Is it time to get the Chase Sapphire Reserve?

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Few people are traveling these days.  As a result, credit card companies have had to work harder to convince cardholders that their expensive travel cards are worth keeping.  Amex was first out of the gate with terrific temporary perks for their ultra premium credit cards.  Some of those perks are so good, that it actually makes sense to sign up for those cards now.  This is especially true with Amex Platinum and Hilton cards.  See these posts for details:

Last week, Chase unveiled their answer with temporary new perks for Sapphire Reserve and Sapphire Preferred cardholders.  Like Amex, Chase is offering the best new perks to cardholders of their ultra-premium card: Chase Sapphire Reserve.  Are these perks valuable enough to make it worth picking up a Sapphire Reserve card today?

Sapphire Reserve Enhancements & Benefits

This chart shows a summary of the new perks (and the previously reported grocery bonus earnings):

The most exciting enhancement, in my opinion, is the ability to redeem points for 1.5 cents each against spend at grocery stores, restaurants, and home improvement stores.  For details about this feature, including commentary about why it is so exciting, please see: Chase “Pay Yourself Back”. Awesome new Sapphire feature!

Here’s a summary of what the Chase Sapphire Reserve offers, including both previous and new perks:

  • $550 annual fee
    (Through December, renewals cost $450)
  • $300 annual travel credit
    (Through December, purchases at gas and grocery stores count)
  • Earn 3X for travel and dining, 10X for Lyft, 1X everywhere else
    (Plus, through June, earn 5X at grocery stores)
  • Ultimate Rewards points can be transferred to travel partners or redeemed for 1.5 cents each towards travel booked through Chase
    (Plus, through September, redeem points for 1.5 cents each for charges at grocery stores, restaurants, and home improvement stores with Chase’s Pay Yourself Back feature)
  • Travel benefits: Priority Pass, Global Entry credit, car rental privileges, etc.
  • Travel protections: Primary auto, free roadside assistance 4 times per year, trip insurance, etc.
  • Purchase protection: Extended warranty, damage & theft protection, and return protection.
  • DoorDash: $60 per year in automatic statement credits + DashPass free delivery.
  • Lyft: Earn 10 points per dollar, plus get 1 year of Lyft Pink for free.

Our full guide to the Chase Sapphire Reserve card can be found here.

Which perks are valuable this year?

Assuming you don’t plan to travel much this year, here are the perks that I think offer concrete value under current COVID conditions:

  • Renew for $450 instead of $550.
  • $300 annual travel credit.  Since Chase is offering to rebate spend at gas and grocery stores this year, the travel credit is easier than ever to earn.
  • Earn 3X for dining and, through June, earn 5X at grocery stores.  With points easily redeemed for 1.5 cents each, this is like earning 4.5% back at restaurants (including food delivery) and 7.5% back at grocery stores in June.
  • Through September, redeem points for 1.5 cents each for charges at grocery stores, restaurants, and home improvement stores.
  • DoorDash: $60 per year in automatic statement credits + DashPass free delivery.

Where’s the enhanced value? 1.5 cents cash-out.

Even without considering the new point redemption options, I’d say that Chase has done a reasonably good job of making the Sapphire Reserve almost as valuable now as it is when frequently traveling.

The really big enhancement, though, is for those with lots of Ultimate Rewards points.  Through September, Sapphire Reserve cardholders can redeem those points for 1.5 cents each against grocery, dining, and home improvement store charges.  This is huge because it basically means that we can cash out points for 1.5 cents each.  Previously, if you wanted cash instead of points, you could only get 1 cent per point.

Nick covered in detail why this cash-out option is so compelling, so I won’t repeat the argument here.  Instead, please see his post: Is it now irrational to hold Ultimate Rewards points? (on Nick’s mind).

If you cash out 100,000 points this way, you’ll get $1,500 in statement credits.  That’s $500 more than you would have gotten before this feature was enabled; and $250 more than you would get with a Sapphire Preferred card which offers this same “Pay Yourself Back” feature but at 1.25 cents per point.

