Posted by William Charles on January 12, 2016
Credit Cards

Published on January 12th, 2016 | by William Charles

67

Keep, Downgrade, Cancel: Chase Sapphire Preferred

I thought it would be fun to start a new series of posts titled ‘Keep, Downgrade or Cancel’ basically the idea would be to look at a card that has an annual fee and to see if it’s worth keeping, downgrading or cancelling the card. Chase Sapphire Preferred gets a lot of coverage, so why not start there!

Downgrade

Chase lets you downgrade this card to two other no annual fee cards: Chase Freedom & Chase Sapphire. I think the Chase Freedom is the most compelling choice as it earns 5x points in rotating categories (maximum $1,500 spend per quarter). Though the Chase Sapphire could be worth considering for people with high restaurant spend as it earns 2x points on those purchases.

Those 5x categories will let you earn a maximum of 30,000 points per year, you’re baseline should always be 2% cash back so the Freedom will be worth a maximum of 30,000 points – $120 in cash (the amount you would have earned from a 2% card if you put $6,000 in purchases on it).

I don’t always max out my Freedom categories though, I value each Freedom card I have at about $150 per year – but the value you get on it will highly depend on what you’re spending patterns are like.

Keep

This card comes with an annual fee of $95, for it to make sense to keep this card you’d need to get more than that in value. Let’s look at a few reasons why this card is worth keeping and then discussing how much value that holds.

  • Ability to transfer Chase Ultimate Reward (UR) points to travel partners (including points earned from non premium cards such as Chase Ink Cash or Chase Freedom)

Probably one of the best features of this card, although it’s important to remember that the Chase Ink Plus also comes with this ability, the same annual fee and also earns 5x points at office supply stores, cellular phone, landline, internet and cable TV services. How much this is worth is easily to calculate, Chase UR points are worth 1¢ a piece when redeemed for statement credit. If these points are worth 2¢ to you when transferred, then this card adds 1¢ per transferred point.

Personally I think the Ink Plus is the much better option, although some people might want to churn the sign up bonus as it doesn’t look like the Chase business cards are subjected to the 5/24 rule.

  • 2x points on dining & travel

This card earns 2x Chase UR points on dining & travel purchases. It’s difficult to get a category bonus on dining/restaurant spend, the best option only earns 3% cash back (apart from cards with temporary bonuses or rotating categories). Given the Chase Sapphire also earns 2x points on this category and it’s a downgrade option, it’s hard to assign any value in this spending category.

There are a lot of cards that offer bonused spend on travel expenses, although most just give 3x points on airfare or are for a specific hotel or airline. This could be useful for some people, but those that are brand loyalty might be better off with the co-branded cards.

  • 20% off travel redemption

If you redeem points through the Chase travel portal, you’ll get a 20% discount. This means points are worth 1.25¢ a piece (if Chase are showing the same rates as other travel portals). Giving you an extra 0.25¢ per point in value.

  • Retention bonuses

Most annual fee cards will offer you some type of bonus for keeping the card if you decide to cancel. Chase rarely offers any retention bonus on this card, although the most common offer I’ve seen is 10,000 points for $3,000/$4,000 in spend. Most of the people that do receive retention bonuses are people that have held the card for more than one year.

Cancel

I don’t think cancelling the card makes much sense at all, you’d be better off just to downgrade it instead. This wasn’t always the case (e.g if you hadn’t gotten the bonus on the Chase Freedom then cancelling outright might have made sense) but given the new 5/24 rules it’s doubtful you’d get approved anyway.

Our Verdict

I think the Chase Sapphire Preferred is one of the most over rated cards on the market, they removed 3x first Fridays on dining spend, the 7% annual dividend and many more features of the card that made it worth it. Now that it’s almost impossible to get approved for this card for people in this hobby, I doubt I’ll ever hold this card again and I’ll certainly never pay an annual fee for it.

The only way I could see it being worth it is if you had a few Chase Freedom’s and couldn’t get approved for an Ink Plus and valued the ability to transfer points and that’s a lot of If’s.

Think I’m wrong? Let me know why in the comments.



