Chase Sapphire Preferred or Reserve? Preferred Wins!
Which credit card should I get? That is the most popular question I get asked. Friends, family, members of our Facebook group, or just people emailing me directly, this one tops the list. It is the number one question from people just starting out as well. Most everyone in this “hobby” agrees that people should start with Chase cards because of the pesky Chase 5/24 rule. What they don’t agree on is whether they should start with the Chase Sapphire Preferred or the Chase Sapphire Reserve?
Updated 3/29/21 with the new offers and fee changes
A lot of people in the miles and points hobby suggest starting with Chase because of the cumbersome Chase 5/24 rule. After your first 4 applications (with any bank) Chase products become unavailable to you. To ensure you don’t have regrets later down the line most people believe that your first few applications should be Chase cards.
Throw in the fact that Ultimate Rewards are some of the most coveted points in this hobby and you see why Chase is such a focus. Chase has a great rewards ecosystem and they have one of the best, if not the best, transfer partners out there in Hyatt. Make sure you read Bethany’s guide on the ins and outs of the program for more detail.
We know you want to start with Chase, and that you should earn Ultimate Rewards points, so which card should you get? For a long time people would tell you to get the Chase Sapphire Reserve. But they are wrong, in my opinion at least.
CLICK HERE to compare this and other travel credit cards.
Why Chase Sapphire Preferred Instead Of Reserve?
I think most people are wrong when they suggest the Chase Sapphire Reserve over the Chase Sapphire Preferred for a few reasons.
No doubt that the Sapphire Reserve used to be leaps and bounds ahead of the Preferred. When the card launched it had an amazing 100,000 point offer, the travel credit could be double dipped and the annual fee was reasonable. Things have changed and Chase has reduced the value of the Sapphire Reserve card while increasing the annual fee.
I previously discussed why the Preferred gives you more value in the first year. With the lower annual fee, a better welcome offer, and the Reserve’s latest reduction in perks the Preferred has taken the lead.
Chase also removed the opportunity to get the travel credit twice in the first year. That changed the Reserve from a profitable card the first year into one that has a substantial annual fee even after taking the travel credit into consideration.
Chase also added the “Sapphire Rule”, you can only carry one Sapphire product at a time now (although there are ways around this). This forces you to choose one or the other and most people should pick the Preferred, to start off at least.
Breaking Down the Numbers
I like using analysis when making a decision so let’s crunch the numbers.
- Annual Fee the First Year: $95 Sapphire Preferred, $550 Sapphire Reserve
- Travel Credit: $0 Sapphire Preferred, $300 Sapphire Reserve
The Chase Sapphire Preferred also comes with a larger welcome offer, 20,000 more points The extra 20,000 points are worth $300 at a 1.5 cents per point valuation. That valuation is fairly easy to obtain via transfer partners.
The Chase Sapphire Reserve earns an extra point per dollar (1.5%) on travel and dining. Since the Reserve is in a $605 hole you would need to spend $30,333 in those categories to make up the difference. That is not obtainable for most everyone.
CLICK HERE to compare this and other travel credit cards.
But What About the Perks?
You are probably thinking this is great and all but what about Chase Sapphire Reserve‘s perks? The Reserve’s perks are far superior to the Preferred but are they useful to most people? A lot depends on your base airport, does it have a Priority Pass Lounge or restaurant? If yes then this could be very valuable to you. A majority of airports don’t offer decent Priority Pass lounge access.
One of the recent perk reductions on the Reserve card was to limit Priority Pass memberships to 2 guests. That puts the Chase Sapphire Reserve more in line with other premium cards. It does still get you access into restaurant lounges thought, something American Express cards do not.
Doordash $60 Credit
I discount this perk quite a bit because of fees and higher prices that restaurants have on the platform. But it is something that should be considered in the calculations depending on if you can use it, and how you value it. The same could be said for Lyft Pink and the Dashpass that comes with the card. Those are harder to quantify though in terms of a dollar amount. And this perk ends at the end of 2021 unless it is extended.
Pay Yourself Back
The addition of pay yourself back is something else to consider. The CSR earns 1.5 cents per point using this feature vs 1.25 cents per point for the CSP. That can add up to a sizeable difference. In order to make up the $605 difference you would need to redeem 242,000 points in this manner to make up the gap. If you already have a healthy stash of Ultimate Rewards points then this number is obtainable for sure. If you are just starting out with Ultimate Rewards then it wouldn’t be a consideration. This offer may not be extended past April of 2021 either.
I Said Almost, Not All
There are always exceptions. One was listed above, if you live somewhere where your airport has a valuable Priority Pass lounge or restaurant, like Portland. And, if you travel with others often then the $605 gap would be closed some and the numbers would change.
Another exception would be if you travel often for business and get reimbursed travel expenses. Maybe that $40,333 in charges on restaurants and travel to make up the difference are actually obtainable for a true road warrior. If you travel often you may want the added travel insurance the Reserve card offers, even if it has been downgraded some.
Lastly, if you have been playing the game for a while and have a pretty decent stash of Ultimate Rewards points already then you may wanna go with the Reserve. That is assuming that you will be taking advantage of the pay yourself back feature while you can.
What About After the First Year?
When you get to the end of the first year the waters become muddied. That is because the $155 difference in annual fees and credits is a smaller gap to bridge. This would trim the spend differential down to $10,333 per year in the 3X earning categories. Even less if the Doordash $60 credit sticks around long term. That is obtainable for more people versus the $40K+ needed in year one. But the lounge access and other travel insurance / perks may make the fee a wash in your eyes anyway.
As you can see the ultimate strategy when discussing how to approach the Sapphire product line is to apply for the Chase Sapphire Preferred in year one and then upgrade it to the Chase Sapphire Reserve in year 2.
After the first year, when the value differential is much smaller, more people will find more value with the Sapphire Reserve card over the Sapphire Preferred. Since Chase makes you choose between one or the other we need to be creative. This system will offer most people the best value.
Have Your Cake & Eat It Too
For those of you that hung around until the end I will throw another option into the mix. This option could let you have your cake and eat it too. While you can not sign up for one of the Sapphire products while carrying the other, you can upgrade into a second one.
So if you signed up for the Sapphire Preferred for the increased welcome offer, you could then upgrade another card into a Sapphire Reserve. This would require you to already hold a Chase Freedom card, and you would have had to have it for over a year.
The upgrade would allow you to get the increased 80,000 point welcome offer, while also, getting the increased value from pay yourself back and all the perks of the Sapphire Reserve.