What’s The Breakeven Point For The Sapphire Reserve & Preferred?

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The Chase Sapphire Reserve Card became available last weekand I’ve written about it extensively. Probably what has people talking most is the massive 100,000 point sign-up bonus upon completing minimum spend.

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The card is intended to be a more premium version of the Chase Sapphire Preferred® Card, which is otherwise one of the all around most compelling mid-range credit cards out there.

The Chase Sapphire Reserve has a $450 annual fee, and the way I see it, there are two features that are most valuable long term:

  • A $300 travel credit, which can be used for any purchase
  • 3x points on dining and travel purchases

Personally I value the $300 annual travel credit at close to face value, so for mental accounting purposes I view the card as costing $150 out of pocket per year, and for that I’m earning triple points on dining and travel.

I should mention that there are other great perks to the Sapphire Reserve as well, though I think the value of them varies depending on who you are:

  • The card comes with a Global Entry or TSA Pre-Check credit (though if you/everyone in your family already has that, it may not be all that useful)
  • The card comes with a Priority Pass membership, though personally I already have one of those through The Platinum Card® from American Express and Citi Prestige® Card, so having an additional one is of limited use to me
  • Points earned on the Sapphire Reserve can be redeemed for 1.5 cents each towards travel purchases rather than 1.25 cents each on the Chase Sapphire Preferred® Card, though if you’re someone who transfers points to airline partners, that doesn’t really make much of a difference

In this post I figured I’d address whether it makes more sense to keep the Sapphire Reserve or Sapphire Preferred long term.

The Sapphire Reserve has a $450 annual fee, which for all practical purposes I consider to be $150. Meanwhile the Sapphire Preferred has a $95 annual fee, though it’s waived the first year.

Long term that’s a difference of $55 per year in the annual fee, and for that you’re earning an extra one point per dollar spent on dining and travel. Personally I value Ultimate Rewards points at 1.7 cents each, so to me that means if you spend at least ~$3,200 on dining and travel per year you’ll come out ahead with the Sapphire Reserve.

Of course this makes a few assumptions:

  • You value the annual travel credit on the Sapphire Reserve (more or less) at face value
  • You value Ultimate Rewards points similarly to how I do
  • You’d otherwise put travel and dining purchases on the Sapphire Preferred
  • You don’t have authorized users, as the Preferred allows free authorized users, while the Reserve charges $75 per authorized user

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Do keep in mind that dining and travel includes a surprisingly diverse number of categories. Dining includes things like Starbucks and Postmates. Travel includes things like parking, Uber, and trains.

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Bottom line

While on the surface the Sapphire Reserve has a high annual fee of $450, when you factor in the $300 annual travel credit and the triple points on dining and travel, it’s very easy to come out ahead with this new card, even in comparison to the excellent Chase Sapphire Preferred® Card.

The $55 “out of pocket” difference between the two cards can easily be made up with just a few thousand dollars in dining and travel purchases.

Do you consider the Sapphire Reserve to be a keeper for the return on spend alone?


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Comments

  1. I completely agree with this post. But in my case I never had the Sapphire Preferred but I did have the Ink Plus. The Ink is one of my favorite cards for the 5x categories. I was able to downgrade that to Ink Cash to save the $95 there by now having the Reserve as my “premium” card. I think it’s a great alternative. $55 for a Priority Pass membership and 3x categories is worth it.

  2. This card is a no brainer long term hold. And I can confirm that the travel credit does have a very wide definition. I recently used that car on a parking meter and the $2 credit is showing on my account. So just about everyone that has this card should be able to take full advantage of the $300 annual credit without jumping through any hoops (looking at you amex).

  3. I was declined for the card, they chalked it up to the 5/24 rule, which was most certainly based on ALL card applications rather than just Chase cards. I find it odd that they really had potential to pull all of my business away from the AMEX Plat card yet they chose to refuse my business based on that rule. I’ve still yet to go to a branch to have them look at it for me but one would think that I’m a prime candidate for Chase’s business rather than someone to push to the curb. I’m just not seeing the logic by Chase…

  4. Agree with Robert, except I never put a dime on my AmEx Plat; but this would have pulled all of my travel and dining spend away from my AmEx PRG and Citi TYP. We are within the top 1% of earners, my FICO score is 835, and I’m barely even over 5/24 — though that really shouldn’t matter because with this card’s bonuses, I would actually use it all the time.

    I went in to a physical branch and only applied after the banker looked and told me I was pre-approved (which some of the reporting claimed provided an exception to 5/24). I was declined — first credit or loan of any type for which that’s ever happened to me.

  5. I got an email approval but no mention of the 100,000 points. Called them and they couldn’t confirm. Think I’ll get them?

