As I mentioned in a post last week, many people are going to be asking “should I keep the Chase Sapphire Reserve?” As we know now, Chase was completely overwhelmed by the response to their new card when it rolled out last August, so much so that they ran out of metal cards for a while. But, now that big $450 annual fee is coming due and people are wondering what they should do. Here are some tips to help you decide?
Should You Keep the Chase Sapphire Reserve?
Let me just start out by saying this – even if you don’t want to keep the Chase Sapphire Reserve anymore, you should not cancel it. You can always downgrade it to the Chase Sapphire Preferred ($95 annual fee) or the Chase Freedom Unlimited (1.5% on all purchases) or the Chase Freedom (rotating quarterly categories at 5%). This way, you keep your credit line and history with Chase and you can still take advantage of the earning potential on those cards, but without paying the $450 annual fee of the Chase Sapphire Reserve.
Benefits of the Chase Sapphire Reserve
Before we get into any yes/no type answers, let’s take a minute to see what you will get going into year 2 holding the Chase Sapphire Reserve.
- $300 travel credit – how to track your $300 travel credit
- Priority Pass Lounge access – unlimited guests
- Primary rental car insurance – leave your own insurance company out of it
- 3X points on dining and travel
- 1.5 points per dollar redemption on travel through Chase
That is a nice, valuable list of perks, to be sure! Of course, you will also get the Global Entry/TSA PreCheck reimbursement if you have not used that already as well.
Time to weigh all of that against the $450 annual fee to see if it is worth it for you!
Do You Travel At All?
I know, this is kind of a strange question to ask on a blog like this but there were a ton of people who actually did sign-up for this card last year to get the points and cashed them out for gift cards and such. 🙂
If you do not travel at all, I mean, even using things like taxis, subways, thruway tolls, etc., then the $300 travel credit will not mean anything to you. There is really no point in keeping such a card and paying the annual fee if you do not travel so this is easy…
Downgrade to a Chase Freedom / Freedom Unlimited
Do You Redeem Ultimate Reward Points for Travel?
As I wrote last week, this is the number one point for me in keeping the card as I redeem a lot of points through Chase and utilize the 1.5 points per dollar. If you were to redeem even 50,000 points this way, it would give you a cash value for your travel of $750. If you had the Chase Sapphire Preferred instead, you would get $625. That means that even for a small amount like 50,000 points, this card will already give you $125 more in value over the Chase Sapphire Preferred with its $95 annual fee.
If you redeem even 20,000 points through Chase with your Chase Sapphire Reserve, you are already even with the annual fee of the Chase Sapphire Preferred when you add in the $300 travel credit. So, if you redeem Ultimate Reward points for travel through Chase…
Keep the Chase Sapphire Reserve
Do You Value Lounge Access?
There are many premium cards that give you lounge access, either with Priority Pass or with particular airlines. For me, lounge access is pretty close to essential! 🙂 I know, that sounds a bit much but given how most of my travel is very quick and limited ground time after long-haul flights, it is important for me to be able to get work done in a lounge with the free WiFi, get some free food, and even shower and change to get ready to hit the ground running.
Since the Priority Pass lounge membership with the Chase Sapphire Reserve allows all members of your travel party to access the lounge (lounge permitting) with you, this is a huge bonus when traveling with family. In this case, it can be a big help.
But, let’s say that you use the lounge access 6 times per year. Since a card like the Hilton Surpass from American Express comes with the basic Priority Pass membership, you would pay $27 per visit if you used that card. So, 6 visits in a year would equal $162 – for just one person! If you travel with anyone else on any of those visits, the cost would go up (yet they would probably pay that unless you are a great friend!).
Of course, you don’t need to use a lounge! But, if you have a long layover, they can be invaluable and even save you money because of the snacks and drinks you will get with your visit vs paying for them in the terminal.
Let’s set the bar at 4 layovers per year with a long enough layover to make a lounge really worth it. That would cost you $108 if paying for the lounge access so when combined with the $300 travel credit, we are at $408 and just shy of the annual fee by $42. In this case…
Keep the Chase Sapphire Reserve
Do You Eat Out + Travel?
I know, back to the “do you travel” part but this is a combo question! Since this card earns 3x points on dining and travel, it is worth taking a look at the type of earning you can realize on this card. In reality, we will only look at it as 1 extra point since the Chase Sapphire Preferred gives 2x points.
Let’s say that you spend $100 a month on dining (which includes things like fast food) and an average of $50 on travel (which includes tolls, rental cars, subways, etc). That adds up to a total of 450 points per month and 5,400 points per year with the Chase Sapphire Reserve. If you use those points to book travel through Chase, it is worth $81.
But, in reality, you are only earning 150 bonus points since that is just the extra you would have with this over the Chase Sapphire Preferred. That adds up to 1,800 points per year or $27 worth of travel.
We also cannot forget that you can use the Chase Freedom and its rotating categories to take advantage of things in the dining category as well for at least $75 (7,500 points) that way as well. So, the math becomes a bit more difficult with the Chase Sapphire Reserve on this!
To sum it up, though, I would say that if you are spending a combined amount of $300 per month in the dining and travel categories, the Chase Sapphire Reserve with its extra point over the CSP and its simplicity vs the Chase Freedom (with the quarterly categories varying) should work out well for you, but not as a standalone reason to keep the Chase Sapphire Reserve.
Does It Count to Count the $300 Travel Credit?
Some people ask this and, in some cases, these travel credits do make you purchase some things you may not already just to get the credit (American Express Platinum – looking at you!). But, the Chase Sapphire Reserve travel credit is just so easy! Whatever rings up as travel will count for that reimbursement and it is credited quickly!
This means that things like the taxes/fees on an award ticket (not with sites like Aeroplan, though, which are separate from the airline), the cash component of a hotel points and cash reservation, a rental car, tolls on a thruway, metro rides, and even more all count towards that $300 travel credit. Last year, I spent the travel credit in about 3 weeks. 🙂 Sure, I only did that because I had it right then but just in the course of normal travel, we would certainly have used it up in just a couple/few months anyway.
Yes, I would say that if you do any travel at all in a year, the $300 travel credit definitely should be subtracted from your annual fee since it is money you would need to spend anyway.
Keep the Chase Sapphire Reserve or Downgrade to the Chase Sapphire Preferred?
This is another question people wonder and since the fee difference is $355 straight up between the two, I would say that all of the extra benefits you get with the Chase Sapphire Reserve easily crush that difference – and then some. Unless you simply cannot afford to pay the annual fee on the Chase Sapphire Reserve right now, there is really no reason to downgrade it to the Chase Sapphire Preferred – if you travel at all.
One thing to consider as well. You are probably like me in that you have a lot of friends and family who travel. If you don’t want to deal with the whole $450 fee right now, consider booking travel for someone that is it upcoming and use that for the reimbursement of the travel credit. Even if you gave them a 5% discount, you are still looking at being able to recover $285 which would leave your out-of-pocket annual fee at $165 – much more manageable!
Keep the Chase Sapphire Reserve
To me, it is almost a no-brainer when it comes to whether it is worth it to keep the Chase Sapphire Reserve. However, I know that there will be a lot of people that will balk at that $450 annual fee when it comes around, especially since there are no new points to offset it! But, there are so many positives that as long as Chase keeps these benefits, I believe the Chase Sapphire Reserve easily pays for itself.