Published on July 25th, 2017 | by William Charles201
[Updated For 2017] Keep, Downgrade, Cancel: Chase Sapphire Reserve
Chase has been sending out Chase Sapphire Reserve year in review’s to cardholder obviously in an attempt to get cardholders to keep the card after the first year. I thought we should repost this and update it so people can look carefully on whether it makes sense to keep, downgrade or cancel the card.
The Chase Sapphire Reserve was launched on August 22nd of 2016 this means that the annual fee is going to be payable for a lot of people soon. There’s no doubt that it provided great value in the first year (100,000 points and 2 * $300 travel credits) but is it worth keeping the card long term? If it’s not worth keeping long term, should you cancel it or downgrade it to another card? Let’s take a look in this edition of Keep, Downgrade or Cancel. You can view other posts in this series below:
What’s Important To Know
Let’s look at a couple of facts before we get started:
- Card has an annual fee of $450
- You receive an annual travel credit of $300 (based on calendar year) (new cardholders will have this based on a card member year)
- Card earns at the following rates:
- 3x points on travel & restaurants
- 1x points on all other purchases
- Chase Ultimate Rewards points can be redeemed for 1.5¢ per point for travel
- Variety of useful insurance benefits & protections
- Chase Ultimate Rewards points can be transferred to travel partners
Choosing to keep the card should be a simple decision, if you get more value out of the card than the annual fee of $450 then the card is worth keeping – otherwise you should downgrade or cancel. Realistically the $300 travel credit isn’t worth $300 as you’re always able to get a discount on that travel. I’d value it at 95% of facevalue on the extremely high end and 80% on the low end (that’s what you should be aiming for if you’re cashing this benefit out). That gives us a real range of $240-$285. Update: Some people disagree with this in the comments, if you can get the full $300 in value then great. My counter argument would be that if somebody was selling $300 in travel credit, would you pay $300 for it? At the end of the day assign the travel credit you feel is reasonable and use that as your working point. The aim of this section of the post is to get readers to determine how much they actually value this travel credit. If you’re using it for tolls that you can’t save money on normally and other fees then that’s great and you’re probably getting closer or the full $300 in value.
In the first cardholder year, you’ll be utilizing this benefit twice though (remember it’s based on a calendar year). Let’s say you got the card now, you’d use the travel credit now and then again in early 2017. This means you’d need to wait until 2018 again to use the benefit, so you’d only be able to use it once in your second year of being a cardholder (rather than twice in your first year). If you have the newer rules applied to you then you’re still only able to get $300 in one cardmember year so the same rules applies.
Are the other benefits worth $165-$190? I think you can make arguments both ways. Again, 1.5¢ per point for travel isn’t as good as 1.5¢ in cash or statement credit (Frequent Miler talks about this more here). The good thing about this benefit is that it applies to all of your Chase Ultimate Rewards points, including points earned on other cards such as the Chase Freedom, Chase Freedom Unlimited, Chase Ink Cash & Chase Ink Plus. Obviously every point you redeem this way is worth up to an extra 0.5¢.
The ability to transfer to Chase travel partners is also a feature of the Chase Sapphire Preferred or Chase Ink Plus. Obviously this card is strictly better than the Chase Sapphire Preferred, so if you held that card you’d be saving $95 a year by getting this card (at least in our calculations for determining the value of the $450 annual fee). Chase Ink Plus does obviously give you the extra $25,000 spending capacity on 5x categories compared to the Chase Ink Cash, but if you were only holding that card for the ability to transfer to travel partners then downgrading to the Chase Ink Cash if you held this card would make sense.
How useful the Priority Pass membership and it’s guest access is, will likely depend on what sort of other premium cards (if any) you hold. For those without lounge access from other cards this is a huge benefit, but if you hold something like the American Express Platinum then it’s basically worthless. The other thing worth considering is that this card also gives your guests access to the Priority Pass lounges as well.
The earning rates on this card are quite good, especially for restaurants as the next best is 3% cash back. There are other options out there in the travel category, but 3x Chase UR would still be one of the best if not the best. Hopefully you have a good idea how much you spend on these categories and what cards you’re currently using for them so you can make a direct comparison. Primary rental insurance is a big one for a lot of people, the other insurance products are also pretty good.
Another thing we didn’t mention is that it might be possible to get a retention offer on this card, I’m not very confident that this will be possible but it’s too early to say definitively.
I’m always of the opinion that downright cancelling Chase branded cards doesn’t make sense, the reason is that you might as well downgrade those to either a Chase Freedom Unlimited for the ability to earn 1.5x Chase URs on all purchases with no annual fee, or the ability to earn 5x Chase URs on the Chase Freedom‘s rotating categories.
The best option between those two cards really depends on your spending habits, but I personally believe that the majority of people would be better off with the Chase Freedom and it’s rotating 5x categories.
Getting this card for the first year used to be incredible value ($600 in travel credits and a sign up bonus worth a minimum of $1,000 for an annual fee of $450? Yes please). From year two onwards, making a case for keeping this card isn’t too difficult either. That being said, it’s definitely not for everybody – especially if you struggle to get value out of the $300 travel credit. That’s what really reduces the hurt of this annual fee from the massive $450. Some people might also want to cancel the card to get the sign up bonus again, just keep in mind this card does fall under the 5/24 rule and that you need to wait two years in between Chase sign up bonuses on the same card.
So far Chase has only made changes to this card that affect it’s value in the first year (lower sign up bonus and travel credit based on cardmember year) it will be interesting to see if they change the long term value proposition or not. Do people like this series of posts? Let me know in the comments, if there is interest I’ll make more of an effort to post them.