  6. Suppose your first purchase with the CSR is a $300 airline ticket. The $300 is deducted from your travel credit, but would you also still earn 3x points?

  7. @shza, I was pre-approved at the branch and was way over 5/24 (more like 14/24) and I got 7-10 days message then 30 days. I didn’t call and the card shows up on my account after one week pending. Did you call the reconsider line? I think the best is to sit tight and wait it out.

  8. Lucky,

    I agree with your valuation however the 2x on the CSP is with a 25% for travel bonus so 2.5. 3x on the CSR is with a 50% bonus so is 4.5. Making the $55 difference about $2,700 instead

  9. I would love some advice from those of you who are more familiar with the ways of Chase. Applied 10 business days ago and got the 7-10 days pending notice. I’m at 3/24 not counting 3 business cards (SPG Amex, Citi AA, & Chase Ink Plus). High income and 803 FICO, so not sure why I wasn’t immediately approved. Would the fact that I already have 2 Chase business cards (Ink Bold and Ink Plus) as well as 2 personal (Freedom Ultimate and CSP) be a factor? Would it be best to call recon or keep waiting? Appreciate any thoughts.

  10. I’m in the same boat as Robert and Shza. Was denied due to 5/24 but I would have moved all of my current business from the Amex PRG Card and Citi Prestige ($3K a month) to their card. I pay off my balances each month, have a FICO above 800 and have never been denied a card – until now. They are losing a big chunk of business in people like us. I just don’t see the logic with this on their part.

  11. Is it me or do the cost of hotels that Ultimate Rewards shows seem inflated? I can never get the same cost for a hotel.
    The WEB site for the hotel is always much cheaper than what UR offers.

    Someone should investigate this.

  12. Alicia, yes you probably have to spread your credit from the other Chase cards. Just call their reconsideration number.

  13. Hi ive seen a hotel ptice in italy for chase ultimate rewards that was much cheaper than all the other hotel sites

  14. @Elias – Your math is wrong. Lucky already values 3x UR points at 5.1 cents because he transfers points to partners. Redeeming through the Chase portal, even with CSR’s 50% bonus would therefore reduce the vale and require more earning to make up the fee differential.

  15. Received my card today from UPS overnight after getting a pending online. I’m a little disappointed that it’s a regular plastic card and the Preferred was metallic with no raised numbers.

  16. @Tummy, apparently due to overwhelming demand they’ve run out of metal cards. You can call to get a replacement card in metal when they become available again.

  17. @Tummy: How long did you wait between applying for the card and receiving it, and did you get any prior notification from Chase that you had been approved? Thanks.

  18. Good analysis of the value comparison between the two cards. Have you done the same comparison between keeping your investments at Chase Private Bank with a low-cost venue like Vanguard? I know this isn’t an investment blog, but I think it’s important to know that if someone is moving assets to Chase to qualify for this card that in all probability those (hidden) fees would dwarf the value of this card (depending on your level of assets).

  19. Patrick:

    While the hotel prices can vary, remember that the Chase quoted price includes taxesand fees while the hotel websites typically don’t. Be wary of resort fees though. Those sometimes don’t get included.

  20. @robo — yes, I believe you do. I have already used some of my travel credit, which has shown up on my account online immediately. The line item shows 3x points on that transaction (though, I suppose, for argument’s sake, I haven’t had the card a month yet and therefore have not actually had the points deposit into my UR account)

  21. Hi all, first time poster here. I currently am a satisfied holder of the Sapphire Preferred, and am going to be charged the $95 annual fee for another year on Oct 1. Ideally, I would apply for the Reserve, and once I have it, transfer my CSP’s 140,000 Ultimate Rewards points to the CSR and then decline to renew the CSP. I’m fine with the extra $55 in annual fee going forward, given the CSR’s extra earning power. Does anyone see a downside to this plan? Thanks for your input.

  22. Can you refer people to this card? Anyone want to refer me, as I believe Lucky doesn’t have a referral link.

  23. Declined CSR application due to being way beyond 5/24.
    However, most of these will drop by end of year, leaving me with three cards.
    Spoke to the Chase recon folks; they encouraged a new application once I’m down.
    Also, by end of year I’ll be 1K with United. Using the CSR after that is almost like making extra money.
    Used to rake in triple points with the CSP by booking thru the Ultimate Rewards portal, but they discontinued that option. That’s why the CSR is the way to go now.
    It’s a no brainer, that’s for sure.