The point is this: the more points you have in your household that you’d like to cash out, the more valuable the Sapphire Reserve card is right now.  That value will drop after September unless Chase extends the Pay Yourself Back feature (which they might do).

Should you sign up new now?

There are two groups of people that might find it more appealing than ever before to sign up for the Sapphire Reserve card right now:

  1. Those with lots of Ultimate Rewards points
  2. Those who prefer cash back over points

Let’s look at each, in turn…

Sign up now if you have lots of points?

Here’s the thing: if you have a huge stash of Ultimate Rewards points, you might not be eligible for a new Sapphire Reserve card.  To get this card you must be under 5/24, you must not be a current Sapphire Preferred or Sapphire Reserve cardholder, and at least 48 months must have passed since you last received a new cardmember bonus for the Sapphire Preferred or Sapphire Reserve card.

If you’re not eligible for a new bonus, you may be better off upgrading from a Slate, Freedom, Sapphire, or Sapphire Preferred card.  See the “should you upgrade?” section for details.

Sign up now if you prefer cash back?

With the ability to cash out points at 1.5 cents each, the Sapphire Reserve card’s 50,000 point welcome bonus is like $750 cash (assuming you redeem the points before the end of September).  By signing up new, you would still have to pay the $550 annual fee, but you would easily get back $300 from the travel credit which can be earned with grocery and gas station spend this year.  So, ignoring the card’s other features, the first year net value of the Sapphire Reserve card is around $500 ($750 bonus – $550 annual fee + $300 travel credit).  Maybe the value is a little more if you also value the DoorDash benefits.

But consider that the much cheaper $95 per year Sapphire Preferred card is offering 60,000 points and the ability to redeem points for 1.25 cents each.  Those 60,000 points are worth the same $750!  60,000 x 1.25 cents per point = $750.   Ignoring the card’s other features, the first year net value of the Sapphire Preferred card is $655 ($750 bonus – $95 annual fee).

My point is that if you’re primarily interested in cash back, and you don’t already have a bunch of Ultimate Rewards points that you want to cash out, the Sapphire Preferred welcome offer is a much better deal.

Here are up-to-date details about both offers:

Chase Sapphire Reserve Card
50K Points
50K after $4K spend in 3 months

$550 Annual Fee

This card is subject to Chase's 5/24 rule (click here for details). This card is not available to either (i) current cardmembers of any Sapphire credit card, or (ii) previous cardmembers of any Sapphire credit card who received a new cardmember bonus within the last 48 months.

FM Mini Review: Excellent all-around card for frequent traveler. Best when paired with no-fee Chase Freedom Flex, no-fee Freedom Unlimited & no-fee Chase Ink Cash


Card Type: Visa Infinite

Base
Travel
Dine
Other

Earning rate: 3X Travel and Dining ⚬ 10X Lyft (through March 2022)

Noteworthy perks: $300 Annual Travel Credit ⚬ Points worth 1.5 cents each towards travel ⚬ Primary auto rental collision damage waiver ⚬ Priority Pass Select lounge access ⚬ $100 Global Entry fee credit ⚬ $60 annual DoorDash credit in 2020 & 2021 ⚬ Free DashPass for at least 1 year (activate by 12/31/21) ⚬ One year Lyft Pink membership ⚬ Earn 10X on Lyft spend

See also: Chase Ultimate Rewards Complete Guide

Chase Sapphire Preferred Card
80K Points
80K after $4K spend in the first 3 months

$95 Annual Fee

This card is subject to Chase's 5/24 rule (click here for details). This card is not available to either (i) current cardmembers of any Sapphire credit card, or (ii) previous cardmembers of any Sapphire credit card who received a new cardmember bonus within the last 48 months.

Recent better offer: None. This is the best offer we've seen.