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Eric
Eric

Great series…. What about benefits like primary rental car insurance, delayed baggage insurance on award tickets when you pay the taxes with the card, etc.?

Ian
Ian

I don’t think the Ink Plus is a better card unless you can actually MS 50k a year, which will probably be tough for a lot of us after the death of Serve. My plan is to downgrade the Ink to no fee Cash (same card but only up to 25k of office supply spend) and keep the CSP.

SimonZX
SimonZX

the Ink plus doesn’t require you to put 50k spend on it, does it? you can still earn 5x UR points even if you don’t spend 50k.

Ian
Ian

Yes, but you have to pay the annual fee on the Ink Plus, whereas you don’t on the Ink Cash.

JamaicanReefer
JamaicanReefer

Well executed summary and similar to what I have been thinking. I believe that if there is a need to keep a Chase premium card for 1 extra year, I would chose United as the points go to United anyways; an account can be topped with United points using this card as well the points will be kept alive; the primary rental car is on the United card as well; and additional award space is opened. So if the big United flight is coming, for me this is the choice for $95. Sapphire Preferred is going to be downgraded or entirely removed from my portfolio very soon.

exoticfusion
exoticfusion

Good point. I was going to cancel the MileagePlus Explorer card, but I never thought of keeping it for the XN feature (among other features). The CSP only offers dining as a category bonus and since I don’t utilize that much, it’s basically a 1x card. This definitely made me think and strategize differently. Thanks for the input.

Mark O
Mark O

Finally someone who says the Sapphire Preferred is overrated!!! They must pay a high referral fee for the amount of pushing it gets out there. It is a good card but I could not justify the annual fee without a grocery or gas category. Great card for a road warrior…not great for regular spend imo. Amex gold or Citi Premiere are better options.

anthonyjh21
anthonyjh21

Why DoC is a great all-in-one source for churners, MS’ers and deal hunters alike. There are no affiliate-driven links so you’re going to get unbiased (at least financially) reviews. Not to mention William doesn’t seem like one to sugar coat things. 🙂

mason
mason

anyway to upgrade a freedom to a chase sapphire or sapphire preferred? say if i valued the double points on dining or primary rental card insurance?

RA
RA

Hi,

Can you touch a little upon downgrading from a Sapphire Preferred to Sapphire/Freedom to avoid paying annual fees and then trying to upgrade later to Sapphire Preferred?

Is it impossible/reasonable or YMMV?

Lantean
Lantean

you are spot on. this is the most OVERRATED card on the market. it’s pushed by bloggers relentlessly… one can only guess why. but since they keep doing it I guess they find new victims every day.
for those with Ink it’s absolutely NOT worth it to pay annual fee on CSP after year 1.

Brian Whyte
Brian Whyte

I will say for the longest time when looking at the rewards structure and annual fee, I was wondering why people would keep it beyond the first year, after getting the signup bonus. It really is pushed a lot. I think also the fact that it’s made of some medal is why people like it.

I can see it being useful though if you have had the Chase Freedom card for a while in which you have accumulated a lot of points. Then you get the CSP, transfer points from the Freedom card for a trip. After that, I would probably cancel it.

exoticfusion
exoticfusion

I thought Chase got ride of the Chase Sapphire downgrade option? Correct me if I am wrong here.

exoticfusion
exoticfusion

*rid

Chuck

You can downgrade to Freedom.

Adam
Adam

I’ve been denied repeatedly. Only offered to downgrade to regular sapphire.
Maybe I’m doing it wrong, suggestions?

tiger59
tiger59

You have to wait until the AF posts, then you can downgrade to Freedom. Just did this with the wife’s CSP. First tried after 10 months from opening and was denied. Waited for the AF to post, then SM them to close, when they said they COULD product switch. Something about it needing to be open a year…

Of course, YMMV…

Adam
Adam

Thanks, I’m about 2 weeks from AF. Hopefully letting it post will open it up for Freedom.
I have one Freedom currently. A second for gas and grocery this year would be awesome.

anthonyjh21
anthonyjh21

AF for my wife’s CSP posts next Monday.

