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With the Chase Sapphire Reserve® entering the rewards card market in August 2016, and Amex ramping up its promotional game to compete with the Sapphire Reserve, a huge slice of the press surrounding points + miles recently has focused on the premium travel card market. And with good reason.
The Sapphire Reserve and The Platinum Card® from American Express are the pack leaders when it comes to rewards travel, with significant new cardmember bonuses, some of the best transfer partners, and arguably best perks of any rewards cards in the loyalty point space.
The majority of reviews and posts on these premium cards rationalize higher fees by cataloging the different travel credits and perks of the cards, effectively deducting the value of annual airline credits and benefits from the annual fee to show the difference between fees isn’t as high as you think.
However, not everyone chasing a rewards card is going to need, or make full use of, a premium travel credit card or its travel credits and benefits. There are some scenarios where it might be a better option to apply for a card at a different tier like the Chase Sapphire Preferred® Card over an ultra-premium travel credit card like the Sapphire Reserve, and in this post, we’ll touch on four of them.
$190 vs. $900 in Fees over the First 24 Months
The most obvious differences separating the Sapphire Preferred from the Sapphire Reserve is the annual fee. As a premium travel card, the Sapphire Reserve has a much higher annual fee than the Sapphire Preferred, with the later attracting roughly ~20% of the fees of its premium rival over 24 months.
Yes, the Sapphire Reserve has an extensive list of benefits that can be used to justify the added expense. But if you are just starting out in the points and miles space and lack the knowledge to maximize the Sapphire Reserve benefits, or if you are not in a position to use all the perks that account for the higher fee, the Sapphire Preferred may be the better card.
Getting Paid for Adding Authorized Users as Opposed to Paying for Them
For many cardholders, adding an authorized user to your credit card account is one of the first priorities after receiving the card. Adding family members as authorized users can give them access to the card’s benefits, double down on your ability to earn points, and help save money by providing access to premium benefits like primary rental insurance, while also increasing your capacity to earn rewards points.
- Sapphire Preferred– Authorized users at no cost
- Sapphire Reserve – $75 annual fee for authorized users
To put that in perspective. If you have one authorized user on your account, the fee difference over 24 months blows out to $190 for the Sapphire Preferred vs. $1,050 for the Sapphire Reserve, which is a mighty big gap if you’re unsure you can take advantage of all the credits and benefits associated with the card.
As an example, let’s say you only used $200 of the available $300 annual airline credit on the Sapphire Reserve and added one authorized user. The fees over 24 months would effectively drop to $650 as opposed to $190 for the Sapphire Preferred leaving you with a difference of $460 over 2 years.
If you spend $5,000 per year on travel and dining on the card ($200 worth of points over 24 months), you would need to put nearly $100,000 spending on the Sapphire Reserve outside bonus categories over those 24 months to make up the difference.
Now, this example is a little extreme and is assuming you’re redeeming Ultimate Rewards points through the Chase Travel Portal at the cards respective rates. It also doesn’t take into account if you are using other benefits of the card, but it serves as an example that you MUST run the numbers before applying for either card to determine which one suits your particular circumstances.
Lower Income Threshold and Minimum Credit Limit Requirements
One of the keys to successful points + miles strategies is selecting products that suit your financial position. While Visa issues both the Sapphire cards, the Sapphire Preferred is a Visa Signature card, and the Sapphire Reserve is a Visa Infinite card. The two cards have different minimum income and credit limit requirements.
The official minimum credit limit for each card is:
- Visa Signature – $5,000
- Visa Infinite – $10,000
And while there is no publicly available formula for how banks decide on credit card approvals, logic would dictate that you will need to meet a higher income threshold to qualify for a $10,000 credit limit, particularly if you already have a line of credit with the same bank.
The Sapphire Preferred Is a Great Card for Beginners
What makes the Sapphire Preferred so good for beginners? We are big believers in starting small; don't dive in head first. Learn from the available opportunities and potential mistakes while they are minor errors that won't cost a lot of money. You will make mistakes; we all do.
Points and miles are no different from any other hobby in that you will make lots of little mistakes early, and over time get sharper and more knowledgeable on how to leverage points and miles for maximum value. It can be a steep learning curve with the volume of information available.
We think the Sapphire Reserve is the better card for people that will make the most out of the available travel credits and benefits while knowing how best to utilize the bonus categories on travel and dining. If there is any doubt that you will make full use of the benefits of the Sapphire Reserve, then the Sapphire Preferred is likely the better option financially.
The ‘best’ card is entirely subjective and determined by your personal circumstances. It’s easy as someone that writes about points and miles for a living to sit here and catalog all the different ways you can maximize airline credits and travel benefits on premium cards.
But I also remember my first forays into points and miles, the fumbles and missteps, false assumptions and daunting volume of information, and that sinking feeling after locking in a flight only to realize I had completely gaffed it.
The Sapphire Preferred still deserves its place as one of the best travel cards on the market, and certainly, the best outside of the ultra-premium travel cards.
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