Disclosure: Miles to Memories has partnered with CardRatings for our coverage of credit card products. Miles to Memories and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. Links in this post may provide us with a commission.
Chase Sapphire Preferred or Reserve? Preferred Wins!
The Offers Listed Below Have Changed
Which credit card should I get? That is the most popular question I get asked. Friends, family, members of our Facebook group, or just people sending Miles to Memories a question, this one tops the list. It is the number one question from people just starting out.
Most everyone in this “hobby” agrees that people should start with Chase cards. What they don’t agree on is whether they should start with the Chase Sapphire Preferred or Reserve?
People suggest starting with Chase because of the cumbersome Chase 5/24 rule. After your first 4 applications the best Chase products become unavailable to you. To ensure you don’t have regrets later down the line your first few applications should be Chase cards.
Ultimate Rewards are the most coveted points in this hobby. Chase has a great rewards ecosystem and they have some of the best transfer partners out there. Make sure you read Bethany’s guide on the ins and outs of the program for more detail.
We know you want to start with Chase, and that you should earn Ultimate Rewards points, so which card should you get? Most experienced people will tell you to get the Chase Sapphire Reserve. But they are wrong, in my opinion at least.
CLICK HERE to compare this and other travel credit cards.
Why Chase Sapphire Preferred?
I think most people are wrong when they suggest the Chase Sapphire Reserve over the Chase Sapphire Preferred for a few reasons. The Sapphire Reserve used to be leaps and bounds ahead of the Preferred. Things have changed and Chase has reduced the value of the Sapphire Reserve card.
I previously discussed why the Preferred gives you more value in the first year. With the waived annual fee, a better bonus (5,000 more points when adding an authorized user), and the Reserve’s latest reduction in perks the Preferred has taken the lead.
Chase also removed the opportunity to get the travel credit twice in the first year. That changed the Reserve from a profitable card the first year into one that has a substantial annual fee even after taking the travel credit into consideration.
Chase also added the “Sapphire Rule”, you can only carry one Sapphire product at a time now. This forces you to choose one or the other and most people should pick the Preferred, to start off at least.
Breaking Down the Numbers
I like using analysis when making a decision so let’s crunch the numbers.
- Annual Fee the First Year: $0 Sapphire Preferred, $450 Sapphire Reserve
- Travel Credit: $0 Sapphire Preferred, $300 Sapphire Reserve
The Chase Sapphire Preferred also allows you to add an authorized user for an extra 5,000 Ultimate Rewards points. This is not an option for the Reserve. The extra 5,000 points is worth $75 at a 1.5 cents per point valuation. That valuation is pretty easy to obtain via transfer partners.
The Chase Sapphire Reserve earns an extra point per dollar (1.5%) on travel and dining. Since the Reserve is in a $225 hole you would need to spend $15,000 in those categories to make up the difference. That is not obtainable for most people.
CLICK HERE to compare this and other travel credit cards.
But What About the Perks?
You are probably thinking this is great and all but what about Chase Sapphire Reserve’s perks? The Reserve’s perks are far superior to the Preferred but are they useful to most people? A lot depends on your base airport, does it have a Priority Pass Lounge? If yes then this could be very valuable to you. A majority of airports don’t offer decent Priority Pass lounge access.
One of the recent perk reductions on the Reserve card was to limit Priority Pass memberships to 2 guests. That puts the Chase Sapphire Reserve more in line with other premium cards.
If you want lounge access I would suggest getting the American Express Platinum Card (hopefully at the 100K offer) or the Hilton Honors Aspire Card. The Amex Platinum card comes Priority Pass membership that allows 2 guests and also comes with Delta Lounge access and Centurion Lounge access. The Aspire card is the most valuable premium card on the market, when talking perks. The Aspire’s Priority Pass membership also allows two free guests per visit.
I Said Almost, Not All
There are always exceptions. One was listed above, if you live somewhere where your airport has a valuable Priority Pass lounge or restaurant, like Portland. And, if you travel with others often then you will make up the difference in value between the two cards in year one.
Another exception would be if you travel often for business and get reimbursed travel expenses. You should be able to charge the $15,000 on restaurants and travel to make up the difference pretty easily then. If you travel often you may want the added travel insurance the Reserve card offers, even if it has been downgraded some.
What About After the First Year?
When you get to the end of the first year the waters become muddied. That is because the Sapphire Preferred’s $95 annual fee kicks in. This would trim the spend differential down to $3,667 per year in the 3X earning categories. Most people can reach that threshold which makes the Chase Sapphire Reserve more valuable card after year one.
As you can see the ultimate strategy when discussing how to approach the Sapphire product line is to apply for the Chase Sapphire Preferred in year one and then upgrade it to the Chase Sapphire Reserve in year 2.
Once the annual fee kicks in for the Sapphire Preferred in year two it is no longer the more profitable option. Since Chase makes you choose between one or the other we need to be creative. This system will offer most people the best value.
Miles to Memories has partnered with CardRatings for our coverage of credit card products. Miles to Memories and CardRatings may receive a commission from card issuers.