Is Chase Sapphire Reserve Still Worth It?

Unless you live in a pineapple under the sea, you’ve probably heard at least some mention of Chase’s newest travel card with it’s headline-grabbing sign-up bonus and annual fee. When it was first launched in the fall of 2016, the Chase Sapphire Reserve card was widely considered the best premium travel card on the market; however, as of January 12, 2017, the too-good-to-be-true bonus was slashed in half for anyone hoping to apply online.  This takes the sign-up bonus from 100,000 points ($1,500) to 50,000 points ($750), while the $450 annual fee remained unchanged.  At this point it’s basically accepted as fact that the 100,000 point bonus plus all of the ancillary benefits is absolutely worth the hefty fee, but would the Reserve card still be worth the massive annual fee after the bonus gets slashed? The short answer is yes, assuming you travel relatively frequently, but it is obviously much less attractive than it would have been previously.

The Perks

• 50,000 point sign-up bonus once you spend $4,000 in the first three months.These points have a value of $750 when redeemed for flights, car rentals, or hotels through Chase Ultimate Rewards.
• $300 annual travel credit
• Complimentary Priority Pass provides access to 900+ airport lounges worldwide.
• No foreign transaction fees.
• 3 points earned for every dollar spent on travel or dining.
• 1 point earned for every dollar spent on all other purchases.
• $100 statement credit for TSA Pre✓ or Global Entry

$300 Statement Credit

So all of these benefits, plus a few other minor ones, are what you receive in exchange for $450 per year. The first thing to keep in mind that should help set your mind at ease is that the $450 annual fee is really only $150 when you consider the $300 statement credit towards travel related expenses. Let’s assume you spend at least $300 towards travel in a given year; that includes everything from plane tickets and hotels to taxis and buses. Your first $300 spent on anything that falls under the “travel” category will be credited, thus offsetting 2/3 of the annual fee. With that in mind, $150 per year is far more palatable than $450.

Sign-Up Bonus

Now that we’ve put the annual fee in perspective, it’s easier to understand that the sign-up bonus, with a value of $750 towards travel, essentially gives you a five year break-even point even if you never spent a dollar on the card after earning the bonus. Through Chase Ultimate Rewards, you can redeem your bonus points, and any other points you accumulate, for flights, hotels, and rental cars from a wide variety of carriers and brands. The value of each point is about 1.5 cents. Obviously $1,500 is much better than $750, but $750 is still enough to pay for most domestic flights and can at least pay for the majority of the cost to fly to many international destinations.

Additional Points Earned

We’ve already established that the sign-up bonus covers your annual fee for the first five years that you use the card, but that was assuming you never used it again for day-to-day expenses. If you use the Reserve as your primary credit card, then you’ll continue to accumulate points throughout the year. So how much do you really need to spend to fully offset the effective $150 annual fee? That depends on what you’re spending money on, but you need to accumulate 10,000 points to fully offset the $150 effective fee (1 point is worth 1.5 cents).:

• If you never use the card on dining or travel, you would have to spend $10,000 per year ($833/month).
• If your expenses are divided evenly among travel, dining, and other, you only need to spend about $4,285 per year ($357/month).
• If you only use the card for travel and dining, you only need to spend $3,333 per year ($278/month).

If you think you can meet the above-mentioned hurdles, then you’ll basically be able to put the sign-up bonus in your back pocket and have no net annual fee. Anything above and beyond these hurdles is just gravy. Let’s say you spend $2,000 per month on the card and it is split evenly among the three expense categories. This would equate to 56,000 points accumulated throughout the year which would be worth $840 in points, leaving you $690 in the money after netting out the $150 effective fee. The attractiveness of the card depends on how and how much money you spend, but as you can see, breaking even doesn’t require spending an exorbitant amount of money.

Priority Pass

At first, we were mostly interested in the card for the bonus, and we knew the math would work out for us going forward based on our monthly expenses. However, after our trip to England, we quickly realized that the lounge access was sneakily one of the highlights of this card. The lounges are primarily located in international terminals, but you can find all lounge locations here.  The lounges offer complimentary food, drink, and WiFi, and are a much more relaxed setting than waiting at the gate for your flight. It’s not like you’re going to get a steak dinner, but they have sandwiches and enough snacks to where you could put together something that resembles a meal. It beats spending money on fast food in the terminal or paying outrageous prices at an airport bar.

Conclusion

While it’s difficult to accept the fact that the absurd 100,000 point bonus is never coming back, the Reserve is still probably the best travel card out there. There are a few other competitors on the market like the Citi Prestige, but the good people over at Nerd Wallet explain why the Reserve is still the better choice for travelers. The $450 annual fee is completely offset if you spend at the very most $833 per month (probably much less) on the card, and the $750 sign-up bonus is still nothing to sneeze at. We didn’t even get into the details of some of the other fringe perks like the $100 credit for TSA Pre✓ or Global Entry and the fact that there are no foreign transaction fees, but these just add to the list of reasons why the Reserve is still worth the big fee.