September 24, 2016

Why the Chase Sapphire Reserve is the Most Lucrative Credit Card in History

It's been a few weeks since the Chase Sapphire Reserve debuted to an online frenzy unseen in the travel hacking world.  There were articles in mainstream publications from Bloomberg and the New York Times.

Chase ran out of the sleek (and heavy) metal cards everyone is so wild about and had to start issuing plastic cards until they can get some more metal.  Travel bloggers (other bloggers...ones without other full time jobs) dedicated entire weeks to just posting about the CSR...why you should get it, how you can get around the 5/24 rules, what you should do with the 100,000 Ultimate Rewards points, etc...

Why is everyone going so nuts? 

Because this is seriously the most lucrative card people have ever seen.  The 100,000 point sign-up bonus alone is worth a minimum of $1,500 in free travel.  Used wisely, you can get a lot more value out of it than that.  But the annual fee is $450?  Is it really?  Let's break it down:

  • 100,000 point sign-up bonus and a $450 annual fee
  • $300 annual travel credit is essentially as good as cash
  • Priority pass with complimentary guests
  • Global Entry $100 credit (once every four years)
  • 3x Ultimate Rewards earnings on travel and dining
If you value the travel credit as cash then the annual fee is down to $150 a year.  Assuming you value Global Entry and TSA preCheck, then you've got another $20 a year (renewals on Global Entry every 5 years) off the annual fee.  Now you're at $130.  If you use the Priority Pass benefits just once per year for you and a spouse/friend, you're down ($27 each) to $76.  That's cheaper than the Sapphire Preferred Card ($95) and you're earning 3x on travel and dining vs. 2x.  That is an INSANE deal.

To close it out, I think the buzz is justified.  This isn't a product just for credit card junkies but really for the mass of people that eat out, like to travel, and our savvy enough to take control of their financial life.  I think that is a large segment of the market and many of them are young.

No way Chase keeps the benefits as they stand today forever.  But for now, everyone that has enjoyed the Sapphire Preferred benefits should go out and get this card with the monster signup bonus and attached benefits.  Even if you don't value the benefits beyond the travel credit, the extra 50% bonus on travel and dining should be enough for most everyone to get more value out of this card than the CSP.  If you spend $500 a month on travel and dining, that's an extra $6,000 in spend per year and an extra 6,000 Chase Ultimate Rewards.  They're worth a minimum of 1.5 cents in travel so that's $90 in incremental value over the CST.

Kudos to Chase for one-upping Amex and Citi (and everyone else) with an outstanding new product.  Even with a $450 annual fee, I plan on keeping my Reserve card going forward.  

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