year. For each year thereafter, “Year” means the twelve month period beginning the day after your December statement date through your December statement date of the next year). Your bonus will appear on your January or February billing statement.

So basically at the beginning of the year you earn a bonus of 7% of all the points earned the previous year. The current sign-up bonus is40,000 Ultimate Rewards points after spending $3,000 within three months, plus an additional 5,000 points when you add an authorized user and they make their first purchase within three months, so since the 7% annual points dividend applies to that too, you’re really earning a sign-up bonus of 51,000+ points, depending on which categories you’re spending money in.

Furthermore, the verbiage suggests that this applies to all points earned, so that should include points earned through the Ultimate Rewards shopping mall.

As I blogged about a couple of days ago the Ultimate Rewards shopping mall rocks not only because they have some massive bonuses for everyday shopping, but also because points typically post within a week, compared to 6-8 weeks with most other programs.

So for example on Friday Best Buy is offering 10 bonus points per dollar spent. That’s in addition to the one point per dollar spent you earn on your Chase Sapphire Preferred card, for a total of 11 points per dollar spent. Then at the end of the year you earn a 7% points dividend on that, for a grand total of ~12 points per dollar spent. For a retailer like Apple or Best Buy, that’s an amazing value. You usually only see those kinds of bonuses for flower shops or Tijuana botox clinics.

When I initially signed up for the card it was because of the great sign-up bonus. Then I realized just how great the card was for everyday spent, especially after Continental terminated their relationship with American Express Membership Rewards. But now as I’m moving and trying to furnish my new apartment, I’m quickly realizing that the Ultimate Rewards shopping mall can be even more useful than either of the other two benefits.

Lastly, keep in mind that it’s not too late to still earn the 7% points dividend for this year. If you were to sign up for the card now and complete the $3,000 in spending over the next month, you could still earn the 7% points dividend in a couple of months, getting you the 3,500+ bonus points in a couple of months instead of in over a year.

Link: Chase Sapphire Preferred® Card Application

Editorial Note: Neither this post, nor the comments, are provided by the Issuing bank, or any other advertiser. The comments below have not been reviewed, approved or otherwise endorsed by any advertiser, and it is not the bank or advertiser's responsibility to ensure posts and/or questions are answered.

Comments

  1. bmvaughn says

    I didn’t think a 7% dividend warranted an extra post to explain, what’s not to understand?

    So was this just a plug to get more referral bonuses? :)

  2. lucky says

    @ LIH Prem — Yes, that’s what I value them at. In particular, that’s what I value Continental miles at right now, and this is in my opinion the best way to get them.

    @ bmvaughn — I got questions about a) whether the bonus only applies to points earned from spending on the card or also the sign-up bonus and Ultimate Rewards mall and b) when the points posted/what schedule they were posted based on.

  3. ashley says

    A little repetition and explanation along with suggested uses of the cards is always valuable. There is so much information out there and we have so many cards,its good to be reminded how to maximize the use of the cards. Keep up the excellent work Ben and write all you want. I am a voracious reader.

  4. jerry says

    Do you think the $95 for additional years is worth it? Will I lose my points when I cancell the card? What would be the best time of year to get the card and be able to get the 7% and use the points before cancelling?

  5. lucky says

    @ ashley — Thanks!

    @ jerry — I think the $95 annual fee is very reasonable given the benefits. Compare it to the Premier Rewards Gold card (the only comparable cards in terms of benefits), which has a $175 annual fee.

    You would need to transfer your points before you cancel the card, though there are lots of great programs to transfer to.

    Well the annual points dividend posts in January/February and is based on an annual cycle, so based on that you’re probably best off signing up in January/February so the bonus points still post. That being said, if you don’t plan on putting a lot of spend on the card this would be a good time, since you could get the 7% bonus to post in a couple of months based on the sign-up bonus. Then you would have the full year to use all of the points too.

  6. AdamH says

    I didn’t realize it was a calendar year thing. I thought it was based on when you signed up for the card as a way to keep you around to pay the annual fee. I predict things are going to get interesting when the fee comes due. Seems like most similar cards have some sort of annual companion pass/free night now a days to make the fee a wash if you will.

  7. Paul says

    Lucky- I’d be curious regarding your thoughts on this card verses a cash back card. I put most of my travel on the Sapphire card due to the bonus points, but my everyday spend goes on my cash back card (lets say 1% back). On one hand the cash back posts every months and I can withdrawl it at any time….and its cash! I do like the fact I can cash in my UR points for travel and hopefully save on the cost of a ticket (and gain qualifying miles), but I do very little personal flights (verses business that have to be booked through work) that are not mileage runs. Do you value the cash back or points higher?

  8. lucky says

    @ AdamH — Yep, it’s a worthwhile distinction, and I find it interesting that they do it that way, since you’d think they’d want to offer it right around renewal time so people are encouraged to keep the card. That being said, the card’s most direct competition, the AmEx Premier Rewards Gold card, also bases their annual 15,000 bonus points with $30,000 spend on a calendar year as opposed to membership year.

  9. lucky says

    @ Paul — There’s no doubt in my mind that in many cases cash back cards are the way to go… but only if it’s 2%+ plus cash back, in my opinion.

    I legitimately value Ultimate Rewards points at two cents each, and I think it’s a very fairy valuation. For example, Continental requires 120,000 miles for a business class ticket to Asia through Europe with a stopover. If you instead earned cashback, you’d be earning $1,200. So while you may not value Continental miles at two cents each, I suspect you do value them at more than a cent each, no?

