6 reasons the Chase Sapphire Reserve's high annual fee is easy to justify - and why the card is ultimately a better value than Chase's cheaper Sapphire Preferred

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Chase sapphire reserve card

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  • The Chase Sapphire Reserve is a fantastic and popular rewards credit cards, but so is its older, less-premium sibling, the Chase Sapphire Preferred.
  • The Reserve has a high annual fee - $450 - that may be off-putting. That compares to the Preferred's lower $95 annual fee
  • However, it's easy to get way more value back from the card in the form of rewards and perks including 3x points on dining and travel, airport lounge access, a $300 annual travel credit, and more.
  • Read on to see the six reasons that the Sapphire Reserve may be better for you. And be sure to check out why the Preferred might be better for you, too.
The Chase Sapphire Reserve made a big splash when it launched in 2016. A beefier follow-up to Chase's popular Sapphire Preferred card - which had been the reigning champ since 2009 - the Reserve managed to generate the kind of hype that's usually reserved for the latest iPhone or Marvel movie, all without any traditional marketing efforts. Advertisement

It's easy to see why, though. While the excitement partly surrounded the card's massive, limited-time sign-up bonus of 100,000 points, the millennial-focused card offered excellent perks, rewards, benefits, and value. The value proposition was so good that Chase was able to convince a number of customers to sign-up for the premium card, and pay the premium annual fee of $450.

The sign-up bonus has since dropped to 50,000 points after you spend $4,000 in the first three months, but even so, the card still offers a fantastic value. While some people might be better off with the lower-fee Sapphire Preferred, which offers many similar benefits and a higher sign-up bonus - though with a lower points-earning rate and without the best perks - my view is that as long as you're comfortable paying the $450 annual fee upfront, you'll get significantly more than that back in value. Personally, the Sapphire Reserve is a permanent fixture in my wallet.

Keep reading to see why the Chase Sapphire Reserve might be better for you than the Preferred.

Click here to learn more about the Chase Sapphire Reserve from Business Insider's partner: The Points Guy.

Keep in mind that we're focusing on the rewards and perks that make these two cards great options, not things like interest rates and late fees, which can far outweigh the value of any rewards.When you're working to earn credit-card rewards, it's important to practice financial discipline, like paying your balances off in full each month, making payments on time, and not spending more than you can afford to pay back. Basically, treat your credit card like a debit card.Advertisement

1. The annual fee may be $450, but you get $300 back each year - that means the fee is effectively just $150.

Each cardmember year (meaning every 12 months starting the month you open the card), the Sapphire Reserve offers a $300 credit toward travel purchases. The credit will be applied to the first $300 worth of purchases you make that year in the travel category, including things like subways, taxis/ridesharing, and parking, as well as hotels, airfare, and cruises. When you subtract the travel credit, the card's annual fee is effectively just $150.

Compared to the Sapphire Preferred's $95, that's only $55 more. Most people will be able to get enough value from the Reserve to make up for that difference.

2. You'll earn more points on spending than you would with the Preferred.

The Sapphire Reserve offers 3x points on all dining and travel, while the Preferred offers 2x on the same categories. To see whether you're better paying (effectively) $55 more per year for the Reserve, take a look at how much you spend on those two categories to see whether earning more points will make up for the higher fee.Advertisement

For argument's sake, let's assume you value your points at 1.5 cent each (that's the value of points used to purchase travel through Chase, with a 50% bonus if you hold the Sapphire Reserve - more on that later). That means you would need to earn 3,660 points each year to make up the $55 annual fee difference between the two cards.

So if you spend at least $3,660 on dining and travel each year, the extra point earned per dollar will add up to the difference in fees and make it worth getting the Sapphire Reserve card. That's without factoring in the other benefits of the card.

Travel is broadly defined, including all of the categories listed above, while dining is similarly broad and includes restaurants, bars, cafés, bakeries, ice cream shops, fast food stands, brewery tap rooms, delivery services like Seamless and Grubhub, and more.Advertisement

3. You'll have the same great redemption options for your points as you would with the Preferred - with an extra bonus.

As with the Preferred, there are a few ways to redeem your Ultimate Rewards points.

One easy, but low-value, option is to exchange them for cash back, with each point worth 1¢.

