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Is the Chase Sapphire Reserve Worth A $550 Annual Fee?

This week Chase Bank announced partnerships with Doordash and Lyft to bring extra benefits to holders of Chase credit cards. In exchange, Chase will raise the annual fee on its premium Chase Sapphire Reserve from $450 to $550. Now a lot of people asking whether this change is worthwhile for consumers. And the answer is: it depends. Like all other credit cards. Everyone’s spending habits and needs are different, but we can do calculations and comparisons.

TRAVEL CREDIT

The Chase Sapphire Reserve (CSR) does have a large annual fee but it’s not as daunting as it appears. The biggest benefit is a $300 annual travel credit–spend $300 on nearly any travel-related expense, and Chase reimburses the cardholder. This essentially brings the $550 annual fee down to $250. Unlike most other cards (such as the American Express Platinum, also with a $550 annual fee) the CSR travel credit is extraordinarily easy to use. No one should apply for the card if they can’t get the full value.

Value: $300/yr

SIGN UP BONUS

Another draw is the sign-up bonus (SUB) of 50,000 points for spending $4,000 within 90 days of applying for the CSR. These points are valued at $750 when redeemed for travel expenses through the Chase website. The travel-savvy can transfer these points to certain airlines/hotels for potentially greater value. But even redeeming the bonus for straight cash (not recommended) gives people $500. Between the bonus and travel credit, that’s a minimum of $800 in value, more than enough to offset an initial $550 fee. The tricky part (for some) is keeping the card profitable in subsequent years.

Value: $500-1,000

POINTS & CASH BACK

The card gives 3x points on dining and travel (often equivalent to 4.5% cashback) with 1x points on everything else (often equivalent to 1.5% cashback).

When the annual fee was $450, CreditCards.com said “if you spend $3,425 per year on travel and dining, you’ll earn enough in rewards with the Sapphire Reserve card’s higher rate and credits to make up the difference in annual fee.” They calculated the card’s overall value at $-9 per year at this level of spending (redeeming points for travel through Chase’s website) not including other benefits. With a different card that gives 3% cash back with no annual fee, it’s a straight $102.75 out of spending $3425 a year.

The hidden boost here is to add Chase’s no-fee cards (Freedom and Freedom Unlimited) then transfer the points from those cards to the CSR for travel-related redemption. The Unlimited card would then earn 2.25% on all purchases (regardless of category) and the Freedom card could earn 7.5% back (depending on categories). Using all 3 cards together gains the most value. Especially if one transfers the Freedom and Unlimited sign-up bonuses to the CSR. Each has a current bonus of $200, which is a combined value of $600 when redeemed for travel.

Value: $? (depends on spending habits and cards held)

AIRPORT PROGRAMS

Chase Sapphire Reserve has two travel benefits: free Priority Pass (allows access to airport lounges) and a reimbursement for getting Global Entry (or TSA Precheck). The latter is a credit for $85 or $100 depending on the option chosen, and is generally helpful for getting through airports faster. The helpfulness of Priority Pass (PP), however, is less clear. There are reports of overcrowding at airport lounges, so PP members aren’t able to always use the benefit. The benefits are also wide-ranging depending on the airport being used. Many PP lounges offer only a few basics for free: coffee, tea, water, soda, some small snacks, etc. It’s more quiet than the general airport and they have Wifi, but those are marginal benefits; most airports already have quiet areas (depending on luck) and free Wifi.

At full price, Priority Pass costs $300/yr for 10 free visits, or $100/yr for visits at $32 each. Or $429 for unlimited free visits. Using lounges 4 times a year would normally cost $228 for one person. Chase Bank lists the PP benefit as a $429 value. The average person wouldn’t normally pay $200+ if their default airport lounge(s) are only making $10-15 of snacks and drinks available. It’s not a big savings compared to an airport restaurant. However, PP does give discounts at Priority Pass designated restaurants which can be valuable. And some airport lounges have significant benefits like free baked goods and alcohol.

So overall, the Priority Pass benefit is too subjective to assign a value. For some people it’s worth $400+, and for others it’s worth $0-30 per year. It also depends too much on luck and location. TSA Precheck and Global Entry are worthwhile though. Since the reimbursement isn’t available every year, it works out to be an annual benefit of $21 or $25.

Value: $21-529/yr

VISA INFINITE & MISC. BENEFITS

As a Visa Infinite card, cardholders get minor benefits such as free breakfast at certain luxury hotels. Not a big draw for a lot of people, but it’s something. (Reservations must be booked through a specific website though, and sometimes that’s much more expensive than other hotel-booking websites. So this “benefit” occasionally has a negative value.) There’s also a concierge service and “access to exclusive events.” Usually tickets to big events or expensive reservation-only restaurant meals from acclaimed chefs.

Other benefits include travel insurance, roadside assistance, and up to $2500 emergency medical/dental coverage. It’s a long list. Most people don’t use any of these benefits, but they’re nice to have, so there IS some value here.

Value: $5+/yr

CAR RENTALS

This card offers primary rental insurance. Most cards offer secondary insurance which is based off your personal insurance, whereas Chase covers things for cardholders. Then there are some discounts at Avis, Silvercar, and National, ranging from 20% to 30%. Plus the possibility of free weekends and complimentary upgrades.

For some people, this is pretty valuable. But since Chase now has a partnership with Lyft, that may cannibalize the car rental benefits.

Value: $0+

LYFT

This is the first of two January 2020 card updates. For 2020 CSR cardmembers will get 10x points on Lyft rides (instead of the usual 3x for travel) and a free one-year membership for Lyft Pink. “Pink” benefits include a 15% discount on US-based rides, priority airport pickup, and “3 free 30-min. bike or scooter rides per month” in 12 cities. When 2020 ends, the only added benefit is 10x points on Lyft, which expires in March 2022. Chase may or may not renew this contract.

The listed value is $240 (Lyft Pink normally costs $20 per month). Some people will get $0 added benefit, while others will get hundreds in benefits. Fans of Uber won’t be pleased.

Value: $0-240 minimum

DOORDASH

The other latest update: Reserve cardholders will get a $60 annual credit for Doordash, plus a free two-year Dashpass membership. (Dashpass gives free delivery and a ~25% reduction in service fees.) Both benefits are slated to expire 12/31/2021 and the 2-year value is listed as $360. The annual credit is nice because of its flexibility, although not everyone has Doordash available in their local area. Dashpass is less useful–in my experience so far, it only reduces Doordash’s costs to the equivalent of going to the restaurant in person. It isn’t a real “added” benefit for me, although I almost never use the service to begin with.

Value: $60+/yr

OVERALL VALUE

The Chase Sapphire Reserve has extreme variance depending on individual spending. The minimum value is currently $360 (via credits) versus the $550 fee. The remaining $-190 may or may not be easy to overcome.

Going by “listed values” then the CSR has a current annual worth of around $1,150 (adding up all credits, programs, etc.) not including luxury hotel benefits or points-earning or percentage-based discounts. That’s about $700 after a $450 annual fee (for CSR holders whose annual fee hits in Jan/Feb/March 2020). Everyone else would come out ahead by “only” $600 or so. IF full value is obtained from everything above. (These calculations also don’t include the sign-up bonus. Most people concerned about the annual fee increase already have the card.)

Unfortunately everyone will have to do their own math. The annual card value ranges from approximately $-200 to $700+ for each person.

BEST ALTERNATIVES

Premium cards include the Citi Prestige Mastercard ($495) and American Express Platinum ($550).

Cards without an annual fee for dining/travel include the Wells Fargo Propel American Express. For more information, check out my post on no-fee credit cards.