  10. Laura says

    When I activated my Chase preferred card earlier this month, I specifically asked the CSR about the 7% bonus points and if it applied to the bonus points as well as the earned points. She said it only applies to the earned points. I hope she is wrong and you are right.

  11. says

    If there wasn’t really anything at Best Buy that you wanted would you just get gift cards? Random tech and sell it on ebay? What do you do when there is a great offer but only sort of need something that the store sells?

  12. Carl says

    The Freedom Card is a great companion card with their 10/10 program for those with a Chase Checking account. I use it for my small dollar purchases.

  13. lucky says

    @ Kate — While it varies by retailer, Best Buy prohibits gift cards from earning Ultimate Rewards points.

    At times it can make sense to buy stuff and then resell it just for the miles. For example, Sears was offering ten points per dollar on gift cards, and then another ten points per dollar when you redeemed the gift card, for a total of about 20 points per dollar (by my valuation a 40% return).

    In this case I guess it makes sense to buy something if you think you can resell it for only a small loss. The 12 Ultimate Rewards points earned per dollar through Best Buy are worth two cents each to me, so if I could make substantially less than a 24% loss, I’d go for it.

  14. Rebecca says

    Hi Lucky,
    I’ve had the card since August and love it (almost as much as Iove your blog!) Question: on 11/14 I purchased a ticket on Air France through the mall and used my card. The $730 ticket price shows up on my statement and in my rewards activity but I only received 730 points. What’s to be gained from booking travel through the mall if there are no extra bonus points to be had? I know I’ll get the double travel points when my statement closes but I thought there would be more rewards in booking through UR mall. Thoughts for this newbie? Thanks.

    Transaction Date Posted Date Type Description Transaction Amount Qualifying Amount Rewards
    11/14/2011 11/15/2011 Online Booking Ultimate Rewards Travel Bonus $730.20 $730.20 730 Points

  15. lucky says

    @ Rebecca — Thanks for the kind words! Something’s not right there. You should have earned double points since it was travel spend, and an additional 730 points since you booked it through the Ultimate Rewards mall. I suggest calling their customer service line and following up on that. Good luck!

  16. Rebecca says

    Thanks Lucky. I just got off the phone with them and basically what the rep told me was the 730 points showing in my mall activity are the 3rd set of bonus points. The other 2 sets (1 pt per $ and 1 pt for travel spend) will show up at the statement closing. So there’s the bonus! Triple points for booking through the mall on travel! 2,190 points! I guess the points don’t technically post within a week, as you mention above, but definitely do within a month depending on your closing statement date. Can’t wait for the Best Buy 10 pts per $ on Friday!

  17. tp says

    Ever since I got the Continental Mastercard in May, I pretty much stopped using my Freedom Card. But after I received my Chase Sapphire Preferred, I’ve actually been pulling out my Freedom card quite a bit based on this quarter’s 5% bonus categories (Dining, Charity, and Department Stores). This works even better with restaurants that are in MileagePlus Dining. Since I reached VIP status earlier this year, I would be effectively earning at least 10 miles/points per dollar spent: 5 miles from the Dining Program directly to my MP Account, 5 UR (Freedom) points per dollar, plus the bonuses for having a Chase checking account of 10 UR points per transaction and 10% bonus on the base 1% cashback. From my understanding, I can transfer my Freedom UR points to my Sapphire UR account.

  18. lucky says

    @ Rebecca — Happy to hear!

    @ Mike — I’m staying in Tampa, just moving around a bit and getting a “formal” home office.

  19. Dan says

    Coins et al,

    Thanks for the analysis. What makes this interesting is the constant repetition on this and other blogs. A friend of mine said (and this is true), that you have to hear/read something 3x’s before you understand it. The constant repetition about the 7% is getting through to me (and others). The one thing I picked up this go round… the 7% will be awarded on my year end business… not the anniversary date of the card.

    Thank you.

  20. allison says

    I admit, I got the Chase Sapphire card for the points, but one really valuable feature that I haven’t seen on a card (and was able to take advantage of) is the purchase protection up to $300 per item. If you are not completely satisfied with a purchase and it can’t be returned to the retailer for whatever reason, they will reimburse you.

    I was able to use this on a dive computer I bought. We simply really didn’t like the functionality of it and because we had used it (how else would you be able to tell if you liked a dive computer?) the retailer wouldn’t accept it as a return. We were able to get almost the total we paid for it (it was a little over $300). This benefit does not seem to bubble to the top when talking about this card.

  21. Jay says

    I am looking into getting the Chase sapphire for the bonus points and the ultimate rewards shopping portal. Are you able to use other cards in the shopping portal? In example, non chase cards.

    Thanks!

  22. allison says

    @Stan Yes, we had to return the computer. I have never had an Amex because of the annual fee, but good to know.

  23. Lou says

    any thoughts on if i transfer points from my freedom to my sapphire preferred … will they get a bonus?

  24. lucky says

    @ Lou — Unfortunately I suspect they would not, given that they’re not really “earned” points. But you never know how they code this stuff, so it could very well happen that the bonus still posts on that amount.

  25. Shannon says

    I just received an e-mail from chase sapphire preferred.. They state that they are getting rid of the 7% annual earned dividend as well as earning double the points on travel and hotel come the end of 2015..

    What makes this card different then other cards out there after they get rid of these features? They are losing the value in the card do you not agree?

  26. lucky says

    @ Shannon — You still earn the standard double points on dining and travel. The only double points which are eliminated are for travel bookings made through the Ultimate Rewards Mall.

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