I no longer redeem Chase Ultimate Rewards points for 1.5 cents each. I used to do so regularly. I once was so flush with Chase points and I was spending them so seldomly that it would have been silly not to redeem them this way. But now I find myself transferring points to Hyatt in droves, and I regularly get far more than 1.5 cents per point value that way. Given that I’m no longer doing those 1.5 cents per point redemption, it begs the question… Am I crazy continuing to pay $550 per year for a card that offers the same 1 to 1 point transfers as the $95 Sapphire Preferred?
A few months ago, in the post “Chase Sapphire Reserve: Why .25 cents is worth $250,” Tim wrote that he considers the Sapphire Reserve card a keeper specifically because of the card’s 1.5 cents per point redemptions (With the Sapphire Reserve card, you get 1.5 cents per point value when paying for travel through the Chase portal or when using Pay Yourself Back). Tim’s reference to “.25 cents” in the title is because he could alternatively get 1.25 cents per point value with the $95 Sapphire Preferred or Ink Business Preferred cards. So, the Sapphire Reserve gives him .25 cents per point more value, and he calculated that he redeems enough points at 1.5 cents per point each year for the .25 cent boost to more than cover the Sapphire Reserve card’s higher annual fee.
For the record, the Sapphire Reserve card costs $550 per year, but with $300 back in automatic statement credits for travel spend. So you can simplify things to say that, after rebate, the Sapphire Reserve costs $155 more than the Sapphire Preferred. The actual difference is arguably a bit more because you don’t earn rewards on the $300 of travel spend that is rebated, but $155 is accurate enough for posts like these.
Okay, so getting back to my situation. Tim keeps the Sapphire Reserve because of its 1.5 cents per point redemptions, but I’ve stopped doing those altogether. I tend to transfer my points to Hyatt, and the cheaper Sapphire Preferred and Ink Business Preferred cards are equally good at doing that. So maybe I should cancel or downgrade my Sapphire Reserve.
Of course, there are other features of the Sapphire Reserve that stand it apart from the Sapphire Preferred. One of the biggest differences is that the Sapphire Reserve card provides Priority Pass membership for access to participating airport lounges, free meals at participating airport restaurants, and even free massages at participating airport Be Relax spas. That’s great, but I don’t personally ascribe any value to this feature of the Sapphire Reserve because I have other cards that provide equally good Priority Pass benefits (both the Chase Ritz-Carlton card and Capital One Venture X card offer equally good Priority Pass benefits but both offer authorized users for free and those authorized users also get Priority Pass).
There are two Sapphire Reserve features that continue to make the Reserve card valuable to me: best in class travel protections and 3x travel earnings. Let’s look at each briefly:
In our post, Chase Sapphire Reserve vs Preferred, we show features of the two cards side by side, including a section comparing travel protections. The Sapphire Reserve bests the Sapphire Preferred by providing roadside assistance, better trip delay insurance (6 hour vs 12 hour), emergency evacuation & transportation, and emergency medical and dental coverage. In fact, the Sapphire Reserve comes out on top in a side by side comparison with all popular ultra-premium cards (see: Ultra-Premium Credit Card Travel Protections).
The only card that matches the Sapphire Reserve card’s travel protections is the Ritz-Carlton card. I also have the Ritz card, so you might think that I wouldn’t value these travel protections on the Sapphire Reserve, but I do. In order to get these travel protections, you need to pay a portion of your travel with the card. Since the Sapphire Reserve card earns 3x Ultimate Rewards points for all travel, I always prefer to use it for travel purchases rather than the Ritz card which earns 3x Marriott points only for certain types of travel and, to me, Marriott points are only worth about half what Chase Ultimate Rewards points are worth.
The Sapphire Preferred card earns 2x for travel and the Sapphire Reserve earns 3x. The more I spend on travel, the more valuable this difference is. Yes, I could earn 3x travel with the Ink Business Preferred card, but then I wouldn’t get as good of travel protections as I get with the Sapphire Reserve.
Travel Protections + 3X Travel Earnings
If I were to get rid of my Sapphire Reserve card I would divide my travel purchases across two cards. For any travel spend in which there is even the slightest chance of my needing travel protections, I would use my Ritz card. For all other travel spend, I would use my Altitude Reserve card (which offers 3x for travel & mobile wallet payments). Altitude Reserve points are worth 1.5 cents each towards Real Time Mobile Rewards and so I value those points much more than the Marriott Bonvoy points earned with the Ritz card (I value Marriott points at around 0.8 cents each).
This hybrid approach to travel spend makes it difficult to estimate the extra value I get from the Sapphire Reserve card. Let’s say I conservatively value Chase Ultimate Rewards points at 1.6 cents each (I know that I’ll get much more value than that with transfers to Hyatt, but that’s the price at which I’m a buyer of points), Marriott points at 0.8 cents each, and Altitude Reserve points at 1.4 cents each (I would expect to get 1.5 cents per point value when redeeming these points, but that’s a bit of a hassle so I value these points slightly lower). If I knew how much travel spend I was likely to do annually going forward, I could estimate the extra value of keeping my Sapphire Reserve:
Assuming $12K annual travel spend ($1K per month) and $8K of which where I care about travel protections:
- Sapphire Reserve: 3 points/dollar x 12000 dollars x 1.6 cents/point = $576
- Ritz + Altitude Reserve Alternative:
- Ritz: 3 points/dollar x 8000 dollars x 0.8 cents/point = $192
- Altitude Reserve: 3 points / dollar x 4000 dollars x 1.4 cents/point = $168
- Total: $360
In the above scenario, points earned with the Sapphire Reserve card are worth $216 more than points earned with my alternate card scenario. When combining this $216 value (vs. my best alternative) plus the Sapphire Reserve card’s automatic $300 travel rebate, the Sapphire Reserve card’s value to me comes very close the card’s annual fee. If I can confirm that the travel spend estimate is realistic or on the low side, then I can confirm that the Sapphire Reserve card is still worth keeping.
I looked at my Sapphire Reserve account and saw that my travel spend this year to-date is close to double the amount estimated above. My wife and I have been travelling much more than usual this year (including nearly the entire month of February on the California coast) and so I’ve been spending more on travel than usual despite often using points to pay for hotels and flights. So, while I think it’s unlikely that we’ll keep up this extreme level of travel spend, I do think that my $1K per month estimate is reasonable for future spend.
Despite the fact that Tim finds it worth keeping the Sapphire Reserve card for its 1.5 cents per point redemptions and that I don’t ever plan to do those again, I’m going to keep my Sapphire Reserve card for at least another year. The combination of 3x earnings on all travel spend plus best-in-class travel protections plus the annual $300 travel rebate is worth more to me than the card’s $550 annual fee. For now. If I find in the future that my travel spend has declined significantly, or if other cards appear on the scene that offer equal or better rewards and protections for travel spend, then I’ll take another look. For now, the Sapphire Reserve has kept its safe place in my travel wallet.