Had her call and hand the phone off to me just an hour ago and unfortunately the rep told me “downgrading to a Freedom is not an option.” I asked further and she told me it’s “not showing on my screen as an option.” Apparently the only option is the no AF version Sapphire.

I then asked if I call in next week and still have the AF waived. She told me they can definitely waive the fee and do the product change at that time but that the Freedom wouldn’t be an option. She was friendly but had conviction in her voice and didn’t hesitate to tell me that won’t change after the AF posts.

The wife has a Freedom card so I’m not sure if that made any difference. Will call in early next week and hopefully they allow the switch to Freedom. If not, looks like I’ll be forced to downgrade to the Sapphire. Not that we’d probably need it, but it would keep the door open to a future upgrade to SP.

@ Tiger – how long after it posted did you call in? Do you already have a Freedom card prior to the request?

anthonyjh21
anthonyjh21

If referring to me, it’s almost to 1 full year.

Rose
Rose

On principle I do not apply for cards with fees. Glad to see you laid out reasons why the CSP is not a good deal.
It is not for me and I was surprised to see they targeted me with an offer for the CSP triggered through my Freedom card account.

In fact, reading through your “new 5/24 rules” for Chase cards – the link provided in your post above had some of the most entertaining and informative comments:)

Ed
Ed

Here’s a question I’d love answered. My wife has a Sapphire Preferred, an Ink Cash, and a Freedom. I’ve got an Ink Plus and a Freedom. To date, I’ve kept her Sapphire Preferred because of the ease of transferring UR points. But, if her Sapphire Preferred were kaput, would Chase allow me to transfer her points to my Ink Plus? I remember having a snafu with UR points transfer once in the past because the Ink Plus is a business card but other cards are considered personal cards. If it’s harder to transfer UR points earned on a personal Chase card to a business card, then I’m inclined to keep the Sapphire Preferred.

Mark O
Mark O

If she is an authorized user on your ink then it should be fine. But I think they have changed the rules where she has to be an AU even if she is your wife. Probably would want to be an AU on her ink cash and freedom just to be safe.

jcm
jcm

I would love to know exactly how much Chase is paying for CSP signups. It has to be a huge affiliate bonus, with the number of bloggers constantly hyping it. I guess that information isn’t publicly available though?

Lantean
Lantean

i guess every blogger negotiates their own… but it’s probably somewhere between $100 and $200.

Win
Win

If you rent cars, savings from CSP’s Primary Auto Collision Damage Waiver helps offset the annual fee; Amex charges extra for premium rental car insurance.

John
John

You mention that people can downgrade to the Chase Sapphire. Is that still an option? I thought that Chase stopped that as an option last year.

http://www.valuepenguin.com/2015/01/chase-discontinues-chase-sapphire-credit-card

The VP article doesn’t exclude the possibility that Chase is still letting people get the CSP as a new card (and the great bonus) and then downgrade to the CS. But if so, that surprises me.

anthonyjh21
anthonyjh21

So I’m a bit confused by one thing. Noah with MoneyMetaGame recently wrote that he was approved for the INK Plus despite highly exceeding the 5/24 rule. Someone commented on that post that the 5/24 rule doesn’t apply to business cards, to which Noah agreed and wrote there’s some misconception about that.

So is the 5/24 rule in effect with Chase business cards? I have the no AF INK card but I wanted to upgrade to the INK Plus and downgrade my CSP. This way I double my 5% category to 50k and maintain my UR transfer ability. I however don’t want to apply if there’s a strong chance I’m just going to waste a hard pull. Noah after all did go in branch and discussed with a banker before being approved so it leads me to believe it’s still extremely hard to obtain without essentially applying for another mortgage and providing documentation.

Matt
Matt

In the end, I downgraded my Ink Plus to Cash and kept my Sapphire. I wanted to keep the ability to transfer, so had to keep one. The Sapphire has 2x with all travel, which is lost with the Freedom. The Ink Cash has all the same benefits as the Plus unless you MS to the max (plus has 2x restaurants).

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