3 Ways To Know If The Chase Sapphire Reserve Is Right For You

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A couple of days ago I wrote a post with four reasons it could make sense to apply for the Chase Sapphire Preferred® Card rather than the Chase Sapphire Reserve® Card, even if you think the Reserve may make sense for you in the long run.

While I think a lot of people are familiar with the benefits of the two types of cards, in this post I wanted to quantify a bit better when it could make sense to have one card over the other.

Obviously there’s no math that everyone will agree on, though hopefully at least sharing the framework of how I crunch the numbers will be useful for some.

Sapphire Preferred vs. Reserve basics

The Chase Sapphire Preferred® Card has a $95 annual fee (waived the first year) and offers:

  • 2x points on dining and travel
  • The ability to redeem points for 1.25 cents each towards the cost of a travel purchase
  • No foreign transaction fees
  • Great travel and purchase protection

The Chase Sapphire Reserve® Card has a $450 annual fee and offers:

  • 3x points on dining and travel
  • A $300 annual travel credit
  • A Priority Pass Select membership with guesting privileges
  • The ability to redeem points for 1.5 cents each towards the cost of a travel purchase
  • No foreign transaction fees
  • Great travel and purchase protection

The $55 difference

When doing the math to decide which card makes more sense, I generally think of the long term cost difference between the two cards as being $55 per year.

  • The Sapphire Preferred has a $95 annual fee (waived the first year)
  • The Sapphire Reserve has a $450 annual fee, but you get a $300 travel credit that just about anyone should get full value out of, so I view the real “out of pocket” as being $150 per year

Long term your real cost difference (by my math) is $55 per year. In the first year the numbers work out a bit differently, as you’ll end up being “out of pocket” $150 vs. zero.

It’s up to you how you choose to value the first year situation vs. the situation in subsequent years. In general this is one reason it could make sense to first get the Sapphire Preferred and then product change to the Sapphire Reserve after a year (or more).

With those basic thoughts out of the way, let’s look at the three big areas where you could get a lot more value out of the Sapphire Reserve than the Sapphire Preferred.

If you value a Priority Pass membership

One of the great benefits of the Sapphire Reserve is that it offers a Priority Pass membership. You can make unlimited lounge visits, and can take two guests into the lounge with you every visit. If you travel with any frequency then this should be worth way more than $55 per year.


Priority Pass gets you access to over 1,000 lounges around the world

The global network of Priority Pass lounges keeps growing, and they add more and more innovative locations to the network. For example, in addition to traditional airport lounges, we now have almost a dozen airport restaurants in the US where Priority Pass members can eat and drink for free.

There are so many cool Priority Pass lounge concepts, like House Spirits Distillery in Portland

The catch is that nowadays many premium cards come with a Priority Pass memberships, and a redundant membership doesn’t really get you anything. For example, I have three Priority Pass memberships, and therefore I value that particular benefit on the Reserve at zero. However, those of us who have multiple Priority Pass memberships are presumably in the minority.

If you spend a lot on dining and travel

One of the key benefits of these two cards is the bonus points they offer on dining and travel:

I value Ultimate Rewards points at 1.7 cents each, so to me that’s a return of 3.4% and 5.1% in those categories, respectively.

In order to recuperate that $55 yearly difference that I talk about above, you’d have to spend ~$3,200 per year in those categories. Obviously these numbers would work out differently if:

  • You value Ultimate Rewards points differently than I do (if you value them at 1.5 cents each then the breakeven cost is closer to ~$3,700)
  • You are trying to calculate the value the first year, since the cost difference between the cards is $150 rather than $55

So based on my valuation, the breakeven point on dining and travel spend with these cards is ~$3,200 per year.


Spend a lot on dining and travel? Triple points will add up quickly

If you want to redeem points for 1.5 cents each

Ultimate Rewards points are flexible, and there are several good ways to use them. You can transfer the points to one of the Ultimate Rewards hotel or airline partners, or you can redeem them as cash towards the cost of a travel purchase:

The points earned on both cards have the same value if you’re transferring them to a partner (you can transfer them at a 1:1 ratio), but if you redeem them as cash towards the cost of a travel purchase, the values are different:

  • Points earned on the Sapphire Preferred can be redeemed for 1.25 cents each towards the cost of a travel purchase
  • Points earned on the Sapphire Reserve can be redeemed for 1.5 cents each towards the cost of a travel purchase

If your goal with Ultimate Rewards points is to redeem them as cash towards the cost of a travel purchase, then the breakeven point here is earning about 22,000 points per year. In other words, if you earned 22,000 points per year you’d have:

  • $275 worth of rewards on the Preferred
  • $330 worth of rewards on the Reserve ($55 more rewards, but you’re also paying $55 more per year out of pocket)

Keep in mind that the 22,000 number is talking about points earned and not dollars spent. So if you have the Reserve and spent $8,000 per year on it exclusively on dining and travel, you’d come out ahead that way (since you’d earn 24,000 points).


You can redeem Ultimate Rewards points to pay for all kinds of travel purchases

Bottom line

The above three points are some of the key differentiators between the two cards. There are other things you have to factor in as well, like the Reserve’s better travel coverage, Global Entry or TSA Pre-Check fee credit, and Visa Infinite perks. However, my goal was to provide generally useful advice that didn’t get too complicated.

While I think both cards are excellent, personally I have the Chase Sapphire Reserve® Card. That’s in spite of the fact that I don’t value the Priority Pass membership (because I have one through other cards as well), and that I don’t redeem points for 1.5 cents each towards the cost of a travel purchase (since I get more value by converting those points to partner programs).

