Update August 22nd: The Chase Sapphire Preferred just upped its signup bonus to 50,000 points, and now they’re revamping their rewards program. In addition to offering 50k Ultimate Rewards Points on signup, you can now earn double rewards on travel and dining purchases. We value Ultimate Rewards points at 1 cent apiece, but if you redeem for travel booked through Chase, your points are worth 25% more. This means that your $500 bonus is worth $625 if you redeem right. In the space of a few months, the Sapphire doubled its bonus and kicked up its rewards rate, ranking the card among the best travel credit cards.
The perks and particulars of the Chase Sapphire
The Chase Sapphire Preferred has a few quirks that make it all the more attractive. First and foremost, it’s now improved its rewards program from a flat 1% back to 2% back on travel and dining. Second, points are worth 25% more if you use them to book travel through Chase’s Ultimate Rewards Travel Service. This feature, which is not offered on the no-fee Sapphire, can significantly improve your rewards rate.
The Preferred also gives a “points dividend,” an unusual feature among rewards credit cards that isn’t offered on the no-fee Sapphire. It pays a 7% bonus on your rewards points each year, meaning your rewards will earn rewards themselves, even if you’ve already spent them. For example, if you spend $100,000, you’ll get 100,000 points worth $1,000. At the end of the year, you’ll get 7% more on those 100k points, for a total of $1,070 in rewards. This, combined with the 25% travel bonus, means you could get a rewards rate as high as 1.34%.
Finally, the Chase Sapphire has no foreign transaction fee, a great benefit for international travelers. The industry standard is around 3%, so if you spend $2,500 abroad, you’ll end up saving $75. This feature is essential for travel credit cards.
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Ultimate Rewards Points: a rewards program review
The Chase Sapphire pays out rewards in Ultimate Rewards Points, which can be redeemed for cash or gift certificates at a 100-point-to-$1 value. Chase also lets you transfer your Ultimate Rewards Points to an existing hotel or airline loyalty program at a 1:1 ratio, though this perk seems to be restricted to just a few companies. Chase already offers branded credit cards with most of these:
- Amtrak (Amtrak Guest Rewards)
- British Airways (Chase British Airways)
- Continental/United Airlines (United MileagePlus Explorer, Continental OnePass, and Continental Presidential Plus)
- IHG (Priority Club credit card)
- Marriott (Chase Marriott)
This can be quite a useful perk, especially since you can use BA miles on Alaska and American Airlines as well as Cathay Pacific, Aer Lingus and others. However, you can get substantially better value if you book travel through the Ultimate Rewards travel service operated by Chase: your rewards points will be worth 25% more. So, for example, if you used your 50,000 signup points to book a flight through Chase, you’d be getting $625 in airfare.
The Ultimate Rewards Mall also has some great bonus reward-earning options. If you spend your points (or cash) there, you’ll earn rewards on top of what you’ve already got. As a random sample, Sephora online purchases earn 8 points per dollar, while Macy’s earns 6 and Omaha Steaks gets 12, in addition to the base 1% rewards.
Is the Sapphire Preferred worth the annual fee?
The no-fee Sapphire is a step down from the Preferred in a number of ways.
- Its signup bonus is 25k points, half of the Preferred’s
- It earns 2x rewards on dining, rather than both dining and travel
- It isn’t eligible for the 20% points boost when using rewards for travel
- It doesn’t get the 7% rewards dividend
- It charges a 3% foreign transaction fee
The Chase Sapphire Preferred always beat out the no-fee version in the short run. Its previous signup bonus was $250, and it waived the $95 annual fee in the first year, so based solely on the signup bonus vs. annual fee, the no-fee pulls ahead of the Preferred only after the third year. Now, the Preferred offers a $500 signup bonus while the no-fee offers $250, so it still breaks even only in the third year.
If you spend $3,170 abroad, your savings on foreign transaction fees will more than make up for the annual fee. Thanks to the 7% reward dividend, if you spend $135,800, you’ll earn enough with the “reward returns” to cancel out the annual fee. Spend $9500 on travel, and the extra rewards on the Preferred make up for the annual fee. There’s a number of ways to make up for the charge.
Verdict: If you’re only looking to hold the card for < 3 years, the Sapphire Preferred’s the way to go. Longer-term, if you spend a lot overseas, travel extensively or spend a lot in general, you should stick with the Preferred, but if not, the no-fee version might be better.
You might also like:
| Capital One® Venture℠ Rewards Credit Card | Starwood Preferred Guest® Credit Card from American Express | ||||||||
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| Earn 10,000 bonus miles, equal to $100 in travel | 25,000 Starwood Points Bonus after spending $5,000 - 10K with your first purchase and another 15K when you spend $5K within 6 months - enough for 6 free nights at a Category 1 or 2 hotel | ||||||||
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| $0 intro for first year; $59 after that | $0 the first year, then $65 | ||||||||
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Check out a no foreign transaction fee credit cards, and stop paying unnecessary fees!