Chase Sapphire Reserve Card Experiment

Photo by Ales Nesetril on Unsplash

I had gotten some snoozing in this morning and woke up wondering if I ought to cut out some more expenses in my life. One of the things I am consider is whether it is still worth it to keep my very fancy Chase Sapphire Reserve card considering the hefty annual fee of whopping $450. 

Short answer is yes. *See update below, it’s a ‘no’ as of January 2020.

After the initial honey-moon phase of euphoria from the 100,000 sign-on points (in this case 50,000 points for people applying now), I believe initially I calculated that these 100,000 points were worth about 3-4 years of annual fees. Since I’ve had this card for more than 4 years now, it is time to re-evaluate whether to keep the card or not.

Of course the Sapphire Reserve card is more than just the two factors (points + foreign transaction fee) I calculated on the google sheet. Some of these notable benefits are actually hard to calculate how much value it is worth, and predict whether or not you will be using it for the next year. So I did not include it in my pure and shiny mathematical calculation.

  1. The card reimburses for Global Entry / TSA Precheck which I didn’t have for the past 12 months, so this was not taken into consideration. If you want, you can always add $20 (prorated from $100 of 5 years Global Entry) to your saved amount. 
  2. Sapphire Reserve also gave you access to Priority Pass which is a lounge access when you are at the airport. I have personally used it when doing international travels and have shitty layovers in Atlanta. This would have cost me $50. Arguably though, Ms. Money-Long-Hair would not have gone to lounges and spent this $50 had I not have the Priority Pass, so technically this “saving” should not be considered into the calculation.
  3. Sapphire Reserve also has trip insurance (used once to claim for missing bluetooth earphones $150), baggage delay insurance, travel incidental and emergency medical coverage. However, I did not consider these as I seldom use them in all the years I have had this card. Therefore it is swept under the “nice to have” category but should not influence my decision. 

The simple rationale behind this calculation is that the money converted from the points earned is greater than the annual fee.

Right off the bat, there is a $300 travel credit which is automatically applied when you put a charge on the card that constitutes as “travel” for Chase (cha-ching!). So, for the sake of the calculation, my savings needs to be bigger than $150 for it to worth my while.

Points: 

Like most people, when I applied for the Sapphire Reserve, I had the Sapphire Preferred card which I downgraded it to Freedom Unlimited (no annual fee!). This card gives me 1.5 points on every purchase. I use the Freedom Unlimited as a catch-for-all for transactions that are not travel and meals (x3 on sapphire reserve). Therefore, anything I accidentally put on my Sapphire Reserve card that doesn’t give me +3 points is not really a “plus” in my calculation.

Foreign Transaction Fee:

Of course sometimes this is unavoidable when you travel internationally and want to put the charge to this card to avoid foreign transaction fees, which brings me to part two of the calculation: anything I spent outside the country on this card saved 3% of transaction fee.

Here’s for the tech / financial savvy and impatient people:

No more reading, and plug your numbers into this Google sheet  I made this morning (instead of doing actual work). You can click “make a copy” from the “file” tab and enter your own values.

Here’s the step by step for the rest of the world or people who likes to read. 

  1. Go to your chase sapphire reserve statements (online or on paper) and look for the section where it tells you how many points you’ve been collecting each month.
  2. Enter the “+3 points” numbers (there are two, one for travel and one for dining) and “+1 points” to the Google sheet.
  3. Look for any foreign transactions you have had in that month. Add this amount to column E of the sheet. Usually for me, when I use the Reserve card, I’d choose local currency. I have found that Chase’s exchange rate usually comes out ahead than using US dollars at the merchant when you swipe your card.
  4. See the result!

I was surprised at the amount of money saved after the annual fee is $300+! Getting charged foreign transaction fees would bother me so much that I would have kept this card even if it was just breaking even with the annual fee. Although, knowing that I have spent this much money in the past 12 months was also another dose of medicine for me to lower my expenses! I will be re-evaluating my spending again to see what are the essential purchases some other time.

*January 22, 2020 update:

Since reading Your Money or Your Life, I have reduced my monthly spending to about $1,000 and putting only about $300 qualifying purchases (travel and meals) on the sapphire reserve card. This has basically rendered the card not worthy of the whooping $150 annual fee ($450 – $300 travel credit). Thus, I have downgraded this card to Chase Freedom Unlimited with no annual fees and planning on not using it for a while.

In the meantime, I am still doing some travels outside the country and I have found great alternatives to share with you!

  1. The Walmart Capital One Card

Hardly the most competitive rewards card out there because you have to be a hard-core Walmart-fan to benefit from this. But, considering I live in Walmart Central (Northwest Arkansas), the cash back feature is great. I am using this card for the no foreign transaction fee feature as well. I’ll test it out this August in Ireland and report back!

     2. Betterment Checking

Betterment rolled out their checking account (Visa debit card) late 2019, and I received one for the ease of transferring money between my chase bank account and Betterment. This debit card does not have foreign transaction fee (though Visa charges 1% foreign transaction fee but it’s still better than 3% on a normal credit card!). I am planning on using this card as a backup where MasterCard (Walmart Capital One) is not accepted.

 

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