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Here's why I plan to cancel my Chase Sapphire Reserve

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The Chase Sapphire Reserve® made headlines last week when Chase announced a $100 annual fee increase, from $450 to $550. The news had current and prospective applicants second-guessing whether the popular card was still worthwhile.

Potential cardholders had four days to apply for the card before the fee rose to $550 on January 12, 2020. Meanwhile existing cardholders are able to renew at $450 for another year if their renewal date is before April 1, 2020. Any renewals after that date incur the new $550 fee.

Chase added new DoorDash and Lyft benefits to help compensate for the fee hike, but many consumers were unsure if the new perks offset the fee. And if you don't frequently use either service, it may not be enough to offset the cost of the annual fee. That's the issue I'm personally running into.

Below, I explain why I plan to cancel my Chase Sapphire Reserve® before I'm billed the increased annual fee next year.

Chase Sapphire Reserve®

  • Rewards

    10X points on Lyft rides through March 2022, 3X points on travel worldwide (immediately after earning your $300 annual travel credit), 3X points on dining at restaurants worldwide, 1X point per $1 on all other purchases

  • Welcome bonus

    50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening — worth up to $750 toward travel when you redeem through Chase Ultimate Rewards®

  • Annual fee

    $550

  • Intro APR

    None

  • Regular APR

    18.49% to 25.49% variable

  • Balance transfer fee

    5%, minimum $5

  • Foreign transaction fee

    None

  • Credit needed

    Excellent

  • Terms apply.

On Chase's secure site

Here's why I plan to cancel my Chase Sapphire Reserve

I had been contemplating opening the Chase Sapphire Reserve® for at least a year before I submitted an application two weeks ago, before I learned the annual fee would increase.

Initially, I justified paying the $450 annual fee because I liked the card's generous welcome bonus, and I was planning to take full advantage of the annual $300 travel credit and $100 credit toward a Global Entry or TSA application fee. Combined those perks were more than worth $450. But after the annual fee increased, I wanted to crunch the numbers to find the card's long-term value, based on how I plan on using it.

Here's a breakdown of the approximate value of each benefit that could easily receive a dollar amount.

Welcome bonus

I qualified for a welcome bonus of 50,000 bonus points after you spend $4,000 on purchases in the first three months from account opening. This is worth up to $750 toward travel when you redeem through Chase Ultimate Rewards® since points are worth 50% more when used that way.

Keep in mind this is a one-time offer. So you can't count on this to offset the annual fee after the first year.

Cardholder value: Up to $750 in year one

My value: $750 in year one, since I plan to redeem for the maximum value

Annual travel credit

The Sapphire Reserve provides a generous annual travel credit that can be used to offset the cost of travel ranging from airfare and hotels to tolls and rental cars.

Cardholder value: Up to $300 a year

My value: $300 each year, I plan on maxing out this credit to cover vacation costs, as well as everyday expenses like tolls

Global Entry or TSA PreCheck credit

Cardholders receive an application fee credit for Global Entry ($100) or TSA PreCheck ($85) every four years. It's generally recommended that you apply for Global Entry rather than TSA PreCheck. For just $15 more, Global Entry grants you access to both.

Cardholder value: Up to $100 every four years

My value: $100 every four years, I already have TSA PreCheck which doesn't expire for a few years, but will apply for Global Entry. But after year one, it will be another four years before I can take advantage of this credit again.

Priority Pass Select membership

This perk provides access over 1,000 airport lounges worldwide after a one-time enrollment.

Cardholder value: $429 a year

My value: $0, since I only fly once or twice a year and often out of terminals that don't have Priority Pass lounges

DoorDash benefits

The DoorDash benefits are worth up to a combined $320:

  • DoorDash credits: $120 statement credit ($60 in 2020 and $60 in 2021)
  • DashPass membership for a minimum of one year and up to two years: Up to $200, depending on when you activate (no later than Dec. 31, 2021)

If you use delivery services like DoorDash, a complimentary DashPass membership may be a nice perk, providing free delivery and lower service fees from hundreds of restaurants on orders of $12 or more. And if you currently use a competitor, like Seamless, GrubHub or Postmates, this may be enough to convince you to switch services.

But that's not the case for me. I don't use food delivery services so this benefit isn't one I'm particularly excited about. Granted, I won't turn down 'free' money, so I already signed up and used about $20 of the DoorDash credit on an ice cream order. I'll likely spend up to the $60 credit to take full advantage of this perk and only use restaurants that are eligible for DashPass to minimize fees.

It's also important to note that these benefits are for up to two years — there's currently no indication they'll be renewed. That means you shouldn't bank on these perks to offset the annual fee every year since, as of now, they're temporary.