You can also use points to purchase travel through Chase.Advertisement

When you redeem your points for travel through Chase's online or phone booking service, you'll get a 50% bonus on your points, effectively making then worth 1.5¢ each. The Sapphire Preferred only offers a 25% bonus, making points used to purchase travel through Chase worth 1.25¢ instead).

However, a potentially much more valuable way to use points is by transferring them to one of Chase's nine partnering airline frequent flyer programs or four hotel loyalty programs. Both cards have access to the same exact transfer partners.While this is more complicated, you can generally get more value by booking frequent flyer award tickets than you can by using your points as cash or through Chase. You can even book flights in business or first class for fewer points than it would cost if you used them as cash or through Chase's website to buy the flights. For example, my wife and I used the points from our Chase cards to fly to Japan in first class for our honeymoon. You can read more about why transferable points are so valuable.Advertisement

4. You'll get access to more than 1,000 airport lounges around the world.

Having access to airport lounges is one of my favorite perks of the Sapphire Reserve. Lounges are comfortable, relaxing, and exclusive areas where you can enjoy comfortable seats, an internet connection, food and drinks - often complimentary - and sometimes other amenities.

The Sapphire Reserve comes with a Priority Pass Select membership. Priority Pass is a network of more than 1,200 airport lounges and airport experiences around the world, any of which you and your travel companions can access for free when you have your membership card. Guests are unlimited with the membership provided by the Sapphire Reserve, so whether you're traveling alone or with your family, you can enjoy free snacks, drinks, newspapers and magazines, showers, and more, all separate from the hustle and bustle of the main terminal.

5. If you don't have Global Entry or TSA PreCheck, the Sapphire Reserve will let you get it - and renew it - for free.

TSA PreCheck and Global Entry (which comes with PreCheck) are absolute musts for just about any traveler. Once you enroll, you can use special lanes to breeze through airport security - you won't have to remove shoes and light coats, and you can leave your laptop in your bag. With Global Entry, you can use a fast lane when you return to the US from abroad, which makes clearing immigration and customs easy and quick. The programs cost $85-$100, and Chase will provide a credit for that fee every four years (memberships are valid for five years).Advertisement

6. The Sapphire Reserve offers enhanced travel and purchase benefits compared to the Sapphire Preferred.

While both cards offer similar benefits and protections, the Sapphire Reserve's are enhanced in a few ways.

Both cards offer trip delay insurance. If you're traveling by common carrier - airplane, train, ferry, bus, and similar public forms of transportation - and your trip is delayed, you can be covered for up to $500 of expenses, including a change of clothes, hotel room, toiletries, meals, and more. Both cards' trip delay insurance kicks in when the delay forces an overnight stay, or, if you aren't stuck overnight, the Preferred's coverage kicks in after 12 hours, and the Reserve's after six hours.

I've been lucky and haven't been stuck overnight since having either of the cards. However, I've been stuck for more than six, but less than 12 hours before. For instance, last summer my morning flight was delayed by severe storms for about seven hours. Because I booked the tickets with my Sapphire Reserve, I saved my receipts throughout the day and placed a claim when I got back home. Within about eight weeks, I received reimbursement for lunch, a cell phone charger, a backup phone battery, and even a pair of headphones that I needed so that I could do some multimedia work from my laptop in the terminal.Advertisement

Similarly, both cards offer primary rental car damage/loss coverage, although the Sapphire Reserve's has a higher upper-limit for how much can be covered. The Reserve also offers covers up to $50 for roadside assistance calls four times a year - while the Preferred offers access to roadside assistance, each incident will cost about $60.

Bottom line:

The Sapphire Reserve is an excellent card, and if you're willing to float that $450 annual fee, and spend enough on dining and travel each year, I think that the Reserve is the better choice.

However, if you aren't comfortable paying that much on your first statement for the annual fee, or if you don't really have a use for benefits like airport lounge access, then the Sapphire Preferred is still a phenomenal card - especially for the lower $95 annual fee, which is waived the first year.Advertisement

Click here to learn more about the Chase Sapphire Preferred card from Business Insider's partner: The Points Guy.

Click here to learn more about the Chase Sapphire Reserve card from Business Insider's partner: The Points Guy.

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Business Insider may receive a commission from The Points Guy Affiliate Network, but our reporting and recommendations are always independent and objective.