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Chase Sapphire Reserve vs. Preferred – Who Wins?

Chase Sapphire Preferred vs. Reserve

The Chase Sapphire Reserve has been a daily driver for me ever since I signed up. Back in the Summer of 2016 Chase released the card to great fan fare, and I signed up live on the podcast. The sign-up bonus was a cool 100,000 Ultimate Reward points. That is still the largest sum ever offer for a UR card from Chase. At the time that I applied I also had the Chase Sapphire Preferred in my wallet. The Preferred was my crown jewel, the card for which all things were possible. Its 2x on travel and dining were like music to my ears. After being approved for the Reserve however, I downgraded my Preferred to the Freedom Unlimited. The rest as they say, is history.

Just the other day the annual fee hit on my Sapphire Reserve. That $450 charge is a beast, ill tell you what. It got me thinking, is this really worth it? Do I get more than $450 in value out of this card. Or, at the very least, do I enough value out of it to justify paying the $450 annual fee when I could have the Preferred for $95? The goal for today is to answer that question. Ill start by going over the primary benefits of each card, and then go into some actual spending. For the sake of this article I am going to use my spending from the 2017 year end summary which Chase provides. Depending on the reception of this article, I may do the same thing once the 2018 year end summary becomes available.

Chase Sapphire Preferred Benefits

Once the darling of credit card points purists, the Preferred has taken a back seat in recent years. With an annual fee of $95 its still a fantastic option if you’re not interested in moving into the ranks of the “ultra premium products”. Its major benefits and perks are as follows:

  • 2x per $1 spent on dining
  • 2x per $1 spent on travel
  • 25% bonus when redeeming points via Ultimate Rewards portal
  • 1:1 Point Transfer to a variety of hotel and airline partners
  • No foreign transaction fees
  • Earn up to 50k bonus points per year for referring friends
  • 50,000 bonus points when you spend $4,000 on purchases in the first 3 months of account opening.

Chase Sapphire Reserve Benefits

As I alluded to earlier, I signed up for the Sapphire Reserve live on the Pursuing Points podcast. To date, it is the most listened to podcast of all time. While the major driving force in signing up was the sign up bonus, the continual benefits and perks are the reasons I keep this card. They are as follows:

  • 3x per $1 spent on dining
  • 3x per $1 spent on travel
  • 50% bonus when redeeming points via Ultimate Rewards Portal
  • 1:1 Point transfer to a variety of hotel and airline partners
  • No foreign transaction fees
  • Earn up to 50k bonus points per year for referring friends
  • 50,000 bonus points when you spend $4,000 on purchases in the first 3 months of account opening.

Reserve vs. Preferred Benefit Matrix

 Annual FeeTravel CreditPts/DiningPts/TravelPts/BaseRedemption Bonus
Preferred$95$022125%
Reserve$450$30033150%

Is the Sapphire Reserve Worth It?

Now that we’ve outlined the benefits of each card, lets try and answer the worth it question. To do so we’ll rely on the following data points for 2017. If you’d like to follow along, head to your Chase.com account and download your 2017 (or most recent year) year end summary. For the sake of this exercise we’re going to ignore all expenditures except for those which yield a bonus.

2017 Dining: $8,281.91

2017 Travel & Entertainment*: $9,871.88

*-Chase combines travel and entertainment into a single category. We’re going to ignore this fact for now, and just assume all spend in this joint category earns 3x. If you’d like to be more granular, feel free to remove any excess purchases from your calculation.

Reserve’s Total Rewards Value

(2017 Dining + 2017 Travel) * 3 = 54,461 points

54,641 points * 50% Redemption Bonus* = 81,691 or $816.92

$816.92 – $450 annual fee = $366.92

$366.92 + $300 travel credit = $666.92

Total Reserve Value = $666.92

*- For the sake of calculating I am using a baseline of 50% redemption bonus. It is of course possible to exceed 1.5 cents per 1 UR point.

Preferred’s Total Rewards Value

(2017 Dining + 2017 Travel) * 2 = 36,307

36,307 points * 25% Redemption Bonus* = 45,384 or $453.84

$453.84 – $95 annual fee = $358.84

Total Reserve Value = $358.84

Verdict

As you can see, if I maintained the same spending patterns on a Preferred, I would be leaving $308.08 on the table. Even when you account for the higher annual fee. The reason for this is rather simple, I maximize the $300 travel credit. If I was unable to use any of the $300 travel credit, all of a sudden i’m only leaving $8.08 on the table. When you consider that some of those travel and entertainment purchases don’t count as bonus spend, i’d be in the red.

Now, I didn’t touch on any of the other benefits that the Sapphire Reserve offers. These include things like $100 TSA Precheck credit, or Priority Pass lounge access. The reason is that if I was losing money or breaking even on this card, I would not keep it around just for those perks. There are plenty of other cards which offer similar perks and i’d find the one which offers me the most value.

This all goes back to outlining a strategy for yourself, and understanding where it is that you’re spending your money. Once you’ve done both, you can hone in on the products that fit you best. As it turns out, the Chase Sapphire Reserve is actually a really good card for me. Its something I plan on keeping in my wallet for a long time. Couple that with the fact that I’m able to earn even more because i’ve got the Chase trifecta, and you can really see how the rewards pile up.

 

Do you have the Sapphire Reserve? Is it making a positive impact on your bottomline? Let me know in the comments below.

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