Cardholder value: Up to $320, which works out to up to $160 in 2020 and $160 in 2021

My value: $320, which is $160 in 2020 and $160 in 2021

Lyft benefits

Cardholders can earn 10X points on Lyft purchases through March 2022 and can also benefit from a year of complimentary Lyft Pink membership. Lyft Pink is worth $19.99 per month and includes 15% off car rides, relaxed cancellations, priority airport pickups, up to three free 30-minute bike and scooter rides per month and more.

Just like the DoorDash benefits, the Lyft Pink membership is only for a limited time, so you shouldn't bank on it offsetting the annual fee long-term.

Cardholder value: $239 for a year

My value: $0 since I rarely use rideshares. I'll sign up, but don't plan on using this service.

Bottom line

Cardholder's total value: Up to $1,978 in year one, assuming you earn the welcome bonus; up to $889 in year two; and up to $729 in other years (not including the Global Entry/TSA PreCheck credit every four years worth $100)

My total value: $1,310 year one; $460 year two; and $300 in other years (not including the Global Entry credit every four years worth $100)

Cardholders who take full advantage of all the card benefits can more than offset the annual fee, however when I crunch the numbers it's clear I'm $90 to $250 short of recouping the fee after my first year of account opening. And when I consider how much I'll use the card (approximately $4,000 annually), that only equates to about $180 in rewards when redeemed through the Ultimate Rewards portal.

If you fit my profile, then you may feel the same and contemplate canceling your Chase Sapphire Reserve®. Experts generally don't recommend canceling your credit card since it can have a negative affect on your credit score. But paying a high annual fee that's not worthwhile can be an exception. (Learn how to cancel a credit card.)

However, you can also consider downgrading your Sapphire Reserve to another Chase card, such as the Chase Sapphire Preferred® Card, which has a lower $95 annual fee, or the no annual fee Chase Freedom Unlimited®.

Alternatives to the Chase Sapphire Reserve

If you're considering opening a different travel credit card, consider these alternatives which have annual fees of $0, $95, $250 or $550.

No annual fee travel card

Wells Fargo Propel American Express® Card

  • Rewards

    3X points on dining out and ordering in; gas, rideshares and transit; flights, hotels, homestays and car rentals; and popular streaming services. 1X points on all other purchases

  • Welcome bonus

    20,000 bonus points when you spend $1,000 in purchases in the first 3 months

  • Annual fee

    $0

  • Intro APR

    0% APR for 12 months on purchases and balance transfers

  • Regular APR

    15.49% to 27.49% variable

  • Balance transfer fee

    Introductory fee of either $5 or 3% of the amount of each balance transfer, whichever is greater, for 120 days from account opening. After that, up to 5% for each balance transfer, with a minimum of $5

  • Foreign transaction fee

    None

  • Credit needed

    Excellent/Good

  • Terms apply.

Information about the Wells Fargo Propel American Express® Card has been collected independently by CNBC and has not been reviewed or provided by the issuer of the card prior to publication.

Similar card with an annual fee under $100

Chase Sapphire Preferred®

  • Rewards

    5X points on Lyft rides through March 2022, 2X points on travel and dining worldwide, 1X points on all other purchases

  • Welcome bonus

    60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening — worth up to $750 toward travel when you redeem through Chase Ultimate Rewards®

  • Annual fee

    $95

  • Intro APR

    None

  • Regular APR

    17.49% to 24.49% variable on purchases and balance transfers

  • Balance transfer fee

    Either $5 or 5% of the amount of each transfer, whichever is greater

  • Foreign transaction fee

    None

  • Credit needed

    Excellent/Good

  • Terms apply.

On Chase's secure site

Premium rewards card with a lower fee

American Express® Gold Card

  • Rewards

    4X Membership Rewards® points when you dine at restaurants worldwide and shop at U.S. supermarkets (on up to $25,000 per year in purchases, then it drops to 1X), 3X points on flights booked directly with airlines or on amextravel.com, 1X points on all other purchases

  • Welcome bonus

    35,000 Membership Rewards® points after you spend $4,000 on eligible purchases within the first 3 months from account opening

  • Annual fee

    $250

  • Intro APR

    Not applicable

  • Regular APR

    See rates and fees

  • Balance transfer fee

    See rates and fees

  • Foreign transaction fee

    None

  • Credit needed

    Excellent/Good

  • See rates and fees, terms apply.

On American Express's secure website.

Competing luxury travel card

The Platinum Card® from American Express

  • Rewards

    5X Membership Rewards® points on flights booked directly with airlines or with American Express Travel and on on prepaid hotels booked on amextravel.com, 1X Membership Rewards® points on all other purchases

  • Welcome bonus

    60,000 Membership Rewards® points after spending $5,000 within 3 months of account opening

  • Annual fee

    $550

  • Intro APR

    None

  • Regular APR

    See rates and fees

  • Balance transfer fee

    Not applicable

  • Foreign transaction fee

    None

  • Credit Needed

    Excellent/Good

  • See rates and fees, terms apply.

On American Express's Secure Site
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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