  24. @ Michael
    I have just credit cards with chase NO banking of any kind

    Way way over 5/24, I just got the BA card 50k bonus again (cancled 2 years 1 day before applying) and both marriot cards, citi prestige and the other one (grey?) citi American plat cards AND the executive all within a couple months

    So not wanting a possible denial for applying online I drove to Katz Deli in NYC… I mean I had business in NYC 😉 (no chase in Massachusetts)

    The rep was very nice, I simply asked if I can apply for the CSR and I have other chase products as in CC’s (no accounts) she said no problem, few minutes later she showed me the screen approved $13k limit.

    Rep just asked a few personal questions no work details etc as I was expecting

    In short, I’m not wealthy, my credit score is below 700 and I eat up cc bonuses regularly (over 20 in 2 years) without much spend after

  25. I’m a 33 year old man and I just made a wink emoji on a travel blog… ^

    Yes i know have a new hobby, I like reading your site it’s helped my family travel so much more than normal.

    Thank you lucky and your team

  26. Hi Ben,
    What are the benefits of keeping both AMEX Platinum and Chase Sapphire Reserve since they both have basically the same perks? Won’t you diminish one for using the other by not maxing out only one premiere card?

  27. Correct me if I am wrong, but lets say we value the UR points at a minimum 1.5 cents per point via travel on the UR portal as valued by Chase. (As advertised 100,000 UR points= $1500, or mathematically 100,000×0.015= $1500) Therefor if the net annual fee is $150, you just need to spend $3,333 on travel and/or dining and with the bonus category x3= 9,999 UR points. So then 10,000 UR points x 0.015= $150 which is the break even for the annual fee. As for the $55 difference between the CSP and CSR, its even less than that. You just need 3,666 UR points to get the $55 difference. (3,666×0.015= $55) meaning you just need to spend $1,222 on dining and or travel to reach 3,666 points/the $55.

  28. @rob yes, if your first spend is $300 travel you get the $300 right away!

    @jakethesnake where you pre-approved? If so, thats why!

  29. I have a FICO of 830, long banking relationship with Chase, Private Client relationship with approx 1 million at Chase and multiple Chase cards all with lots of spend (I’m an UR fan).
    Also I believe I am just under 5/24 or maybe right at it.

    I was told pending on my application. I applied in my branch with my private client banker. This was frustrating.

    After a week I called them. I was told the issue was that I already had a lot of credit with Chase cards (150k or so). I was told that if I wanted more credit that I needed to wait 1-2 additional weeks for an answer. However if I was willing to move credit she could process it now.

    I just moved the credit (though I actually wanted more) and got approved.

    Point is that those already deep in with Chase may actually have a harder time getting approved than a new to Chase client. They want to court new business. This happens to me in reverse with lots of targeted offers from Citi etc, if they don’t have you they want you.

    And yes, I have been told to expect a plastic card at first as they are out of metal. Seems this card has been more popular then they expected.

  30. @Noel, Lucky is basing his analysis on the marginal additional 1 UR point you get for travel and dining with Reserve over Preferred. To do better than the Preferred based on ongoing spend, you have to spend more than $3,666 if you value at 1.5cpp ($3,666 x the 1 additional UR pt x 0.015 = $55). Or >$3,200 if you value at 1.7cpp.

  31. I value the perks (including $300 credit) @$1100 but you’ll have to go to flyertalk to see my math. This card is a keeper for anyone who needs PP lounge access.

  32. I was charged two fees on my new credit card. Annual membership fee of $450, and a second fee of $75. I thought the fee was waived the first year. Is this correct that they charged me upon opening the account?

  33. Yup, its true you got charged 450 for yourself and 75 for authorized user. Unlike the saphire prefered you get charged for the first year too. But you also get 600 travel credit… 300 before December 31 and 300 after December 31

  34. I made postmates purchases and didn’t get 3 points/ $…even though when I had the chase sapphire preferred I always got the 2 points/ $ reward for dining. I emailed customer service and they gave me some canned answer about how their category was registered under miscellaneous personal services, so it wouldn’t count for dining.

  35. I think the $450 fee would be worth it for us, but the extra $75 fee to add my wife makes it too iffy.

  36. We have been Chase CC customers for years, collecting our Ultimate Reward points. Just this month, Chase took 300,000 points from our account when we switched to online statements and they didn’t send them to us. Once we corrected the error and paid in full, they are still refusing to honor our points- NONE. Despite being long term customers before Chase even had Ultimate Rewards. At 1.7x/point, I think its a pretty significant loss and an unreasonable response from Chase. They didn’t even call us to let us know about the mistake, or that our account hadn’t been appropriately sending the paperwork. Anyway, highly disappointed in Chase at this point and looking for another option- and another bank. The inflexibility for a long-time (20 year) customer who pays on time every month is infuriating.

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