FM Mini Review: Great signup bonus. Solid option to pair with fee-free Ultimate Rewards cards such as the Freedom cards, Ink Business Cash, and Ink Business Unlimited in order to unlock ability to transfer points to airline and hotel partners.


Card Type: Visa Signature

Base
Travel
Dine
Other

Earning rate: 2X Travel and Dining ⚬ 5X Lyft (through March 2022)

Noteworthy perks: Primary auto rental collision damage waiver ⚬ Free DashPass for at least 1 year (activate by 12/31/21)

See also: Chase Ultimate Rewards Complete Guide

Should you upgrade now?

If you have another consumer Chase Ultimate Rewards card (Freedom, Freedom Unlimited, Sapphire, Sapphire Preferred) or Slate card, and you’ve had it for at least a year, you may be able to upgrade to the Sapphire Reserve simply by calling and asking.  You’ll need a credit limit of $10K or more.  If you don’t have a large enough credit limit on the card you want to upgrade from, the agent may be able to move credit from other Chase consumer cards to make the upgrade possible.

You won’t get a bonus for upgrading, but you will get all of these benefits immediately:

  • $300 annual travel credit.  Since Chase is offering to rebate spend at gas and grocery stores this year, the travel credit is easier than ever to earn.
  • Earn 3X for dining and, through June, earn 5X at grocery stores up to $1500 per month.  With points easily redeemed for 1.5 cents each, this is like earning 4.5% back at restaurants (including food delivery) and 7.5% back at grocery stores in June.
  • Through September, redeem points for 1.5 cents each for charges at grocery stores, restaurants, and home improvement stores.
  • DoorDash: $60 per year in automatic statement credits + DashPass free delivery.

I previously thought that you would keep your account anniversary when upgrading, but recent reports suggest that Chase may reset the clock on your account.  This means that upon upgrading you will soon owe the full annual fee.  What’s unclear is whether you’ll be charged $450 or $550 this year.  Reader reports about this have been mixed.  Some have been told $450 and others $550.  We’ll have to wait and see what shows up on people’s actual statements.

Is it worth it?  To make the math easy, lets make the following simplifying assumptions:

  • You are upgrading from a no-fee card to the Sapphire Reserve
  • You will be charged the full $550 rather than $450 (the jury is still out on this one)
  • You value the $300 travel credits at full face value (again, this is to simplify the math)

With the above simplifications, we can calculate that the upgrade will cost you $250 ($550 – $300).  Upgrading to the Sapphire Preferred card, meanwhile, would cost you only the card’s $95 annual fee.  If you don’t consider any of the other Sapphire Reserve perks, then we can say that upgrading to the Sapphire Reserve is worth it if the 1.5 cent cash-out ability of the Sapphire Reserve results in more than $155 extra ($250-$95) over cashing out at 1.25 cents with the Sapphire Preferred.

The break-even point is when you redeem 62,000 points.  Here’s the math:

  • Upgrade to Sapphire Reserve for net $250 cost.  Redeem 62,000 points for $930.  Net result: $930 – $250 = $680.
  • Upgrade to Sapphire Preferred for net $95 cost.  Redeem 62,000 points for $775.  Net result: $775- $95 = $680.

All of the above, gets us to this advice: If you want to cash out more than 62,000 points, then upgrading to the Sapphire Reserve card makes sense.

Conclusion

Chase has made excellent temporary enhancements to the Sapphire Reserve card.  These changes ought to be enough to convince most current cardholders to keep their cards.  Plus, as I’ve argued above, those with lots of points to cash out should consider upgrading to the Sapphire Reserve.

For those thinking of signing up new for the Sapphire Reserve, I’m less bullish, unless you’re one of the rare few who have a lot of Ultimate Rewards points and can qualify now for a new Sapphire Reserve card.  For others, I don’t think it’s a bad time to sign up, but I also don’t see much advantage to doing so now versus waiting until travel resumes.  Many would do better to sign up now for the Sapphire Preferred and, after a year, upgrade to the Sapphire Reserve.

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