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Reader Bundy asked the following question on the “Ask Lucky” page of the blog:
What is your take on keeping the Barclay Arrival Card & Chase Sapphire Preferred Card past the annual renewal date? I did my calculation and it seems hefty to recoup the annual fees.
I would consider these two cards to be the two travel “super cards,” if I could only choose two. They both have:
- Extremely flexible points currencies
- High return on everyday spend
- No foreign transaction fees
- Annual fees of under $100 (both waived the first year)
I should also note that I love the Starwood Preferred Guest® Credit Card from American Express and would put it in the same league as these two, though it does have foreign transaction fees.
Chase Sapphire Preferred® Card earning rates
With the Sapphire Preferred Card you earn:
- Double points on dining and travel
- Flexible points that can be transferred to some great partners, including Hyatt Gold Passport, Korean Air SkyPass, and United MileagePlus
Barclaycard Arrival Plus™ World Elite Mastercard® earning rates:
With the Barlcaycard Arrival Plus Card you earn:
- Two miles per dollar spent
- 10% refund of miles redeemed
- Each mile can be redeemed for one cent towards the cost of a travel purchase, which means you’re basically earning a 2.22% return on everyday spend
Comparing earnings rates between the two
The math on the Barclaycard is easy — you’re earning a return of 2.22% per dollar spent.
What about the Sapphire Preferred? I value Ultimate Rewards points at roughly 1.6 cents each, so you’re earning a return of ~1.6% on everyday, non-bonused spend.
But that doesn’t factor in the double points on dining and travel. Roughly half of my credit card spend falls in those two categories, though I realize everyone has different spending patterns. So for me, I’m earning an average return of 2.4%+ per dollar spent on the Sapphire Preferred. Of course that doesn’t represent the average consumer, and for others the math works out differently.
Say, on the other hand, a quarter of your spend fits in the dining and travel category. If that were the case, you’d be earning an average of ~1.25 Ultimate Rewards points per dollar spent, which I consider to be a return of ~2%
Chances are that regardless of which card you have, you’ll come out roughly even.
So can it make sense to pay the annual fee on both cards?
Both cards have no annual fee the first year, so they’re at least worth taking for a “test drive.” What about after the first year, though? The Sapphire Preferred has a $95 annual fee while the Arrival Plus has an $89 annual fee. So while both cards individually have reasonable annual fees, chances are you won’t get enough marginal “return” out of the second card to justify it. Unless…
You value “hedging” your mileage “portfolio”
When it comes to having miles and points there’s both such a thing as over diversifying and under diversifying.
By my definition, over diversifying would generally be when you have so many different points currencies that you don’t have enough in a single currency to redeem for an aspirational award. Under diversifying would be when you have so many points in a single program that you’re totally screwed if there’s a mega devaluation.
So if you’re a fairly big credit card spender, there’s something to be said for not putting all of your eggs in one basket. I’ve explained in the past that I like having Arrival miles for subsidizing fuel surcharges on award tickets, as it certainly makes those redemptions sting less.
These really are the two “super cards” when it comes to travel, given the return they provide on everyday spend as well as the lack of foreign transaction fees. If I were putting under $50,000 or so per year on the card I’d probably choose just one, based on whether I valued travel “cash” more, or whether I spent a lot on dining and travel.
But for a really big spender it might be worth having both cards in your wallet just for the sake of diversifying the points you earn.