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Which Chase Premium Card is Better in Year 1
In the comments section of my latest Great Debate series article I got into an interesting discussion that sparked the idea for this post. Which premium Chase card is better in the first year? The Chase Sapphire Preferred or the Chase Sapphire Reserve? Pretty much everyone reading this is thinking the Chase Sapphire Reserve, duh. The CSR is the better card over the long term, but the question is if it is better in the first year of card membership?
I will be approaching the answer to that question using my personal experiences. This is my opinion and this is not a one size fits all answer but I think it will give everyone something to consider when making the decision.
Comparing the Cards
Shawn did a similar post shortly after the CSR was first released. The Chase Sapphire Reserve was the clear winner but things have changed over the last year and a half. Chase has added new rules to the Sapphire line of products. You are only allowed one Sapphire bonus every 24 months, whether it is the CSP or CSR. One cancels out your chance at the bonus for the other. You can no longer carry both cards at the same time either.
The new rules make the decision between the two cards more important. But, that wouldn’t change the results from over a year ago. The changes that leveled the playing field were the reduction in the Sapphire Reserve’s sign up bonus. Along with limiting the travel credit to once per cardmember year, instead of calendar year. Those changes makes the decision a little bit tougher.
Sign up Bonus
The sign up bonus for both cards is currently 50,000 Ultimate Rewards points after $4000 in spend within the first 3 months. The 50,000 UR bonus is a stark contrast when compared to the Chase Sapphire Reserve’s launch bonus of 100,000 UR points. There is no longer a difference in the sign up bonuses.
The Chase Sapphire Preferred’s annual fee is waived the first year where the Chase Sapphire Reserves has a $450 annual fee the first year. The CSR does come with a $300 travel credit, and even if you valued that credit at 100% face value the CSR has a $150 higher annual fee in the first year.
The Reserve card earns 1 more point per dollar in the travel and dining category. This is very important for anyone who has reimbursed expenses from work or large spend in those areas.
The CSR crushes the CSP when it comes to perks, no doubt about that. But, what are the value of those perks overall? Let’s take a look at the main ones and I will try to assess it’s value. Remember this is based on my personal experience.
- 1.5 cents per point versus 1.25 when going through the portal – ($30)
- Transferring UR points to partners brings a better return but I will assume that I may use the portal for a non chain hotel or a discounted room etc. one time at $150 per night. I would need 12,000 UR points with the CSP versus 10,000 with the CSR. Those 2,000 extra points would be worth $30 to me.
- Priority Pass Lounge access – ($50)
- I personally don’t put a ton of stock into this since everybody and their brother offers a Priority Pass membership (not with as generous a guesting policy though). Also lounge access is not really necessary and PP is somewhat limited in the United States. This perk’s usefulness depends a lot on where you fly out of and where you are going. My airport does not have a PP lounge so it is worth less to me then it would be for some others. I would say that a lounge may save me $10 per airport trip in drinks and food. I do think people tend to get to the airport earlier and eat and drink more than they normally would just to justify having lounge access. Let’s say I use it 5 times per year at a value of $10 per visit.
- TSA/Global Entry Credit – ($0)
- This is offered by so many cards that I don’t put any real value in it. It is also a luxury and unless you are a road warrior I wouldn’t suggest paying out of your pocket for it in the first place. So if I wouldn’t pay for it without the perk then why should I value it.
Let’s crunch the numbers a little bit. Both cards have the same sign up bonus which is a wash.
The Chase Sapphire Reserve has a $450 annual fee. The Chase Sapphire Preferred’s annual fee is waived the first year. The CSR does come with a $300 travel credit. I discount travel credits 10% from their face value (more detail on why here) putting the credit’s value at $270 for me. That would leave the CSR with a cost that is $180 higher in the first year.
The CSR’s perks close the gap a little bit more. I would personally receive $80 in value from the perks. That brings the difference in annual fee down to $100.
Now that I have the final difference in cost we can calculate what I would need to spend to make up the difference. If we give UR points a valuation of 1.5 cents a piece I would need to spend $6,666 dollars in the dining and travel category to make up the difference.
I personally don’t spend that much on dining and travel. Because of that I would be better off getting the Chase Sapphire Preferred if I was only keeping the card one year.
Where You May Differ
Someone who travels a lot for work, or pleasure, and would get more value out of CSR’s perks may come to a different conclusion.
Or if you had a great Priority Pass lounge at your home airport that could also change your figures. Something like Capers Cafe at PDX where they give you $28 in credit at the restaurant as your lounge access.
Someone who has reimbursed travel from work will always come out ahead with the CSR.
But, I would say the majority of Americans would get a better return from the Sapphire Preferred. Most people do not travel enough to offset the difference in the annual fees the first year.
While many of you will most likely disagree with me that the Chase Sapphire Preferred is the better card to get the first year for people that only have leisure travel. I hope that I at least gave you a road map on making the decision for yourself.
Like I said in the beginning this is not a one size fits all answer. I do believe the perks are overvalued somewhat with the CSR. With the changes made over the last year I don’t think the massive value is there anymore. The fact that the Preferred card waives the annual fee the first year really levels the playing field in my opinion and pushes it over the top.
When you look at year two and beyond the CSR would be the more valuable card. Mainly because the difference between the annual fees shrinks.
Let me know what you think in the comments section. Do you think most people would get more value from the CSR with the changes that have gone into effect?
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