A couple of days ago I wrote a post with four reasons it could make sense to apply for the Chase Sapphire Preferred® Card rather than the Chase Sapphire Reserve® Card, even if you think the Reserve may make sense for you in the long run.
While I think a lot of people are familiar with the benefits of the two types of cards, in this post I wanted to quantify a bit better when it could make sense to have one card over the other.
Obviously there’s no math that everyone will agree on, though hopefully at least sharing the framework of how I crunch the numbers will be useful for some.
Sapphire Preferred vs. Reserve basics
The Chase Sapphire Preferred® Card has a $95 annual fee (waived the first year) and offers:
- 2x points on dining and travel
- The ability to redeem points for 1.25 cents each towards the cost of a travel purchase
- No foreign transaction fees
- Great travel and purchase protection
The Chase Sapphire Reserve® Card has a $450 annual fee and offers:
- 3x points on dining and travel
- A $300 annual travel credit
- A Priority Pass Select membership with guesting privileges
- The ability to redeem points for 1.5 cents each towards the cost of a travel purchase
- No foreign transaction fees
- Great travel and purchase protection
The $55 difference
When doing the math to decide which card makes more sense, I generally think of the long term cost difference between the two cards as being $55 per year.
- The Sapphire Preferred has a $95 annual fee (waived the first year)
- The Sapphire Reserve has a $450 annual fee, but you get a $300 travel credit that just about anyone should get full value out of, so I view the real “out of pocket” as being $150 per year
Long term your real cost difference (by my math) is $55 per year. In the first year the numbers work out a bit differently, as you’ll end up being “out of pocket” $150 vs. zero.
It’s up to you how you choose to value the first year situation vs. the situation in subsequent years. In general this is one reason it could make sense to first get the Sapphire Preferred and then product change to the Sapphire Reserve after a year (or more).
With those basic thoughts out of the way, let’s look at the three big areas where you could get a lot more value out of the Sapphire Reserve than the Sapphire Preferred.
If you value a Priority Pass membership
One of the great benefits of the Sapphire Reserve is that it offers a Priority Pass membership. You can make unlimited lounge visits, and can take two guests into the lounge with you every visit. If you travel with any frequency then this should be worth way more than $55 per year.
Priority Pass gets you access to over 1,000 lounges around the world
The global network of Priority Pass lounges keeps growing, and they add more and more innovative locations to the network. For example, in addition to traditional airport lounges, we now have almost a dozen airport restaurants in the US where Priority Pass members can eat and drink for free.
There are so many cool Priority Pass lounge concepts, like House Spirits Distillery in Portland
The catch is that nowadays many premium cards come with a Priority Pass memberships, and a redundant membership doesn’t really get you anything. For example, I have three Priority Pass memberships, and therefore I value that particular benefit on the Reserve at zero. However, those of us who have multiple Priority Pass memberships are presumably in the minority.
If you spend a lot on dining and travel
One of the key benefits of these two cards is the bonus points they offer on dining and travel:
- The Sapphire Preferred offers 2x points on dining and travel
- The Sapphire Reserve offers 3x points on dining and travel
I value Ultimate Rewards points at 1.7 cents each, so to me that’s a return of 3.4% and 5.1% in those categories, respectively.
In order to recuperate that $55 yearly difference that I talk about above, you’d have to spend ~$3,200 per year in those categories. Obviously these numbers would work out differently if:
- You value Ultimate Rewards points differently than I do (if you value them at 1.5 cents each then the breakeven cost is closer to ~$3,700)
- You are trying to calculate the value the first year, since the cost difference between the cards is $150 rather than $55
So based on my valuation, the breakeven point on dining and travel spend with these cards is ~$3,200 per year.
Spend a lot on dining and travel? Triple points will add up quickly
If you want to redeem points for 1.5 cents each
Ultimate Rewards points are flexible, and there are several good ways to use them. You can transfer the points to one of the Ultimate Rewards hotel or airline partners, or you can redeem them as cash towards the cost of a travel purchase:
The points earned on both cards have the same value if you’re transferring them to a partner (you can transfer them at a 1:1 ratio), but if you redeem them as cash towards the cost of a travel purchase, the values are different:
- Points earned on the Sapphire Preferred can be redeemed for 1.25 cents each towards the cost of a travel purchase
- Points earned on the Sapphire Reserve can be redeemed for 1.5 cents each towards the cost of a travel purchase
If your goal with Ultimate Rewards points is to redeem them as cash towards the cost of a travel purchase, then the breakeven point here is earning about 22,000 points per year. In other words, if you earned 22,000 points per year you’d have:
- $275 worth of rewards on the Preferred
- $330 worth of rewards on the Reserve ($55 more rewards, but you’re also paying $55 more per year out of pocket)
Keep in mind that the 22,000 number is talking about points earned and not dollars spent. So if you have the Reserve and spent $8,000 per year on it exclusively on dining and travel, you’d come out ahead that way (since you’d earn 24,000 points).
You can redeem Ultimate Rewards points to pay for all kinds of travel purchases
The above three points are some of the key differentiators between the two cards. There are other things you have to factor in as well, like the Reserve’s better travel coverage, Global Entry or TSA Pre-Check fee credit, and Visa Infinite perks. However, my goal was to provide generally useful advice that didn’t get too complicated.
While I think both cards are excellent, personally I have the Chase Sapphire Reserve® Card. That’s in spite of the fact that I don’t value the Priority Pass membership (because I have one through other cards as well), and that I don’t redeem points for 1.5 cents each towards the cost of a travel purchase (since I get more value by converting those points to partner programs).
The main benefit that makes me love the Reserve is that it offers triple points on dining and travel. Compared to the Preferred, I feel that I come out ahead if I spend at least ~$3,200 per year on travel and dining on the card, and I most definitely do that.
If you have the Sapphire Preferred or Reserve, how do you justify one card over the other?
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