Credit card Q&A: “Should I keep Chase Sapphire Reserve?”
Now that the very popular and game-changing Chase Sapphire Reserve has been out for over a year, a lot of folks are pondering whether to keep it for another year or ditch it to the avoid the costly $450 annual fee.
It’s a good question, seeing that $450 isn’t chump change, but it’s not totally cut and dry.
I will start by saying for me personally, it’s probably a card I won’t keep past year one. Only because there are so many other credit cards out there that I can apply for instead.
If there weren’t so many other good alternatives, I would understand the appeal of keeping it, but there are so many good alternatives…
Will You Pay Another $450 to Keep Chase Sapphire Reserve?
If you’ve had this card in your wallet the past year, you’ve likely enjoyed a boatload of Ultimate Rewards points, along with free lounge access and other perks like reimbursed Global Entry and the amazing $300 travel credit.
Those things made the card worth applying for without question, but renewing the Chase Sapphire Reserve is an entirely different scenario.
You won’t be getting another mega sign-up bonus for year two, so the UR points will only come via normal spending. There are some good categories on CSR, including the broad 3X travel category and 3X at restaurants.
Those are solid earning categories, but as noted, there are lots of alternative cards that have solid categories as well, not to mention the rotating 5X categories tied to Chase Freedom.
You will get the $300 travel credit again, which means that daunting $450 annual fee really isn’t $450. I told my friend this the other day when he fretted about spending $450.
I said look, you’re not paying $450, you’re really paying $150 after the $300 travel credit because you’re going to use it without question. It’s so broad that it’s almost hard not to use it in a given year.
Is CSR Worth the $150 Renewal Fee?
But that still leaves you with an effective $150 annual fee for those other perks, which include lounge access, no foreign transaction fees, the 3X point earning categories, and the 1.5X travel redemption (if you actually use it).
There are also some more obscure benefits, such as car rental privileges and The Luxury Hotel & Resort Collection stuff, but it’s nothing that notable.
So at this point you have to ask yourself if it’s worth keeping Chase Sapphire Reserve open for $150 per year to get Priority Pass lounge access, the 1.5X travel redemptions via Chase Ultimate Rewards, and the 3X categories.
For me, it’s not worth it. First off, I have plenty of other cards that waive foreign transaction fees. Secondly, the Priority Pass lounge benefit has been failing lately.
A recent trip to Portland (PDX) saw the Alaska Lounge overflowing and quite frankly unpleasant at LAX on the way out, and entirely closed off to PP holders at PDX on the way home.
In other words, the benefit couldn’t even be used half the time, and when it was used, it left a lot to be desired.
As far as the 1.5X travel redemption goes, I would venture to say most people use their UR points to transfer to travel partners, as opposed to purchasing travel via the Chase portal. Some savvy folks might be able to glean value, but most probably won’t/don’t.
If you do, more power to you. The 1.5X travel benefit could actually be pretty beneficial. I have a friend who lives in Maui that travels to and from the mainland a lot. For him, this perk could actually be utilized a lot since he’s not going to get more value transferring to loyalty programs instead.
What else? The 3X categories are solid, but you’d still need to spend $5,000 to recoup the $150 annual fee, assuming you value UR at one cent each. They’re probably worth a lot more if used for airfare and stuff, but you have to be conservative.
The Caveat About Getting Rid of Chase Sapphire Reserve
So by now you can probably tell that I’m not about keeping the CSR a second year. But there is one big caveat here.
If you close the card, you have to use your UR points or lose them. Or transfer them to another card or loyalty program (or household member).
For those with other Chase credit cards that earn UR, you can simply transfer your UR points to the other card before you close your CSR.
It gets even more complicated though. If you don’t have a premium UR-earning card, such as Chase Ink Preferred or Chase Sapphire Preferred, you won’t be able to transfer your UR points to travel partners.
But if you do, the points can be used for that purpose and there’s nothing to worry about.
If you don’t have any other Chase UR-earning cards, you’ll need to do something with the points ASAP to avoid losing them. Fortunately, you can just cash them in at a penny apiece, which is still good value for such an easy redemption option.
Assuming you’ve got 100,000-odd points in your account, you can just request a check or direct deposit for $1,000 and be done with it. Not a bad way to go out.
Other options include a product downgrade to typically Chase Sapphire Preferred or Chase Freedom Unlimited.
You can do that if you’d like, but then you forego earning the sign-up bonus on those cards, at least for a couple years.
Personally, I’d rather just close it and apply for new credit cards, earn the sign-up bonuses, and come back for a second Chase Sapphire Reserve in the future, once I’m eligible again. And heck, maybe the sign-up bonus will be higher again then.
Of course, I already have Chase Freedom and two Ink cards, so I’m able to keep my points and transfer them to travel partners if and when I choose. And I only pay a $95 annual fee on the Ink card for legacy 5X categories.
Obviously the decision to keep or get rid of Chase Sapphire Reserve gets harder if you don’t have any other Chase cards, or if you don’t have another premium Chase card.
Lastly, you can call Chase and ask for a retention bonus or perk of some kind. Let them know you aren’t sure the card is offering enough value to keep it a second year and hope for the best. They may offer something to change the equation. Just don’t hold your breath.
As always, do the math and determine why you would keep it. At the same time, take a look at what else is out there. There might be other credit cards, such as Amex Platinum or something else that will yield a lot more value for you in the meantime.
Here Are Your Options for Year Two
- Close the card and move on (transfer points or cash out before you do!)
- Keep the card and pay the $450 annual fee again
- Downgrade the card to a cheaper or no-fee option instead such as Chase Freedom or Chase Sapphire Preferred (or even regular Chase Sapphire)
- Call and ask for a retention special such as a reduced annual fee or bonus miles since you’re such a good customer…
(photo: Quinn Dombrowski)
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Really? The annual fee is effectively $150 per year. I can’t believe all this gnashing of teeth and analysis over whether or not to pay a measly $150 for a credit card.
Rick,
My assumption is many people who got CSR never paid an annual fee in their lives, so it’s a big deal for them. And if you don’t use the $300 travel credit it’s $450. I’m sure some people won’t for whatever reason, or will only use a portion of it.