Should You Apply For The Chase Sapphire Reserve Before Changes?
Everyone got what appears to be some more bad news last night. There are some rumors, that appear to be pretty reliable, that Chase is changing up the perks and annual fee of the Chase Sapphire Reserve. For most people these changes will be a net negative but there is still a small window to lock in the old annual fee and get the new perks. So the question is should you apply for the Chase Sapphire Reserve before the changes kick in?
Some Of These Offers May Have Ended Or Changed Since Publishing
What Are The Changes?
Before we get ahead of ourselves let’s take a look at the rumored changes:
- Annual fee will be increased from $450 to $550
- Free DoorDash Dashpass for 2 years ($9.99 a month normally)
- It gives free delivery on orders over $12, plus lower service fees.
- $60 DoorDash credit. It is unclear if this will be a lump sum credit or $5 per month etc.
- Lyft Pink ($19.99 a month normally). This gets you 15% off your rides and 3 -30 minute bikes or scooter rentals per month for free and some other perks.
There is also a comment saying that the travel credit will be increased to $325 from $300 per year but I am not sure if that is real or not.
What Are These Changes Worth?
Chase will try to sell you that these are positive changes and offer way more value than the increase in the annual fee. This is right out of the American Express Platinum playbook! What they are really hoping for is a ton of breakage and a way to line their pockets with profit from the people that can’t or won’t max out these benefits.
What are these perks worth is a tough question to answer because it depends on your personal situation. If Lyft or DoorDash are not in your area then that makes these additions almost worthless to you. If you live in a big city and use both all of the time then this could be a net positive. Having said that I will give it my best shot to come up with some fair valuations.
DoorDash –
It appears that Dashpass will save you $4-$5 per delivery by waiving the delivery charge and reduced service fees on orders of $12 or more. If you normally order from DoorDash or a competitor anyway that is $4+ a pop for you. The $60 credit if in chunk format is somewhat valuable. But if $5 per month etc. then it will basically cover the service fee. That means this adds convenience to your life but all it saves you is the gas you would have spent picking your food up. Now if the $60 credit is a chunk credit then the best way to use it is in one or two big orders so it isn’t cannibalized by fees. If that is the case the value is somewhere in the $40-$50 range for these perks. If it is broken down to a small credit per month both things are essentially worthless.
Lyft Pink –
I have always used Uber when traveling but Lyft is actually often times cheaper. And there are many people out there that prefer Lyft’s service. If that is the case then this program can save you some money for sure. Getting 15% off every ride adds up quickly for power users. Also anyone that lives in a city and uses the scooters or bikes on a regular basis will love the 3 free rides every month.
To be honest you would be better off getting a SoFi Money account to get 20% off Lyft rides. The account is free, has some awesome perks and comes with a small bonus. This offer goes till 2/18/20 so I would go that route.
Should You Apply Before January 12, 2020?
These changes supposedly go into affect on January 12, 2020. So you could sign up before then and lock in the $450 annual fee and still get all of these new “perks” a few days later. But should you? Is it worth it?
I have said for many years that the Chase Sapphire Preferred offers more value in the first year versus the Chase Sapphire Reserve. The best play, for most, would be to apply for the CSP and then upgrade to the Reserve after the first 12 months. Would that change with these newly added perks? Let’s take a look at the numbers.
THESE OFFERS MAY HAVE ENDED OR CHANGED
Crunching the Numbers – Chase Sapphire Preferred
The Chase Sapphire Preferred comes with the following welcome offer right now:
- 60,000 Ultimate Rewards points after spending $4,000 within the first 3 months.
- The $95 annual fee is NOT waived.
If we value Ultimate Rewards at 1.5 cents a piece that is $900 in value offered. Once you subtract out the annual fee you are left with a net positive of $805.
Crunching the Numbers – Chase Sapphire Reserve
The Chase Sapphire Reserve comes with the following welcome offer right now:
- 50,000 Ultimate Rewards points after spending $4,000 within the first 3 months.
- The $450 annual fee is NOT waived.
- There is a $300 annual travel credit which helps offset the fee.
The welcome offer brings in $750 in value. I would value the travel credit at near full value so we will call it $300 to make it easy. Once you subtract the $450 annual fee you are left with a net positive of $600. If we add in $45 for the DoorDash perks (assuming a lump sum payment) and another $40 for the Lyft program you are sitting at just under $700 in value for that first year.
Comparing The Results
As you can see at first glance the Chase Sapphire Preferred comes out $120 ahead of the Chase Sapphire Reserve but we are not quite done yet.
These figures don’t include the other travel perks of the Sapphire Reserve like the Priority Pass membership, 1.5 cent redemptions in the travel portal or increased travel insurance benefits. It also doesn’t account for the better earning structure of the Reserve. It earns an extra point per dollar on travel and restaurants.
If we place a $0 value on the travel perks above and solely focus on the earning structure you would need to spend at least $8,000 in travel and dining to close the $120 value gap in that first year.
Putting a $0 value on the travel perks is not fair really though. However their value is totally subjective and dependent on your personal situation. Some will value having Priority Pass restaurant access at more than $120 a year. Others will look at the extra portal savings they could have and think it is worth it. The gist of what I am saying is that you have to plug in your own figures.
