Chase announced some nice improvements to its Sapphire Preferred and Sapphire Reserve cards this week, confirming rumors that have been circulating for the last month. We think the changes are a major improvement for the Sapphire Preferred card but not as impactful for most Sapphire Reserve cardholders. Your mileage may vary (YMMV), however, so take a look at each change in order to estimate how it will affect you. These changes take effect August 16, 2021.
For Chase Sapphire cardholders, four new bonus categories will be added. Dining, select streaming services and online grocery expenses will earn Chase Ultimate Rewards (UR) points at 3 points per dollar spent (3X). Dining includes in-restaurant, carryout and delivery. . .Chase hasn’t yet defined which streaming services it has selected yet. . .and online grocery specifically excludes Target, Walmart and wholesale clubs. Cardholders will receive 5X for travel booked through the Chase Travel Portal, plus a $50 annual credit for hotels booked through the Chase Travel Portal. To top it all off, Chase will “pay” a bonus of 10% of your annual spend on the card in UR points on your account anniversary.
What this means is that the points you earn from charges to your Sapphire Preferred card could easily double compared to what you’ve been earning. Here’s an example: Let’s say you charge $2,000 each month to the card plus another $2,000 during the course of the year for airfare and hotels. Each month, you spend $500 on groceries delivered to your home, $500 on restaurants or carryout food, $100 on select streaming services and $900 on miscellaneous expenses, for a total of $2,000. Under the current program, you would earn 2K points per month plus another 4K points for your airfare and hotel spend, adding up to 28K UR points per year. Beginning August 16, the bonus categories will increase your UR points haul to 4.2K per month plus 10K for airfare and hotel; this adds up to over 60K UR points per year! Add in the 10% annual spend bonus on your card anniversary date ($26,000 X 10% = 2600 UR points) and your total annual points earned comes to exactly 63K UR points, or 2.25 times what you earned before these changes are made.
Of course, YMMV, so the impact of the changes will be different for everyone. We liked the Sapphire Preferred card a lot before these changes were announced, with its low $95 annual fee and current 100K signup bonus. Come August 16, we’ll like it a lot more. Those 63K points are worth at least 1.25 cents each for travel ($787) if redeemed through the Chase Travel Portal or even more when transferred to an airline for award travel.
For Chase Sapphire Reserve cardholders, we don’t think the additional earnings will be as dramatic, unless you travel a lot for business and/or pleasure and use your credit card to pay for those expenses. Three new bonus categories will be created: 10X on Chase Dining charges, 10X on hotel and car rental charges through the Chase Travel Portal and 5X on airfare booked through the portal.
The Chase Dining program is only for specific restaurants, most of which are located in the biggest metro areas in the US. A recent search for Cleveland, Ohio showed only three restaurants available (none of which I had heard of), while New York City yielded 38 results.
If you travel a fair amount and book that travel through the Chase Travel Portal (rather than use those hard-earned points for hotel and airfare!), you could see a substantial increase in your UR points balance. For example, let’s say you book $10,000 a year on travel through the portal. . .$4,000 on airfare, $5,000 on hotels and $1,000 on car rentals. This is pretty realistic for a business traveler, at least in our pre-pandemic world. And let’s say you can take advantage of the Chase Dining program and use it for another $1,000 in meals. Under the current program, you would earn 3X on all of these expenses for a total of 33K points. With the new bonus categories, you would earn a total of 90K UR points, nearly three times your pre-August 16 haul.
But if your annual travel costs are more like the previous Sapphire Preferred example and you don’t live in one of the 10 biggest metro areas, your points earnings will be much lower. Using that example, the points you earn will increase from 6K to 15K; a nice bump, but not that significant.
The last enhancement Chase announced this week was that they are establishing their own airport lounge brand, “Chase Sapphire Lounge by The Club”. Three locations were disclosed, probably opening this year. . .New York LaGuardia, Boston Logan and Hong Kong. It appears that only Chase Sapphire Reserve cardholders and Priority Pass members will be able to use the clubs, so this benefit will not accrue to Sapphire Preferred cardholders. Curiously, this will also benefit rival Amex Platinum cardholders and Citi Prestige cardholders, both of which offer the Priority Pass as a benefit.
If you travel a lot and use a credit card to pay for it, consider the Chase Sapphire Reserve. . .but only if you can take advantage of enough of its benefits to offset the $550 annual fee. As always, you should calculate an estimate of your personal spending profile against both benefits and potential points earnings to determine if this (or any) card is right for you. If you need help with this, contact us at phil@theexceptionaltraveler, and we’ll be glad to help.