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Chase Sapphire: Preferred or Reserve?

The Chase Sapphire cards have long been regarded as some of the best travel cards in the market right now. The two main cards in the Sapphire portfolio are the Preferred and the Reserve. Chase has recently installed a rule that limits one Sapphire card per person, forcing users to choose only one of them. Many people ask, which one is better for my lifestyle? This post lays out the difference between the two, and some insight on which one to choose.
Note: I’m writing this in the perspective of a 26 year old young professional who travels a few times per year.

Here’s the difference laid out in chart form.
Category Preferred Reserve
Annual Fee $95* $450
Earning 2x on Travel/Dining
1x on All
3x on Travel/Dining
1x on All
Sign-up bonus 50K for $4,000 in 3 months 50K for $4,000 in 3 months
Travel portal bonus 25% 50%
Credits None $300 travel credit
Other perks Transfer partners Transfer partners
Global Entry credit
Priority Pass Select membership
*Annual fee waived first year

Round 1 - The effective annual fee:

The Preferred is the clear winner here with the lower $95 annual fee that is also waived the first year. The Reserve has a much higher fee of $450 and isn't even waived the first year. However, the Reserve actually isn’t too far behind. Don’t let the hefty $450 price tag scare you - the Reserve comes with a $300 annual travel credit (per cardmember year, not calendar year) that is extremely easy to use. Chase is by far the most generous company when it comes to purchases that code for travel (and dining too!). Travel includes everything from airfare, bus, train, subway, taxi, rideshares, hotels, AirBnB, and parking (basically everything except for gas). Most young professionals spend well over $300 in travel annually. Thus, the effective annual fee is more like $150. After year 1, the two cards have a difference of only $55 in annual fee. The increased earning rate on the Reserve can easily cover the difference and more depending on how much you spend on dining and travel.

Round 2 - the Earning rates:

The Reserve is the clear winner here with 3x on dining and travel vs the Preferred’s 2x on dining and travel (both cards earn 1x on all other purchases). The hard part is how to value the points.

UR points are 1 cent per point when used as cash back, however you shouldn’t use this option since that’s not optimal. If you’re looking for cash back on your card, you’re better off with something like the Citi DoubleCash, which gives you 2% back on every purchase. However, it’s nice to have this option here in case you ever want/need points to cover a purchase that you don’t want to use your hard earned money for.

Instead, there are 2 optimal ways to use UR points. Option 1: Chase’s travel portal. Option 2: Transfer partners. As indicated in the chart above, UR points are worth 1.25 cents per point with the Preferred (since there’s a 25% bonus in the travel portal with the Preferred), and 1.5 cents per point with the Reserve (50% bonus in travel portal). With option 2, both cards have about 2 cents per point since both cards have the same transfer partners. I’ll explain why they are valued like that in a different article. Using the above values, the earning structures become:

Earning Preferred Reserve
Points 2x on Travel/Dining
1x on All
3x on Travel/Dining
1x on All
Travel portal 2.5% on Travel/Dining
1.25% on All
4.5% on Travel/Dining
1.5% on All
Transfer partners 4% on Travel/Dining
2% on All
6% on Travel/Dining
2% on All

We stated earlier that the Reserve is winner, but it’ll take some calculations to figure out if the increased point earning structure outweighs its higher annual fee. We’ll calculate from year 2 and onward since the annual fee is waived on the Preferred for the first year. We just have to see how much we have to spend to generate $55+ in value from the Reserve. Since the CitiDouble cash exists, I wouldn’t recommend putting any non-travel/dining purchases on either Sapphire card unless you want purchase protection for it. So, we’ll say that the non Travel/Dining spend is a non factor. We will only consider dining and travel purchases.

ER * x - EP * x = 55

0.045 * x - 0.025 * x = 55

0.02 * x = 55

X = $2,750 on travel and dining per year to break even

X = $229.17 per month

Therefore, if you spend roughly $230 per month on travel and dining, the Reserve will make up for its higher annual fee. However, Chase recently changed its policy in that purchases that trigger the travel credit do NOT earn points. This means that this figure will have to be AFTER you have spent $300 in travel (dining purchases always earn points).

For reference, I’ve spend about $1,000/month on travel and dining (though I do work in consulting, so some of that money is coming out of my companies pocket), so the Reserve is well worth it for me, even if I could get the annual fee from the Preferred waived every year (more about that later).

Round 3 - the sign-bonus:

Both cards have the same sign up bonus: 50,000 UR points if you can spend $4,000 within the first 3 months of account opening. Note it’s not the day you receive the card, but the day your account is opened (typically when you see the approval screen when you apply for the card). Chase is very good about expediting the card for free if you call in and ask for next day shipping. The sign-up bonus is an absolute MUST for the card (and every single credit card rather). Make sure you can get this bonus when you apply for the card.

Round 4 - Miscellaneous Perks

The biggest perks that the Reserve has over the Preferred are Global Entry credit ($100 every 4 years) and Priority Pass Select membership (free Priority Pass airport lounge access for you and 2 guests with valid same day boarding pass). These perks are very nice and a must have for frequent travelers, however many other cards come with these same perks. The value is very high if the Reserve is the only card you will have that comes with these two, but the law of diminishing marginal utility is very strong with these perks. However, you can get some use out of a second Global Entry credit by using it on someone else (say a family member or good friend. It doesn’t have to be for your own application). Finally, there are a couple of other travel and purchase protection perks that the Reserve is more generous with. I’ll lay them out in a table.

Category Preferred Reserve
Purchase protection Up to $500 per claim
$50,000 per account
Up to $10,000 per claim
$50,000 per year
Trip delay insurance Up to $500 per ticket for delays of 12+ hours Up to $500 per ticket for delays of 6+ hours
Baggage delay insurance Up to $100 per day for up to 5 days Up to $100 per day for up to 5 days
Trip cancellation insurance Up to $10,000 per covered trip Up to $10,000 per covered trip

The Reserve is slightly better in the protections it offers, but very few people will be able to feel a difference.

Overall, I conclude that the Reserve is better than the Preferred for most traveling young professionals. However, there are some niche cases where the Preferred might make more sense. Although it seems counterintuitive, the Preferred can provide more value than the Reserve to those who are very savvy with the credit card game.

Preferred wins over the Reserve if:

Otherwise, the Chase Sapphire Reserve is the card for you.