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We downgraded in 2018, here’s why we’re keeping the Sapphire Preferred in our wallet
I’ll preface this entire post with the fact that when I made this decision in 2018, I held a Citi Prestige ($350), Amex Personal MB Platinum ($550), and an Amex Business Platinum ($595). That meant 4 premium cards and $1800+ in annual fees. As of 2/2020, I still hold a Citi Prestige, a personal Amex Platinum, and an Amex Business Platinum. All of these cards come with travel credits and perks that make each and every one of them individually valuable, but it doesn’t mean that refinement isn’t needed. The debate between Reserve and Preferred is one I have had each year since downgrading since I could call in and upgrade from Preferred to Reserve if I found it valuable.
The benefits of the Chase Sapphire Reserve are immense with 3x points in dining and travel, priority pass membership, 1.5 cent redemption in the travel center, car rental insurance, $300 airline credit, $60 Doordash credit ( 2020 + 2021 ), and 10x on Lyft. I was approved for the card at the end of 2017 with a 50k welcome offer, and put quite a bit of my personal spend on the card. If this was the only premium card that I held, I’d keep it, no doubt. But, as I mentioned above – it wasn’t. So why did I decide to product change to a Sapphire Preferred, and why have I kept that Sapphire Preferred ever since?
First off – I think the Chase Sapphire Preferred is a no brainer card for beginners and the savviest of point enthusiasts
It has a low annual fee of $95 and comes with a great selection of benefits, but most important to me are:
- The ability to take points earned from Chase Freedom, Freedom Unlimited, Ink Business Cash and Ink Business Unlimited and transfer them into my Sapphire account and then to partners. This is how premium travel is most effectively achieved with points.
- I get full primary coverage when renting cards.
Just these two reasons are enough for me to pay a $95 annual fee.
We transferred Chase Ultimate Rewards to BA Avios and upgraded into BA First Class for just 25k points.
Second: A big argument for getting the Chase Sapphire Reserve used to be that it was just a $55 difference between it and the Chase Sapphire Preferred after the $300 travel credit. That is no longer the case
We need to look at our math again since Chase raised the fee from $450 to $550 in 2019
Because the Chase Sapphire Reserve offers a $300 travel credit, the $550 annual fee can be effectively dropped down to $250 out of pocket when you factor that in. But, this assumes that I’d prefer to put those $300 on my Chase Reserve. In fact…I don’t opt to put most of my travel there because most of my travel is work related. Also, you don’t earn 3x points on the $300 travel credit, so that’s 900 points, or $13.5 ( at 1.5c) that should be added to the $155. Or $168.50.
That $168.50 has to be made up somewhere and the biggest difference would be 3x dining vs 2x, the $60 Doordash credit in 2020 and 2021, and Lyft Pink ( 15% off rides ) and 10x points on Lyft purchases.
If you back out the $60 at full value you still need to make up $108.50 in either 15% Lyft discounts and increased dining earn.
Since I have an Amex Platinum that gives me $15 a month in Uber credit, and my parents Platinums are loaded on to my account as well ( since they don’t use Uber at all ) I hardly ever use Lyft these days. That 15% discount wouldn’t really help me out much, but quickly, I’d need to spend roughly $660 a year to earn back the $108.50 ( at 15% credit = $99 ), which would mean I’d need to spend $45 on Uber and $55 on Lyft per month ( except for December when Amex credits Uber with $30 per account so I’d need to spend $145). That just doesn’t happen for me. You’d need to factor in the 6600 points you’d earn as well, which valued at 1.5c, is $9.90. That $660 would net you savings of $108.90. Correct me if my math isn’t right, I did it pretty quickly, but it’s pretty close and you get the picture.
As for dining…
I use a combination of my American Express Gold card and my Citi Prestige to earn 4x and 5x respectively at restaurants. Plain and simple, the 3x that I’d earn on my Chase Sapphire Reserve just doesn’t measure up comparatively. Even beginning to crunch the numbers doesn’t matter because I’d have to account for the opportunity cost, and let’s be honest, the Opportunity cost of 2x Citi Thank You is bigger than 1x Chase Ultimate Rewards every day of the week
PersonallyI think the Amex gold card is an absolute must – read why here.
I mentioned I keep a few premium cards: Prestige, Amex Platinum, Amex Business Platinum – so there is a lot of moot benefits between them.
Let’s focus on the Citi Prestige:
Citi Prestige has a high annual fee but mine is only $350 ( Citi Gold gets $145 credit). I mainly keep it for the 4th night free benefit, but it also comes with Reserve commensurate trip cancellation protection, and a priority pass membership ( amongst a bevy of other benefits). Citi Prestige also comes with a $250 airline credit which drops the fee down to $100. Yes, there is similar opportunity cost I mentioned above, but it’s easily overcome with the 4th night benefit. In fact, the $350 is easily overcome most years without even worrying about the fee credit. Not that I leave it on the table, just saying…
Since I know I’m going to keep it, I use the Priority Pass associated with it. Currently, it still has access to restaurants, and last year alone I was able to get several hundred dollars worth of credit. That means I don’t need the one issued from the Chase Sapphire Reserve which effectively gives it zero value to me.
Ink Business Preferred – 3x work travel
I mentioned this above, but the bulk of my travel is work related and this card offers 3x points on travel which negates the 3x travel on the Reserve.
Amex Platinum = 5x on airfare
This is a beast card in this category as long as purchases are via the airline’s actual site or amex travel. Otherwise, push it through Ink biz Preferred or Citi Prestige.
Where was I using my Reserve most?
As I analyzed my spending I began to realize that I was utilizing the card most on every day purchases and bills associated with non-category bonus spend. I also utilize the rental car coverage a lot.
These are both perfect for the Sapphire Preferred. I’ll use my Sapphire Preferred for primary rental coverage at Sixt where I got this benz upgrade due to comped Platinum status.
The Chase Sapphire Reserve values its Ultimate Rewards at 1.5 Cent in the Chase Travel Center
This is something you should really consider. The most any other Chase card will give you is 1.25c – the Chase Sapphire Preferred and Chase Ink Business Preferred. That means the difference in annual fee, which we measured to be $168.50 after Door Dash could be recouped if you spend enough on your card to create that much value for redemption. Granted, you need to be primarily using your points in the travel center, but the argument is there to be made. Simply put that means the difference, 0.0025 of valuation, must yield more than $168.50 in value.
If you earn more that 67,400 points a year, you’d be better off keeping a Reserve vs the Preferred ( $1011 in value vs $842.50 )
Overall: I downgraded my Reserve to a Preferred and I’m keeping it that way
I still think the Chase Sapphire Preferred is one of the single best overall cards on the market. I first picked up a Sapphire Preferred back in 2013 and downgraded it to a Freedom in 2017 when I got a Reserve. It’s been back in my wallet and staying put. This doesn’t mean that the Reserve isn’t worthwhile, on the contrary, I think it’s still super valuable for most that hold it. But…
Everyone’s situation is different and requires unique analysis to assess which cards make the right sense in your wallet. I am certainly amongst a distinct category of cardholders willing to spend a lot of money on annual fees, but I also am able to utilize and extract value in excess of the fees from all of the cards I keep. When I don’t feel like the value is there, I reassess and rearrange.
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