I’ll explain why I am upgrading my Chase Sapphire Preferred card and why you may consider upgrading.
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You’re listening to the Hurdy Gurdy Travel Podcast. I’m your host, Justin Vacula, here to help you travel the world at next to no cost through credit card points, miles, benefits, and rewards. Make money, save money, and take advantage of great deals!
Thanks for joining me for episode 53, Upgrading to the Chase Sapphire Reserve Credit Card. I’ll explain why I am upgrading my Chase Sapphire Preferred card and why you may consider upgrading.
Decisions, decisions! October of 2020 would be year three with my Chase Sapphire Preferred card, the next iteration of the $95 annual fee I viewed as worth paying. For two years with the Chase Sapphire Preferred, I enjoyed limited-time bonus categories, Chase offers, the ability to transfer Ultimate Rewards points to Hyatt, and even referral bonuses. I also combined points I earned through the Sapphire Preferred with my Chase Ink Cash card rather than only getting 1% back through cashing out points.
Downgrading the Chase Sapphire Preferred is out of the question for me, but what about upgrading? Does it make sense to bite the bullet of a $550 annual fee compared to the usual $95 annual fee? Chase recently raised the Chase Sapphire Reserve annual fee from $450 to $550, but added a $120 Doordash benefit, including membership with Dashpass, which offers free delivery and other benefits.
Initially, I wasn’t too excited about the increased annual fee coupled with the Doordash benefits. I’ve recently seen tons of discounts or promo codes with Doordash which easily stretch the $125 spending further. On October 2nd, I got $20 off any order, for example. Even future codes for 50% off or $5 off $10 will lead to good value, especially if picking up food.
In addition to the $120 Doordash benefit, Chase Sapphire Reserve’s annual $300 travel credit can now be used for purchases at grocery stores and gas stations, so that’s super easy to use and, in my eyes, equivalent to cash. Considering the $120 Doordash benefit the same as cash, there’s still $120 to break even on the annual fee when also accounting for the $300 travel credit.
Pay Yourself Back, a new-ish feature, allows cardmembers to use Ultimate Rewards points to offset purchases at grocery stores, home improvement stores, and restaurants. I wouldn’t suggest using Pay Yourself Back for home improvement purchases because Lowe’s and Home Depot gift cards 10% off or better are easy to come by. I’m instead happy to use Pay Yourself Back for larger purchases at grocery stores I usually can’t get with discounts. This Pay Yourself Back purchase eraser type feature values points on the Reserve card at 1.5 cents per point and probably won’t be around for years to come.
Chase Sapphire Preferred now has the Pay Yourself Back feature as well, but only at 1.25 cents per point. With the Reserve card, I can cash out 50,000 points I have for $750. Fifty thousand points with the Sapphire Preferred would only be worth $625 for a difference of $125 per 50,000 points. So, should one cash out at 1.5 or transfer to Hyatt?
I love staying at Hyatt properties for 5000 points a night when low rates are available. Sometimes Hyatt stays will cost 8000 or more points, though, so great value at about 2 cents per point isn’t possible, so if you’re getting closer and closer to 1.5 cents per point booking with Hyatt, cashing out at 1.5 cents per point should be more appealing.
…and what about other hotel programs? I have more than 1.4 million points with Hilton thanks to great promotions and cards with American Express. I have Diamond status with Caesars Rewards and have been getting room rates of either free or $10 a night, likely due to past poker play. I also get free room offers with MGM, likely thanks to my Gold status and activity from the MGM Mastercard. It’s a no-brainer to stay with rock-bottom cash rates compared to using even 5000 Hyatt points or 20,000 Hilton points per night.
With so many great hotel options outside Hyatt, the need to transfer to Hyatt lessens. I’m also not traveling as much as I used to, mostly due to the pandemic. I currently have more than 220,000 Hyatt points, and I will continue to earn Ultimate Reward points in the future when Pay Yourself Back is likely no longer an option.
What about airlines? Some may have used points for flights either through Chase’s travel portal or transferring points to airlines like United and Southwest? If one has the bases covered with airline programs meaning they aren’t reliant on UR transfers for future flights, the urge to cash out points should increase. I have more than 750k Delta SkyMiles, 70k American Airlines miles, and 50k JetBlue TrueBlue points….and I’m not flying very much now, so I’m eager to cash out Ultimate Rewards at 1.5 cents per point. Once again, we see that having multiple credit cards for lots of options pays off.
Valuing the Doordash benefit at $120 or more, entirely using the $300 travel credit, and getting great value from Pay Yourself Back at 1.5 cents per point, I said yes to the upgrade from Preferred to Reserve.
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What should you do? Should you use Pay Yourself Back? Should you upgrade from Preferred to Reserve? As a general guide, a yes answer should follow when you have a healthy amount of Ultimate Rewards, many points across hotel programs, airline points/miles covered, and not too much travel coming or already covered. Consider biting the bullet of a higher annual fee because it can be a good investment.
Chase Sapphire Reserve also offers 3x points on travel and dining, but that’s not interesting to me since I have 3x points for travel on my Altitude Reserve card, and those points, interestingly enough, are worth 1.5 cents each. I also have 4x points with my American Express Gold Card.
The Reserve card is also now giving 10x points on Lyft rides and Lyft Pink membership, but I probably won’t bother with this because discounts on Uber gift cards are standard. Massive cash discounts or rebates on Uber gift cards are better than 10x.
In August, for example, I liked a Speedway gas station promotion, which gave a $10 Uber bonus card when buying a $50 Uber gift card – that’s a 20% rebate atop everyone’s favorite Speedway points and credit card multipliers for gas station purchases. I just load the Uber balances to my Uber app and move on with life.
You can often find more Uber gift card deals at clubhouse stores like BJ’s and Sam’s Club; drugstores; and grocery stores. Some travel and purchase protections from Chase Sapphire Reserve may be valuable to you as well. Maybe we’ll also see more Sapphire Reserve bonus categories like gas and groceries in 2020 or even 2021.
I don’t plan on using the Chase Sapphire Reserve for much so-called everyday spending. Still, I can use it for the small number of travel expenses I am paying (it’s an easier way to cash out at 1.5x compared to Altitude Reserve) and for some grocery spending to use Pay Yourself Back. I won’t use it for dining. Not every card will be slam dunk in all areas like everyday spending, and that’s okay.
It’s strange to see people lamenting the Chase Sapphire cards hoping for refreshes and new features. Of course, I’d like to see additional benefits and categories. Still, both Chase Sapphire Preferred and Reserve are great cards even if they aren’t used as much compared to cards like the American Express Blue Business Plus for 2x on all spend or Altitude Reserve for 3x on mobile wallet spending.
As I say in most episodes, think about the bigger picture. Don’t just focus on card spending categories, but instead look at the overall value credit cards bring to the table. In October of 2020, Chase Sapphire Reserve is likely the strongest in a long time and maybe ever except for a super-high signup bonus that came out with its release. Sadly, Chase’s infamous 5/24 rule still exists, but I’ll be earning more Ultimate Rewards points with my Chase Ink Cash for that lovely 5x at Staples and OfficeMax.
I’ll pay my $550 annual fee in the coming weeks and will evaluate whether to pay $550 once again in 2021…but that’s a long time from now, and all I need to justify at the moment is the next 12 months. Some fear the annual fee thinking they’ll be locked in forever, but that’s undoubtedly not the case. If Pay Yourself Back diminishes or goes away in the coming months, I’ll probably later downgrade to the Chase Sapphire Preferred in October of 2021 and ride the Hyatt train once again.
Thanks for listening and stay tuned for more content! Leave comments on this episode with your thoughts and questions!
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