Chase Travel

Do Benefits Offset $550 Annual Fee?

February 5, 2021
Vernice

The Chase Sapphire Reserve® card was so popular when it launched in 2016 that Chase experienced a shortage of the metal required to make the card.

Since then, the Sapphire Reserve has built a loyal following of card members who’ve learned to take advantage of the card’s premium travel benefits — including a coveted $300 annual travel credit and complimentary airport lounge access.

Last year, the Sapphire Reserve card underwent several updates, most notably when Chase raised its annual fee to $550. Nonetheless, the card gained a bunch of benefits with new partners like Lyft, DoorDash and Peloton that help balance out the higher annual fee.

If you expect to start traveling again this year, you may want to consider adding this card to your wallet. Below, CNBC Select breaks down the rewards, benefits and fees of the Chase Sapphire Reserve, so you can decide if the card is worthwhile.

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 including eligible delivery services, takeout and dining out, 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

  • Intro APR

  • Regular APR

    16.99% to 23.99% variable

  • Balance transfer fee

  • Foreign transaction fee

  • Credit needed

Chase Sapphire Reserve Review

Rewards

If you’re a foodie or frequent traveler, this rewards program is geared toward you. You earn 3X points on travel and dining worldwide and 1X points on all other purchases. Plus earn 10X points on Lyft purchases through March 2022.

The welcome bonus is also top-notch: Earn 50,000 bonus points after you spend $4,000 on purchases in the first three months from account opening.

The Sapphire Reserve has two unique perks that can maximize the value of your points by 50%:

  1. Chase Ultimate Rewards® portal: Simply use your points to book hotels, airfare, cruises and more directly through the travel portal.
  2. Pay Yourself Back: Use this tool to redeem points for a statement credit toward purchases at grocery stores, on dining (including restaurants, takeout and eligible delivery services), at home improvement stores (such as Home Depot and Lowes) and for contributions to a dozen eligible charities. Valid through April 30, 2021.

If you use either of these redemption options, the 50,000-point welcome bonus is worth up to $750.

CNBC Select calculated how many rewards the average American can earn if they optimize the way they use their Chase Sapphire Reserve card. We worked with the location intelligence firm Esri, who provided us with a sample annual spending budget of $22,126.

The budget includes six main categories: groceries ($5,174), gas ($2,218), dining out ($3,675), travel ($2,244), utilities ($4,862) and general purchases ($3,953).

Here’s how many points you can earn with your Chase Sapphire Reserve card in each category:

  • Groceries: 5,174
  • Gas: 2,218
  • Dining out: 11,024
  • Travel: 6,733
  • Utilities: 4,862
  • General purchases: 5,929
  • Total: 35,940

If you redeem those points for travel via Chase Ultimate Rewards® or with Pay Yourself Back, you’d receive a 50% bonus, which increases the approximate $359 value to about $539 per year. (This doesn’t factor in the annual fee or welcome bonus.)

When you account for the $550 annual fee and 50,000-point welcome bonus, the first year earnings drop to about $309 for regular redemptions, assuming 1 point is worth a penny. If you decide to redeem points through Chase Ultimate Rewards or Pay Yourself Back and receive 50% more value, the value rises to roughly $739. (That’s because the bonus is now worth $750, not $550.)

Benefits

The Chase Sapphire Reserve card offers over two dozen benefits for cardholders, which add additional value to the points we outlined above.

Many of the best perks have a clear value worth $60 to $300 each. When optimized, these perks can help you more than offset the $550 annual fee.

Here are the key benefits:

In addition to those benefits, you can take advantage of helpful travel and purchase coverages, such as:

Learn more about the specific terms for each benefit.

Fees

This card comes with a pretty steep $550 annual fee. Therefore, it’s not for everyone. You’ll need to pay the annual fee on your first statement, then every subsequent account anniversary. You can chip away at the annual fee during the year by earning rewards and taking advantage of the benefits mentioned above.

There is no intro 0% APR period for this card, so it shouldn’t be used to finance new purchases or complete balance transfers. The APR is typical at 16.99% to 23.99% variable on purchases and balance transfers.

This card has no foreign transaction fees, so you can travel and spend outside the U.S. without incurring the average 3% fee.

Bottom line

If you’re a frequent traveler, the Chase Sapphire Reserve card can be a helpful addition to your wallet. In order to offset the $550 annual fee every year, you’ll need to take full advantage of most of the card’s perks, from the annual $300 travel credit to the Lyft, DoorDash and Peloton perks. That said, this card has a robust suite of perks that range from travel insurance and statement credits on eligible spending to 50% extra value on select rewards redemptions.

But if you don’t want to fork over $550, consider the more affordable Chase Sapphire Preferred® Card. This card has a $95 annual fee and still offers a 25% boost on eligible point redemptions. Plus you can benefit from many of the same travel and purchase protections, as well as similar statement credit offers.

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.