The application for the Chase Sapphire Reserve card went live today, and I couldn’t resist. It was too hard for me to pass up on 100,000 Chase Ultimate Rewards points for spending $4k in 3 months. Chase points earned with this card yield a value of 1.5 cents per point when redeemed for travel thru the Chase Ultimate Rewards site, so 100,000 points yields at the least $1,500 in value. (The points could yield an even higher value if I transfer them to a partner and use them there instead). $1,500 is far greater than the $450 fee I will need to pay the first year.
As for later years, the $300 credit for travel related purchases knocks the fee down to $150 in my book. I plan on canceling my Sapphire Preferred card (for which I was paying a $95 annual fee), so I am still $55 in the hole. However, I earn 3x points on dining and travel instead of the 2x points with the Sapphire Preferred. This in itself justifies for me the additional $55 that I will pay in an annual fee.
We can look at the numbers in more detail. If we value a Chase Ultimate Rewards point at 2 cents per point like many travel bloggers do, I need only spend $2,750 in a year on dining or travel to make up the additional $55 annual fee. Specifically, if I spend $2,750 with my Sapphire Preferred, I earn 5,500 points (2,750 X 2). These points are worth $110 in value (5,500 X.02). Alternatively, if I spend that same $2,750 with my Sapphire Reserve card, I will earn 8,250 points (2,750 X 3). These points are worth $165 in value. $165-$110 = $55!
Addendum-I just realized that I am paying an additional $75 for a card for Rob. (There was no fee for the additional card with the Sapphire Preferred.) Therefore, I am going to up my break even point. So now how much will I need to spend to make up the $55 (fee over the Preferred) +$75 (Rob’s fee) or $130 in annual fees?
It looks like the amount is $6,500. If I spend $6,500 annually on dining and travel, I earn 19,500 points with the Reserve or 13,000 with the Preferred. The value of these 19,500 points is $390 and of the 13,000 points it’s $260. ($390-$260 is $130). I will make sure that at the end of the year that I have spent at least $6,500 in dining and travel, but I cannot imagine that I do not!
Also, note that the above analysis does not take into account the fact that I can redeem my points at 1.5 cents per point with the Reserve versus 1.25 cents per point with the Preferred.
I want to note that I did not get immediately approved. My application came back as pending and Chase told me I would receive a decision within the next 30 days. I called the Chase credit reallocation line, as I always advise you all to do, and got it approved this way. However, it wasn’t easy.
Originally Chase told me that I could not get this new card because I was being barred by the 5/24 rule. The rule states that if you have gotten five new credit cards (FROM ANY BANK) within the past 24-months, you will not be approved for a new credit card application.
I had the Chase representative go through my recent cards because I was curious as to when my 24 months would be up and I could successfully apply for another Chase card. In going through the cards, we realized that Chase was automatically counting cards that I was merely added as an authorized user to Rob’s accounts. The Chase rep told me that these cards should NOT count towards the five cards. This makes sense in that I am not the responsible party on these other cards. (Rob is!).
So after a few minutes on hold and then some credit reallocation (I did not get any additional credit with this card), I await my Chase Sapphire Reserve card.
I am really excited to start using it to rack up those Chase Ultimate Rewards points!