The main benefit that makes me love the Reserve is that it offers triple points on dining and travel. Compared to the Preferred, I feel that I come out ahead if I spend at least ~$3,200 per year on travel and dining on the card, and I most definitely do that.

If you have the Sapphire Preferred or Reserve, how do you justify one card over the other?

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Comments

  1. Quick related question:

    Has anyone applied for a Chase card, gotten the initial Pending Review message, then via the automated app status phone line received an Approval a few days later, then received a letter in the mail with a denial?

    It all sounds weird. I guess maybe I should call Chase and ask, at this point.

  2. @ Colin — How strange. Not that it really matters, but what card was it and what was the stated reason for the denial?

  3. @lucky – I’m thinking I figured it out. Applied for Ink Pref and then Sapphire Pref, back to back (Ink first).

    The next day, calling the automated app status line yielded “We received the first Application on June xx…This application is being reviewed. Expect a response in 7-10 days. We received the second application on June xx. You have been approved. Expect your new card in 7-10 days.”

    The entire time, because Ink was “first”, I always assumed that was the one being reviewed, and Sapphire was the one Approved. But because they were literally back to back (within 20 mins), and with the Sapphire denial, I’m now thinking it is actually the Ink that was approved.

    And now I’m thinking this is the case even more because Chase is offering me to refer folks to the Ink.

  4. Though you mention it in the summary, I don’t understand why you leave out the Global Entry credit. Its as easy to get as the $300 travel credit, the government charges you and right below that line Chase gives you a credit. You can either see that as either putting you $45 ahead of the Sapphire Preferred in year one or annualize it to show a reduced cost of $25 per year. Yes, other cards provide this feature too, but those are typically the same cards that also provide Priority Pass.

    I know many people who finally applied for Global Entry only because it was free once they got the Sapphire Reserve, it was just the nudge that they needed. However, after getting Global Entry and experiencing the convenience it gives them they have valued that feature highly.

  5. Been racking my brain on this. I have a Sapphire Preferred that was changed from the Fairmont card. My wife has the Reserve and I’m an AU on the Reserve. I also have the Ink Cash and Freedom Unlimited. I get Priority Pass from other cards I have so I don’t need that. However we’ve already hit around 10k on the card for travel and dining spend so that’s an additional 10k vs if we put the spend on my Preferred. I wonder if I downgrade my Preferred to a regular Freedom can I still transfer my earned points to her Reserve to redeem at 1.5 or do I have to carry an AF card on my account? A question for Chase I guess.

  6. The content was good, but it always makes me cringe when I see a Points Guy-esque title on this blog!!

  7. @ Justin — You can transfer the points from your Ink Cash and Freedom Unlimited to your wife’s Sapphire Reserve, so your best bet might be to just be an authorized user on her Reserve and get rid of the Sapphire.

  8. @ Shawn C — The reason I leave it out is because:
    a) It’s a benefit most cards only offer every 4-5 years
    b) Nowadays a lot of cards offer it
    c) It’s not something you can easily “cash out,” and it’s tough to decide in what year you want to place the value (in other words, is it a $100 value in year 1, an average of a $20 per year value, or what

    So personally the reason I don’t add that value is because I still haven’t used the benefit of the card. I have a handful of cards with these credits, as do my family members. I can’t use them fast enough. For those who do get value out of this, though, it absolutely should be added to the equation when crunching the numbers on a card.

  9. @Lucky —> You asked, “If you have the Sapphire Preferred or Reserve, how do you justify one card over the other?”

    The CSP was one of the first cards I applied for (and received) once I jumped into the “points & miles game.” At that point, the CSR did not exist, but when it first came out, I was over 5/24 and could not a) apply for it, nor b) receive the 100,000 bonus. I was still over the 5/24 when Chase cut the sign-up bonus from 100k to 50k.

    Meanwhile, I got a Citi Prestige card ($450 AF), and even though it lost the golf benefit and AA Admiral’s Club access, it didn’t matter all that much. (I don’t play golf; I rarely if ever fly AA.). I’ve received a lot of benefits using the “4th Night Free” benefit, trip delay insurance, primary auto insurance, etc. Despite some later devaluations, the card is still quite relevant for me.

    So the questions remain:
    1) How many $450+ AF cards does one need in their wallet?¹
    2) Since I cannot now have both the CSP and the CSR, I have to downgrade my CSP first, *then* apply for the CSR in order to get the sign-up bonus, but I have concerns — rational or not — about then being denied the CSR: then what would I do? At least FOR THE MOMENT, I’m content to stay with the CSP, even though — all things being equal — I *do* spend enough on travel and dining to make the CSR worth having.

    _______________
    ¹ With the devaluations in the SPG program as the two programs are completely merged as of August 1st, I’m seriously thinking about the Hilton Aspire…

  10. You forgot to mention the great 80k(with 20k spend) offer for the sapphire preferred. would definitely make to comparison different…

  11. @lucky – Ah thanks Ben. That clears up that confusion. I’ll probably product change it down to a Freedom (she has one, I don’t) and we can double up on the quarter 5’s when it makes sense to.

  12. Still cannot quite understand why this card would be better than AMEX Platinum. Yes, the 3X points on dining and travel are super as well as the redemption. Yet, AMEX goes beyond priority passes. They have their own lounges among other lounge access. They also offer TSA PreChek or Global Entry reimbursements. Etc, and Etc.

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