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).

tingyu66
tingyu66

My most frequently used UR transfer partners are UA, BA, SW and Hyatt (plus Amtrak before it died). I can get (or churn) their co-branded cc from chase bypassing the 5/24 rule. So I see no reason to keep a 95 AF card without any retention offer. I will transfer all my UR pts to UA and Hyatt before next $95 is posted, coz UA miles are harder to accumulate (not that bad if you use MPX a lot) and Hyatt cc offers very few signup bonus. BA is a easy 50k signup bonus + MR transfer, let alone that SW has multiple cc products. In a word, the only reason to keep CSP is having a piece of metal in my card case in case.

thershope
thershope

What i could not find in this article is if I downgraded my CSP to CS, can i transfer the UR to partners or that ability is only with CSP ?

Pag
Pag

Yes, that’s the information I was looking for as well. Looks like you lose the ability to transfer if CSP is downgraded (unless you have Ink Plus). I am wondering which airline/hotel to transfer my UR points to before I am hit with the AF on my CSP.

trouble747
trouble747

The bulk of our credit card spending goes to travel, restaurants, and bars (and we transfer frequently to United, SW, and Hyatt) so it works well for us.

Audrey
Audrey

I remember Frequent Miler did an analysis in which he concluded CSP/Ink Cash was the best combination given all considerations.
I did upgrade from Sapphire to CSP when I needed the ability to transfer, obviously had an AF and no bonus but I figured i couldn’t get the bonus anyway.

AM
AM

I understand that keeping the card may not be for anyone, but I do (and I’m welcome to changing, if someone can point out a good replacement).

1) I primarily redeem miles for economy flights to/from Europe, so United is key here (booking on LH). I don’t want to pay taxes on award redemptions

2) I tend to spend heavily on dining and travel, but not always

3) I need a no FTF, chip + sig/PIN, Visa/MC (Amex still has shitty acceptance once you leave touristy areas)

4) I’m OK paying an annual fee, but anything over $95 is too much

5) I love the Freedom combo

6) I think UR is a solid program, even if CSP has had some terrible changes made

Mark O
Mark O

I think if you spend a lot on travel and restaurants then it can be a good card and if you are not able to get an ink then I could see why you would keep it for the freedom transfers. I would say look at the Citi Premiere – it has better earning rates and not sure about transfer partners to get to Europe (especially for wherever you are based) but if you are able to find decent rates on tickets you can use the points towards them at 1.25 a piece. It is $95 per year 3 pts on travel and gas, 2 pts on restaurants and entertainment. 50k sign up bonus and first year free so you could always take it for a test drive.

Hunter
Hunter

Torn on this. Would really love to downgrade the CSP to Freedom or CS when my annual fee comes due 2/15. However, I was denied for both the Ink Plus and Ink Cash last May and June, respectively, even after many recon calls. After holding off on applying for Chase cards since then, I was approved for the SW Plus and denied for the SW Premier at the end of the November due to too many recent Chase cards (4 opened in the last 12 months). Given this, I’m wary applying for the Ink Plus again, even though I think it’s a card that makes more sense to retain. What’s your call?

Mark O
Mark O

If you value the transfer-ability I wouldn’t downgrade until you get the ink….will most likely not get the CSP again. You could transfer your UR points to an airline or hyatt now and then downgrade if you have a use for them in the near future and then start banking them with the freedom in hopes of getting an ink. It all depends how many UR points you have banked and what you value them at. If you only have a couple thousand left over is it worth the $95 to you? Do you get enough value out of the 2pts categories to make it worth it etc?

I have the ink so I canceled my sapphire since I didn’t do enough spend on restaurants or travel although now I wish I would have kept it and downgraded to ink cash since I don’t spend over 25k at office stores. If I am going to pay the fee anyways I might as well have the sapphire and ink cash…like getting an extra card for the free since I am paying the same fee with the ink plus. But I was going to churn it again and then the new rules came out.

Hunter
Hunter

I’ve heard Citi is more generous with retention offers with the Ink Plus, whereas they rarely or never give for the CSP. This would make the Ink Plus more logical to retain, no, since you’re getting your annual fee back on it but not on the CSP?

I currently have 100k UR points and no use for them in the near future (probably in early spring, but not sure where we’re headed yet, so don’t want to transfer to any one airline yet). 2/24 will be 90 days from when I applied for the SW cards. My current thinking is to try for the Ink Plus then and see what happens when I call before my CSP annual fee comes down on 2/15. Still, I feel like I’ll be out of luck in terms of a retention offer and the Ink Plus will go to pending and may not be approved. Wonder if the Cash is any easier.

Mark O
Mark O

I don’t think the cash is any easier then the plus but that is just my opinion.

You could always just cash in 9500 points for the annual fee although I know that is taboo to most but if you got a plethora of points I don’t think it is a bad play. You could do that and then wait a little longer to apply for the ink to improve your chances get the sign up bonus and then downgrade it to cash when that annual fee comes due if no retention offered.

jcb
jcb

So does the no AF Sapphire card let you keep your UR points if you downgrade (assuming you don’t have the Ink+)?

I think you have to compare the travel redemption value of UR points to, say, TY points since the Citi Premier would arguably be the better card. Using 2.1 cents for UR point value, and 1.6 for TY points (source: TPG), and a 2x vs 3x earning rate for travel on each card, the Citi Premier comes out ahead by .006 cents/pt. But you have to also look at the travel partners, and TY points aren’t maximized unless you have the Prestige card right (at least for AA redemption)? And if you also have the Freedom and an Ink, then the CSP would help maximize UR earnings across your expenses categories. So if you really want to rack up UR points you should keep it.

So downgrading seems like a 50/50 decision and depends on your situation/goals

Sam
Sam

I have been considering keeping the CSP purely for transferring points to Southwest. The conversion rate to cash for 1 CSP point is 1 cent. Conversion rate to Southwest points is 1.5 cents according to thepointsguy.com. So as long as I’m transferring more than 1900 points to Southwest, that offsets the $95 AF (1900 x .05 = $95). Am I missing something?

BTW – when I called about the AF tonight I was told it posts at the end of the month in which the anniversary occurs, and can be refunded up to 90 days after it posts if the card is closed.

Mark O
Mark O

Your math is off since it is .005 cents not .05 cents. So it is 95/.005 which is 19000 points but that is comparing it to a 1% card not a 2% card.

You need to spend a lot in the travel and restaurants category to offset the fee since you are losing money on every non bonus purchase.

On non bonus spend you are getting a 1.5% return on your spend but you could get 2% cash back with no annual fee…so you are paying $95 to earn .5% less per dollar on regular spend…If you use the points just for southwest you are better off spending on a 2% and paying cash for your tickets and then earning points.

Mark O
Mark O

Having said that you should keep the Sapphire if you are maxing out your 5% categories every quarter with the freedom…that makes up for the fee since you are getting 7.5% return on that spend (5pts per dollar at 1.5 cents per point).

Gadget
Gadget

Called to Downgrade or Cancel my CSP tonight. First, I asked about retention offers or spending bonuses – no dice.

Chase offered the CFU, CF, or CS. I already have a CFU, and CF, and got the signup bonuses long ago. So, opted for another CF. I am not much for maxing out the current CF as I don’t really MS, so this will probably just be in the sock drawer.

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