Are you considering signing up for the Chase Sapphire Reserve credit card?
This card can be a great addition to your wallet if you travel enough — and use the benefits of this card — to make the annual fee worth your while.
But it’s not for everyone.
Before you fork over the $550 annual fee this premium credit card carries, you should probably think long and hard about the pros and cons of such a commitment.
In this article, I’ll take a look at the merits of this card to help you figure out if it’s worth it to you.
Table of Contents
- What Is the Chase Sapphire Reserve?
- Chase Sapphire Reserve Credit Card: Specs and Perks
- Is the Chase Sapphire Reserve Worth $550 per Year?
- Chase Sapphire Reserve: Pros and Cons
I’ve compared the Chase Sapphire Reserve to the best cards in those segments of the market. And I’ve determined that it’s a viable choice for high-volume spenders because of its strong rewards program built primarily around travel and dining spending.
As you’re deciding whether this card is a good fit for your wallet, please use this review in conjunction with Clark Howard’s 7 Rules for Using Credit Cards.
What Is the Chase Sapphire Reserve?
The rewards for this card, given out as Chase Ultimate Rewards® points, are focused on travel and dining spending. So they’re worth more if you redeem them to make new travel purchases through Chase.
This card is a popular choice for people looking for a travel credit card that is not tied to a specific hotel or airline.
(Note that this card is different from the Chase Sapphire Preferred card. It carries a $95 annual fee and offers a similar but much lighter version of the rewards program offered with this card.)
Chase Sapphire Reserve Credit Card: Specs and Perks
Let’s take a look at the fine print to examine some of the card’s perks and drawbacks.
Chase rewards all types of spending with this card via Chase Ultimate Rewards® points, but the best use of the card is for spending on travel and dining thanks to bonus multipliers for those spending categories.
This card’s rewards program underwent some significant changes on August 16, 2021.
Here’s a quick breakdown of the points system for purchases with the Sapphire Reserve:
|Spending Category||Old Points Structure||New Points Structure|
|Dining (through Chase Ultimate Rewards)||1 point per dollar spent||10 points per dollar spent|
|Hotels and Car Rentals (through Chase Ultimate Rewards)||1 point per dollar spent||10 points per dollar spent|
|Air Travel (through Chase Ultimate Rewards)||1 point per dollar spent||5 points per dollar spent|
|Non-Chase Dining (including takeout and delivery)||3 points per dollar spent||3 points per dollar spent|
|Non-Chase Travel||3 points per dollar spent||3 points per dollar spent|
|All Other Purchases||1 point per dollar spent||1 point per dollar spent|
|Spending Category||Qualifying Purchases|
|Travel||Transactions with airlines, hotels, motels, timeshares, car rental agencies, cruise lines, travel agencies, discount travel sites, campgrounds and operators of passenger trains, buses, taxis, limousines, ferries, toll bridges and highways, and parking lots and garages.|
|Dining||Dining at restaurants (worldwide) including eligible delivery services and takeout|
|All other purchases||All other transactions, excluding items such as balance transfers, cash advances, lottery tickets, casino gaming chips, race track wagers or similar betting transactions|
Also, as a temporary perk, Chase is offering 10 points per dollar spent on Lyft purchases through March 2022.
Rewards Redemption Rules
As mentioned above, the spending rewards for this card are awarded as Chase Ultimate Rewards points. You can convert the points into a reward of your choice such as a statement credit or a free night at a hotel.
This is where you need to pay close attention, because your decisions on how you convert your points have a direct impact on their actual monetary value.
Chase says you have the following options for cashing in your Ultimate Rewards points:
- Statement credits
- Gift cards
- Transfer points to participating airline and hotel rewards programs
- The ability to pay with points for products or services made available through the Ultimate Rewards program or directly from third-party merchants.
The points conversion rates for each of these methods vary and are sometimes affected by temporary promotional offers. But generally speaking, each point is considered to be worth about a penny.
Two areas where you can maximize the value:
- Redeeming your points for travel through the Chase Ultimate Rewards program. You get a 50% bonus in redemption rate here. For example, you can redeem 50,000 rewards points for $750 worth of travel. That’s an effective value of 1.5 cents per point.
- Use the “Pay Yourself Back” program. This is another opportunity to get a 50% bonus in redemption rate by using your points to claim a statement credit on a certain spending category. These categories rotate, so you’ll have to be strategic. For example, if Chase is offering this deal on grocery store spending, you could get a statement credit of $150 for $1,000 in grocery spending.
Other Cardholder Benefits
- 50,000 Point Welcome Bonus Opportunity: New cardholders earn 50,000 bonus points if they spend at least $4,000 with the card in the first three months they have the card.
- $300 Annual Travel Credit: You can make back more than half of this card’s $550 annual fee by taking advantage of this yearly travel spending perk. This is awarded as a statement credit each time you make a purchase in the travel category until the full value is exhausted ($300 per year). As a temporary pandemic-related perk, Chase also includes purchases in gas stations and grocery stores through the end of 2021.
- Global Entry or TSA Precheck Credit: Cardholders are eligible to receive a statement credit of up to $100 every four years as reimbursement for the application fee for either of these passes. You must make the purchase with your Chase Sapphire Reserve card to get the credit.
- Complimentary Airport Lounge Access: As a cardholder, you’ll receive complimentary access to enrollment in the Priority Pass Select program. This gives you free access to more than 1,000 VIP lounges in 500+ airports worldwide.
