The Chase Sapphire Reserve has been The JOAT’s best travel card pick since the day the card launched in 2016. As Harvard Business Review said, “Chase Sapphire Made Credit Cool for Millennials“. The card has been wildly popular, and you probably have one in your wallet or have gone back and forth on when you should upgrade.
In January 2020, Chase announced some changes to the card, including increasing the annual fee from $450 to $550. We were debating whether the new benefits were worth the extra $100 and even began comparing with the other premier travel cards when COVID-19 swiftly cancelled all vacation plans we had for the rest of the year.
In response to COVID, Chase has cancelled the $100 fee increase they had planned for all of 2020. Cardholders who were charged a $550 annual fee were given a $100 statement credit – essentially making it a $450 renewal for them. They also added some new ways to earn bonus points, such as 5x points on Instacart orders and at gas stations, and 10x points on streaming services like Netflix and Hulu.
The most important feature they rolled out was the Pay Yourself Back program. This is a new and limited time program they released on May 31st to boost Sapphire card benefits in a world of no/limited travel. Pay Yourself Back lets you redeem your Ultimate Rewards Points towards past purchases at the same rate as when you redeem it for travel. So basically, your points are redeemed for the 1.5x you would get if you bought a flight or hotel through Ultimate Rewards. To be honest, I kind of ignored this when the news came out, hoping to hoard my points and redeem it for a much needed 2020 vacation.
But, as I sat here on Labor Day Weekend looking at the $450 annual membership fee for a card I have barely touched in the last 6 months, I knew a downgrade was the only smart option.
It didn’t make sense for me to completely close this card because I still spend at restaurants, have travel expenses such as parking, tolls, Uber/Lyft, and AirBnb. So, I decided to downgrade to the Chase Sapphire Preferred, which has been a staple Chase credit card for a number of years – long before the Reserve came around.
In case it’s been a while since you looked at the Preferred, here’s a high level summary: Chase Sapphire Preferred has a $95 annual fee and lets you earn 2X points on all travel and dining costs. If you redeem points through their Ultimate Rewards site, you get an extra 25%, which basically means you get 2.5% cash back on travel and dining. You also get no foreign transaction fees, a bonus 5X points on Lyft rides, and the same DoorDash benefit they introduced on the Chase Sapphire Reserve.
But, before downgrading, I redeemed nearly 100,000 points using the Pay Yourself Back program (a $1500 value). Doing it was easy enough – go to Ultimate Rewards, click the menu bar on the left, and click “Pay Yourself Back”. Chase automatically gives you a list of previous purchases that qualify you for the 50% bonus, and you simply click which ones you want to redeem. Why did I do this? Two main reasons: 1- I am sitting on over 100,000 points without a need to use them any time soon. And 2- more importantly, the second I downgrade my card, my points are worth 25% less. Basically, every 10,000 points I have is worth $25 less with Chase Sapphire Preferred vs Reserve. Within a few days, the total amount you redeem will end up as a statement credit to offset any charges or balance on your account.
Bottom line – downgrading your Chase Sapphire Reserve to the Preferred allows you to keep your points, pay a lower annual fee, and get many of the same benefits you liked with the Reserve. The downside is you don’t earn as many points and get fewer travel perks – but with COVID-19, you may not be able to take advantage of those perks any time soon.
Finally – if you do not have a travel card today, we suggest holding off and just using our Best Cash Back Card until we know what the world looks like on the other side of this pandemic.