Is the Chase Sapphire Preferred worth the $95 annual fee?

If you're planning a vacation, it's a good idea to pay with a card that provides rewards and protections on flights, hotels and car rentals. The Chase Sapphire Preferred® Card is a popular choice for consumers who want to open a travel card without paying hundreds of dollars a year. With a $95 annual fee, it ranks as one of the best credit cards with annual fees under $100 and one of the top travel rewards cards for beginners.

New cardholders signing up for the Chase Sapphire Preferred can currently earn an impressive 75,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's over $900 when you redeem through Chase Travel℠ since points are worth 25% more.

However, you shouldn't apply for a card just to earn the bonus. There are other factors to consider like the rewards rates, benefits and annual fee. Also, keep in mind that the Chase Sapphire Preferred card requires good to excellent credit to be approved, so not everyone will qualify.

CNBC Select breaks down the value of the card so you can decide if the $95 annual fee is worthwhile.

Welcome bonus

The Chase Sapphire Preferred's welcome bonus is one of the most valuable credit card sign-up bonuses on the market. The 75,000 points are worth over $900 toward booking travel through the Chase Travel℠. By using the welcome bonus this way, you can offset the annual fee for ten years.

If you transfer your points to one of Chase's travel partners, like United, British Airways, Southwest or Hyatt, you can get even more value than the methods listed above.

Rewards

The Chase Sapphire Preferred earns 5X points on travel purchased through Chase Travel℠, 3X points on dining, 3X points on select streaming services, 3X points on online grocery purchases (excluding Target®, Walmart® and wholesale clubs) and 2X points on all other travel purchases. It also offers 5X points on all Lyft rides through March 2025.

Based on these rewards rates, you could recoup the card's $95 annual fee by spending about $2,500 on dining or $3,800 on general travel each year and redeem your points through Chase Travel℠ with the 25% bonus.

Additionally, the Chase Sapphire Preferred provides cardholders an anniversary bonus equal to 10% of their total purchases made the previous year. That means if you spend $25,000 on purchases, you'll get 2,500 bonus points, which will help offset the annual fee.

Annual Chase Travel Hotel Credit

As a cardholder, you can get up to $50 in statement credits each account anniversary year for hotel stays purchased through Chase Travel℠. At face value, this perk effectively reduces your annual fee to $45, helping you earn back about half of the fee.

Complimentary DashPass

Another way to offset the fee for a year is to take advantage of the complimentary DashPass membership Sapphire cardholders receive. When you activate by December 31^st, 2024, you’ll get complimentary access for a minimum of one year, valued at roughly $120. This is more than enough to cover the $95 annual fee once.

Other benefits

The Chase Sapphire Preferred comes with a host of purchase and travel protections, ranging from extended warranty protection, to baggage delay insurance, primary rental car insurance, emergency assistance services and more. It also charges no foreign transaction fees when using the card abroad and offers high spending limits.

These perks cannot be assigned a specific dollar amount and don't always have immediate value. However, they're invaluable in certain situations and have the potential to save you hundreds if not thousands of dollars.

If you're considering the Chase Sapphire Preferred Card, it's best to apply when you have large expenses to charge to the card so that you can earn the welcome bonus without overstretching your budget.

Although the Chase Sapphire Preferred is a good starter card for beginners to points and miles, it's probably not for people applying for their first-ever credit card. The Chase Sapphire Preferred requires good to excellent credit to qualify, so you should aim for a credit score of at least 700. While there's no minimum income requirement, the higher your income, the better your approval odds — and the higher credit limit you'll get. There are many resources available for you to check your credit score for free, such as CreditWise from Capital One, Chase Credit Journey and Discover Credit Scorecard (available only to Discover credit card holders).

Note that this card doesn't offer any interest-free financing options, so you'll want to pay your balances in full so you don't incur interest charges.

While the Chase Sapphire Preferred is a great low-cost travel card, you may want to consider another option that offers more perks.

The closest comparison to Sapphire Preferred is the Capital One Venture Rewards Credit Card (see rates and fees). For the same $95 annual fee, it offers 5X miles per dollar on hotel and rental cars booked through Capital One Travel and 2X miles per dollar on all other purchases. Standout benefits include two complimentary visits to Capital One Lounges or to 100+ Plaza Premium Lounges per year through the Partner Lounge Network and a Global Entry or TSA PreCheck application fee credit up to $100 every four years.

New cardholders can currently earn a valuable welcome bonus of 75,000 bonus miles by spending $4,000 on purchases within the first three months from account opening.

If you like what the Sapphire Preferred offers, but want more premium perks like airport lounge access, consider the Chase Sapphire Reserve®. You’ll receive an annual $300 travel credit that can offset airfare, hotels, tolls and more. Plus you’ll get a complimentary Priority Pass Select membership with access to over 1,000 VIP airport lounges worldwide (valued at $429).

The Reserve also doubles the added value points receive when redeemed for travel via Chase Travel℠ from 25% to 50%. And you can benefit from earning 5x total points on flights and 10x total points on hotels and car rentals when you purchase travel through Chase Travel℠ immediately after the first $300 is spent on travel purchases annually. Earn 3x points on other travel and dining & 1 point per $1 spent on all other purchases

Cardholders who take full advantage of the Chase Sapphire Reserve’s perks can make the $550 annual fee worth the cost.

All in all, the Chase Sapphire Preferred Card's $95 annual fee can easily be offset just by using it to pay for your everyday purchases. You can also recoup the fee by taking advantage of perks like DashPass, the card's $50 annual Chase Travel Hotel Credit and its welcome bonus.

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