Description: This article is going to be talking about whether it makes sense to keep the Chase Sapphire Preferred or the Chase Sapphire Reserve by doing comparison between both cards.
Today we’re going to talk about whether it makes sense to keep the Chase Sapphire Preferred or the Chase Sapphire Reserve. The Chase Sapphire reserve drops down from 100k points to 50k points, now both cards are 50k points and minimum spend is still at $4,000 so given that they are almost the same bonus wise, which one makes more sense?
The CSR makes more sense than the CSP unless you have liquidity issues. So if you do have liquidity issues and you don’t want to pay the $450 upfront right now, then fine. But if you are going to hit the minimum spend of $4,000, you probably should be able to pay $450 otherwise this card doesn’t make sense.
If you look at the CSR and a CSP 50k assume that you cash them out for one cents a point, so you’re doing a statement credit that means you’re getting $500 as a statement credit and you’re still having $4,000 to spend. The only difference is that you’re paying $450 for the CSR and you don’t have an annual pay for CSP. So for the first year, it is waived and it seems a lot better because they are paying $450 versus paying nothing.
But the thing you are not accounting for is that you get two statement credits in your first year of having the CSR for $300 per year, and the reason you get that is because these travel credits are based off the calendar year.
If you book a trip on January 1st, you can get a reimburse right away depending on how much the trip is. Now we are paying $450, and we are getting $600 dollars in credits in the first year. Before you either decide to keep the card or downgrade it, we go down that route and you are getting paid $150 to have the card versus the CSP where you are not paying anything and not getting anything back either.
The main question a lot of people are asking is how hard it is to use a travel credit? If I book a flight that costs $79, once it’s posted to my credit card, there will be an immediate credit fro the the amounts, which is very convenient. Now I’m going to talk about how the credit works. When you book something, it posts on your credit card and Chase is effectively paying it off for you up to $300 per year, but a thing to be aware of is that the travel credit needs to be used by the December statement of the current year.
Now let’s look at the CSP, let’s assume you spend $2,000 on travel and dining, $2,000 on everything else, you hit the minimum spend, get 50,000 points, you also get extra points so $2,000 towards travel and dining, that’s 4,000 points and for everything else you get 2,000 points. So in total that’s 56,000 points, $560 in value. You are not paying annual fee which is nice, and all you get is $560.
For the CSR let’s assume the same thing. So you spend $2,000 on travel and dining, $2,000 on everything else, in total of 58,000 which is $580, they are paying $450 annual fee and you get a $300 travel credit and in January, you get another $300 travel credit. So in total, your value is $730. And that’s the total value you are going to get from the card in your first year.
So by getting the CSR, you’re getting $170 extra and value that you wouldn’t have got from the CSP. In most cases there’s almost no reason not to get the CSR. So if we take these results, look at the chase travel portal, the CSR and CSP allow you to book at a discounted rate. When you’re on the portal, the CSR 0.5 value and the CSP is 1.25, which means at CSP you’ll be $700 in value and the CSR gives you $1020, that’s a difference of $320.
When you choose CSR, there are also some benefits, you are getting a priority pass, better trip delay Insurance which is six hours instead of twelve hours, you get $500 for lodging and dining if the trip is delayed for more than six hours in the case of the CSR and twelve hours in the case of the CSP.
In case you’re wondering about a year or two with the CSR, you only get one credit, so you’ve already claimed the 2018 credit in 2017 from the first annual fee, so you’re only really getting the 2019 credit but the effective annual fee will only be $150 after the credit, compare to $95 with the CSP, so if you feel the value isn’t there, you can always downgrade the CSR to the CSP after the first year. If you decide to cancel a card, you have 30 days to cancel at local refunds
The only way to make the CSR not worthwhile compared to the CSP is if you don’t spend all these $300 and travel either this year, next year or both. The only real situation where it makes sense to take the CSP over the CSR is if you have liquidity issues and you can’t pay the $450 right now in the first month, but if that’s the case you probably want to be getting either card because both cards have minimum spend of $4,000.
If you lose so much value by not hitting the minimum spend, I probably recommend you to get the cards later on when you know that either your liquidity is figured out or you’re expended higher or maybe you have other expenses coming up. If you can’t hit the minimum spend, you are throwing away $500.
So you can make the argument that you should get both cards especially if you have high spend coming up that you have to pay it off as well as hit the minimum spend, you’re getting 12.5 percent return on spend at minimum if you value it at $500.