In 2016, Chase introduced its Sapphire Reserve credit card, and the award travel world went crazy. Chase literally couldn’t produce the actual metal cards fast enough, and many had to make due with traditional plastic cards.
But after the initial 100,000 point welcome bonus ended and the $550 annual fee came due again, many were left asking if this card was really worth it.
How the Chase Sapphire Reserve card works
The current offer for the Chase Sapphire Reserve lets new applicants earn 50,000 bonus points after spending $4,000 on new purchases within three months of account opening. You also earn 3x points on all travel and dining and one point per dollar spent elsewhere.
Points are earned in Chase’s Ultimate Rewards program, and you can redeem them in several ways. First, you can get one cent in value per point when you redeem them for cash back, gift cards or merchandise. But you should never do that, because you can get 1.5 cents in value per point redeemed for travel reservations made through the Chase Ultimate Rewards travel center, including air, hotel, rental car and cruises.
And, better yet, you can get even more value when you convert your rewards to frequent flyer miles with nine available airline or four available hotel programs. When you redeem these miles for expensive last-minute flights, seats in business or first class or pricey hotel stays, your points can sometimes be worth several cents each.
A key Chase Sapphire Reserve benefit is the Priority Pass Select airport lounge membership, which includes unlimited visits for you and up to three other people in your party.
You also get a $300 annual statement credit toward any travel expenses and a $100 credit towards the application fee for TSA PreCheck or Global Entry, which includes PreCheck. Finally, this card comes with numerous travel insurance and purchase protection policies.
Let’s do the math
You’d be correct in thinking that $550 sounds like a lot to pay for an annual fee, but it’s not really as bad as it seems. First, you have to consider the $300 annual travel statement credit, which automatically applies to any flights, hotels or car rentals you purchase with your card. It even applies to buses, trains, parking and toll charges. Because of this, you should consider the net annual cost of this card to be $250.
Next, take a look at the value of the Priority Pass Select lounge membership. This card lets you and up to three traveling companions into more than 1,000 lounges around the world. And, in some airports, they let you charge $28 per person at member restaurants. At my home airport in Denver, there’s a restaurant called the Timberline that’s part of Priority Pass Select, and it’s not uncommon for my family of five to begin and end our journeys by going out to eat there with up to $112 in free food and beverages.
Finally, there’s the ability to earn 3x points on all travel and dining expenses and redeem those points for 1.5 cents each towards travel reservations. In contrast, the Sapphire Reserve’s junior sibling, the Sapphire Preferred offers just 2x points for travel and dining and only 1.25 cents per point towards travel reservations. It costs $95 and doesn’t have any travel statement credits or airport lounge access. So for me, the extra $55 in net annual costs for the Sapphire Reserve is a no-brainer.
Is the Chase Sapphire Reserve card right for everyone?
Of course, there’s no single credit card that makes sense for everyone, or even for all credit card users. First, many people simply don’t travel very much and will have little use for these kinds of travel rewards. I would say that you need to travel at least two or three times a year to even consider a card like this, and those who travel six times a year or more will see the most value.
Next, this is a rewards credit card, which will have higher interest rates and fees than similar cards that don’t offer rewards. Reward cards only make sense for those who always avoid interest charges by paying their entire statement balances in full. If you can’t do that, then you should focus on paying off your debt with a low-interest card, or one with a 0% APR promotional financing offer. In fact, if you consistently use your credit cards to incur debt, then you should probably be using a different form of payment altogether.
The Chase Sapphire Reserve is an excellent travel rewards credit card, but only for certain people. If you are a regular or frequent traveler who never incurs interest charges, then the math shows that this card’s $550 annual fee can actually be worth paying.
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