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The Chase Sapphire Reserve Card became available last week, and 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.
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
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.
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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