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Why the Chase Sapphire Reserve still beats the Chase Sapphire Preferred

Before you apply for the Sapphire Preferred card to grab it’s 60,000-point bonus, you should take a close look at the Sapphire Reserve card

Summary

Despite an increased sign-up bonus, the Chase Sapphire Preferred Card is still outpaced by the Chase Sapphire Reserve.

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This week Chase made a major announcement: For the first time in the Chase Sapphire Preferred card’s history, Chase has increased the sign-up bonus on the card. Cardholders can now earn 60,000 points when they sign up for the Sapphire Preferred card and spend $4,000 in the first three months. This is one of the most valuable bonus offers for a card in the Preferred card’s class – beating out competitors such as the Capital One® Venture® Rewards Credit Card and the Citi Premier Card. Though Chase is no longer waiving the Preferred card’s annual fee, the 60,000-point bonus is still an improvement over the previous offer.

If you’re eagerly nudging your mouse toward the apply button, we would beg you to pause for a moment and consider: The Chase Sapphire Reserve®.

Chase Sapphire Reserve®

Why get it?

If you spend enough on travel and dining (at least $3,425 per year) the Chase Sapphire Reserve card is one of the most rewarding travel rewards cards.

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Other things to consider:

  • 3 points per dollar on travel and dining
  • 1 point per dollar on other purchases
  • 50,000 points if you spend $4,000 in first 3 months
  • $450 annual fee
  • $300 annual travel credit
  • Priority Pass lounge access

Why the Chase Sapphire Reserve card has the advantage

The first thing you may notice about the Chase Sapphire Reserve card is that the bonus is smaller (only 50,000 points for spending $4,000 in the first three months) and the $450 annual fee is significantly higher than the Preferred card’s $95 annual fee. However, the Reserve card has a few features that give it an edge over the Preferred card (even for moderate spenders):

  • A higher earning rate on dining and travel purchases (3X points)
  • A $300 travel credit that applies to most travel purchases, canceling out most of the card’s $450 annual fee
  • A 50 percent bonus on travel redemptions through the Chase Ultimate Rewards portal (the Preferred card has only a 25 percent redemption bonus), boosting the value of the card’s points to 1.5 cents per point
  • Priority Pass lounge access
  • $100 credit toward your Global Entry or TSA Precheck application

All these features add up to a lot of value that can easily make up for the card’s larger annual fee.

How to decide which card is best for you

Since the main difference between the Sapphire Preferred and Reserve cards is the amount of rewards they offer on dining and travel, the decision between the two cards mostly comes down to how much you spend on these two categories. In comparing the value of the cards, you should estimate the amount you spend on dining and travel each year, multiply it by the number of points you can earn, factor in the redemption bonus and subtract out each card’s annual fee. Basically, try the following calculation:

Yearly dining and travel spend x earning rate x redemption bonus – annual fee

For the Reserve card, you should also factor the $300 travel credit into the value (and note that any travel purchases covered by the $300 credit earn only 1X points).

To make the Reserve a better value, we estimate that the threshold on dining and travel expenses is $3,425. At this level, the rewards that you earn on dining and travel with both of these cards – factoring in the travel credit and annual fees – aren’t quite enough to cancel out the annual fee. In fact, you are spending about $9 per year to make up for it. (Note: The rewards you earn from the 1 point-per-dollar rate on general purchases will likely offset this cost.)

Comparing the value of $3,425 yearly dining and travel spend

Chase Sapphire Reserve cardChase Sapphire Preferred card
$3,125 travel and dining spend (excludes purchases covered by $300 travel credit) x 3 points per dollar = 9,375 points

 

$3,425 travel and dining spend x 2 points per dollar = 6,850 points

 

9,375 points x 1.5 cents point value = $140.63 (when redeemed for travel through Ultimate Rewards)6,850 points x 1.25 cent point value = $85.63 (when redeemed for travel through Ultimate Rewards)
$140.63 + $300 travel credit – $450 annual fee = ($9)$85.63 – $95 annual fee = ($9)

Beyond this threshold, however, the Reserve ekes more rewards out of travel and dining spend each year. In other words, if you spend more than $3,425 on dining on travel annually, the Sapphire Reserve card is the best bet for you, because you’ll get more value out of it.

In fact, by our estimates, a cardholder who spends just a moderate amount on a credit card each year can get more mileage with the Sapphire Reserve card in the first year. In the example below, a cardholder who spends around $15,900 in a year – $1,272 on travel purchases, $2,226 on dining purchases and $12,402 on other purchases – can earn $38 more in rewards in the first year with the Sapphire Reserve card:

Sample of rewards earned in the first year ($15,900 spend)

Chase Sapphire Preferred cardChase Sapphire Reserve card
60,000-point sign-up bonus = $750

Travel rewards ($1,272 spend) = $32

Dining rewards ($2,226 spend) = $56

Other rewards ($12,402 spend) =$155

50,000-point sign-up bonus = $750

Travel rewards ($972 spend) = $45

Dining rewards ($2,226 spend) = $100

Other rewards ($12,702 spend) = $191

Travel credit = $300

Total (minus $95 fee) = $898Total (minus $450 fee) = $936

The fact that the Reserve card also comes with premium travel benefits – including complimentary Priority Pass access and a $100 credit toward Global Entry or TSA Precheck – is just cream on top of the card’s rewards.

Bottom line

The 60,000-point offer on the Sapphire Preferred card is a tempting one, but you should take a moment to compare cards before you apply, because Chase only gives you one shot at opening up a Sapphire card. Chase does not allow you to own a Reserve and Preferred card at the same time, and, once you are a Preferred card member, you may have to wait a year or longer before Chase will allow you to upgrade to its Reserve card. To spare yourself some buyer’s remorse, be sure to do the math ahead of time to see which card will take you further in your travels.

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Published: March 21, 2019

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