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.
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
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®
16.99% to 23.99% variable
5%, minimum $5
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.
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
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
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.
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
The DoorDash benefits are worth up to a combined $320:
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
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.
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®.
If you're considering opening a different travel credit card, consider these alternatives which have annual fees of $0, $95, $250 or $550.
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
20,000 bonus points when you spend $1,000 in purchases in the first 3 months
0% APR for 12 months on purchases and qualifying balance transfers
14.49% to 24.99% variable on purchases and balance transfers
Introductory fee of 3% ($5 minimum) for 120 days, then 5% ($5 minimum)
5X points on Lyft rides through March 2022, 2X points on travel and dining worldwide, 1X points on all other purchases
80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening — worth up to $1,000 toward travel when you redeem through Chase Ultimate Rewards®
15.99% to 22.99% variable on purchases and balance transfers
Either $5 or 5% of the amount of each transfer, whichever is greater
4X Membership Rewards® points when you dine at restaurants worldwide and shop at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X), 3X points on flights booked directly with airlines or on amextravel.com, 1X points on all other purchases
35,000 Membership Rewards® points after you spend $4,000 on eligible purchases within the first 3 months from account opening
See Pay Over Time APR
See rates and fees
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
60,000 Membership Rewards® points after spending $5,000 within 3 months of account opening
See Pay Over Time APR
See rates and fees, terms apply.