- Luxury Hotel and Resort Perks: You get access to benefits, such as complimentary room upgrades, early check-in and late check-out, at participating top hotels and resorts. You’ll have to book your room with this credit card, and you’ll obviously want to check to make sure your desired hotel or resort is a participant before you book.
- Complimentary DoorDash and Lyft Memberships: Cardholders can get a free year of DoorDash’s DashPass as well as a free year of Lyft Pink.
Here’s a quick look at some of the fees the Chase Sapphire Reserve card carries:
- Annual Fee: $550
- Balance Transfer Fee: Either $5 or 5% of the amount of each transfer, whichever is greater
- Cash Advance Fee: Either $10 or 5% of the amount of each transaction, whichever is greater
- Foreign Transaction Fee: None
- Late Payment Fee: Up to $40
Is the Chase Sapphire Reserve Worth $550 per Year?
Now that I’ve talked up the plentiful perks associated with this card and paid out the fees you’d be facing as a tradeoff, it’s time to answer the big question.
Is this card really worth paying $550 per year?
The answer to that question likely is “Yes” — if you travel often. But the actual returns will vary based on the travel spending patterns of each individual.
Here are some things to consider:
- If you assume that you’ll easily reach $300 in travel spending per year, you’re going to see that money go right back into your pocket in the form of a statement credit. This means that $300 of that $550 annual fee can be considered “covered” by spending in this category.
- You’ll have an opportunity to earn 50,000 bonus points in your first three months of card membership. If you achieve that, those points could be worth between $500 and $750. That makes covering Year 1 a breeze, but these bonus points are a one-time reward.
- Many travelers are going to take advantage of that credit on either Global Entry or TSA Precheck, so that’s another $100 you’ll be able to knock off that annual fee in the first year. But keep in mind this is redeemable only once every four years.
- It’s hard to place an exact value on the airport lounge, hotel and resort perks that you get with this card. This will vary based on personal travel volume and program availability at your desired destinations.
- You could also see immediate returns on the DoorDash and Lyft subscriptions, but those are temporary and also tough to evaluate without knowledge of your potential individual usage.
Annual Travel and Dining Spending Example
Let’s assume that you use the card primarily on spending for your 3x rewards spending on travel and dining.
Here’s a look at how much your annual spending could be worth based on either 1x or 1.5x redemption methods:
|Annual Travel/Dining Spending||Rewards Points Earned||1x Value Redemption||1.5x Value Redemption|
If you’re able to achieve the welcome bonus spending within the first three months, you’ll almost have the $550 annual fee for Year 1 covered with your 50,000 rewards points.
But it gets much more complicated in Year 2 and beyond.
If you assume that you’re going to earn your annual $300 travel credit, you’re really trying to earn just enough rewards to cover an effective $250 annual fee.
To get to that number as a break-even point, you’d need to earn 25,000 points redeemed at the 1x value rate or 16,667 points redeemed at the 1.5x value rate.
Anything earned above these numbers would be considered a net win for you during that year.
Chase Sapphire Reserve vs. 2% Cash Back Credit Cards
As a general piece of advice, Team Clark points consumers to 2% cash back credit cards for everyday purchases. These no-annual-fee cards are an easy way to assure yourself a steady return on almost every purchase you make.
You may be wondering if using the Chase Sapphire Reserve is a better option than simply sticking with the 2% you earn with a cash back card for your travel purchases.
If you consider the 3x points bonus for travel and dining purchases with the Sapphire Reserve card as an approximate reward that can be redeemable for an equivalent to 3% cash back, you’re going to need to spend upwards of $55,000 per year to make the extra 1% you earn over a standard 2% card cover the $550 annual on its own.
That’s a daunting number for even the most avid traveler! However, you have to take the usefulness of the perks into account here to make a fair comparison.
As we discussed previously, the Sapphire Reserve can easily cover its annual fee with benefits like the annual travel credit, Lyft and DoorDash subscriptions, TSA Precheck and Global Entry and special travel privileges.
If you use those perks frequently enough, the $550 annual fee quickly can be reasoned away and the 3% returns on dining and travel are superior for spending in those categories versus a standard 2% cash back card.
In an ideal situation, avid travelers could use this card in combination with a 2% cash back card to get optimal rewards on each type of purchase.
You can apply this same kinds of spending analysis to other premium credit cards such as the Platinum Card from American Express. These cards are going to give you benefits that exceed their hefty annual fees, but it’s worth it only if you actually use the benefits.
Chase Sapphire Reserve: Pros and Cons
|Travel and dining enthusiasts can really rack up points with the multipliers.||The annual fee is hard to justify for most consumers.|
|$300 annual travel credit and TSA Precheck or Global Entry fee credit add value for travelers.||There are only two spending categories for permanent points multipliers.|
|No foreign transaction fees||Must use Chase Ultimate Rewards for travel to get the most out of your rewards|
Generally speaking, money expert Clark Howard is not a fan of paying large annual fees for access to a rewards credit card.
Many of us love the idea of traveling so much that these perks are tempting, but the reality is that most Americans may not travel enough to justify a recurring $550 fee for access to a credit card.
Are you the exception to Clark’s rule?
Based on the rewards we reviewed with the Chase Sapphire Reserve, you can easily make the case that this card is a net positive for your wallet if you’re spending more than $10,000 per year on travel and dining.
As always, Team Clark recommends that you use rewards credit cards with the intention of paying your bill in full each month. The interest rates associated with carrying a balance can quickly negate any benefits you see from the rewards.
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