Your Own Personal Calculation
Since I can not justly tell you what to do here or which option is best for you I will give you a formula to calculate. Use this and whichever one comes out on top is your champion:
Chase Sapphire Preferred:
60,000 X (your value of UR points) – $95 = the net value of the CSP for you
Chase Sapphire Reserve:
50,000 X (your value of UR points) + $300 Travel Credit (or what you value it at) – $450 =
Now keep that number and add it to what you get from this second equation. Plug in your valuation for each item –
Priority Pass Membership + .25 More In Portal Bookings + Travel Insurance + Lyft Pink + Door Dash =
Once you total those two equations up for the CSR then compare it to the CSP’s number and see which one is bigger. If the Chase Sapphire Reserve comes out ahead then you may want to apply for it before January 12th.
Things to Consider When Evaluating These Options
I wanted to give you some thoughts on adding valuations to these options. Look at what other cards offer similar perks or spending options. For example if you have an Amex Gold card or the Citi Prestige are you going to put any restaurant spend on the Chase Sapphire Reserve?
Do you have Priority Pass already from another card? Does that membership have restaurant access already and if not do you value that access at all?
Do you frequently use the portal or do you think you actually will since transferring to partners usually brings better returns?
Just a few things to get you churning your thoughts a little bit. We don’t want to fall into that elite status type of trap when comparing these card. Go in with a clear mind and realistic valuations.
Final Thoughts On Should You Apply For The Chase Sapphire Reserve?
Back to the original question, should you apply for the Chase Sapphire Reserve before the changes kick in? The answer depends on your entries into the formula above.
For me personal I put a $0 value on these new perks so it doesn’t sway my thinking that the Chase Sapphire Preferred is better in the first year for most people. The difference now is that I think it will be better in year two and beyond now. But if you value the DoorDash or Lyft perks at all I would grab the card before the change in annual fee. That added value closes the gap quite a bit between the two cards and the added travel perks would put the Chase Sapphire Reserve in the lead.
What do you think? Should people apply for the CSR before the changes kick in? Do you give any value to the new perks at all? Let me know in the comments.
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It’s not just Lyft Pink though, it’s Lyft Pink + 10x points/$ spent, which comes out to an over 30% discount on Lyft, way better than the SoFi account.
That is true I didn’t know about the 10X when I wrote this. I would still probably use the SoFi card even if I had the CSR since Lyft Pink is a membership and it doesn’t matter which card you use. I value 20% > 10X
I didn’t know you could stack SoFi with the Lyft Pink! That’s pretty awesome and weird. OTOH I personally prefer to grab UR points over cash just to have that Hyatt optionality. When I need a reasonably priced hotel room I can always use UR to get it even with the recent Hyatt devaluation even during peak times. Like I just booked some rooms in Austin for SXSW where the rooms are going for ridiculous rates; because I have a stash of points it is no problem. I wouldn’t do the same thing with cash, it’s just too expensive. So for me it’s the opposite: UR>cash.
Points are great for sure. Just most people don’t value UR at 2 cents a piece so that is why SoFi would be better. But if you get over 2 cents per point then 10X UR is the better option.
You can look at it this way. By not going the SoFi route you are essentially buying those points at 2 cents each. Something to think about.
Good point, though it’s not precisely equivalent because you can’t actually buy UR points, and Hyatt points normally sell for 2.4 cents/point and there’s an annual limit on how many you can buy. For me it’s about flexibility — being able to grab a decent deal on a good room whenever and wherever I want, even at peak times, so the more Hyatt and/or UR points I have, the more likely it is I can get myself or my family the room(s) I want. Unlike cash, Hyatt points aren’t always easily convertible from cash. For example, let’s say I want to plan a trip to a city during a peak time and I’ve run out of Hyatt/UR points and have already hit the limit on points buying — I may not be able to use the cash I have to convert to points at any price, not even the 2.4 cents/point usually offered, and then I’m SOL — I just have to find some crappy room or pay an exorbitant sum for a Hyatt room. So that’s another reason why for me UR points > cash even if I might only be getting 1.8 cents/point or something like that, because in some situations the points just can’t be had at any cash price.
Fair enough. If you find yourself running low on points often then it makes sense to grab as many as you can when you can!
I called into Chase a few minutes ago and they are not accepting a product change from preferred to Reserve. The title of your article seems to indicate that one can still get the Reserve? Why do you infer that? if Chase is not allowing this to be done?
You can still apply for the card which is what this article is about. They blocked upgrades until after the annual fee changes which we talked about on the site as well.
My wife and I both did the CSR a couple years back when they had a good sign up bonus. We needed to revisit both of us having the card this year. Definitely will drop one. Now we need to consider dropping one and add 2nd on as Authorized user, a do a downgrade path. Thanks for the article.
My pleasure Wayne – tough choices ahead for sure
Thanks for the article. I have been waiting for the 48 months rule to be over so I can reapply for CSR but now looking at these changes I won’t get it and go for Southwest instead and hold on to the Aspire. The AF on the Aspire offer more benefits for me
I think that is a solid plan. The Aspire is hard to say no to for sure 🙂