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How much do you have to spend each year for a Chase Sapphire annual fee to be worth it? The answer depends on:
- Whether you spend in the bonus categories often
- How much you value Chase Ultimate Rewards points
I’ll break down spending in 3 scenarios:
- Half bonus/half non-bonus spending with points worth their base rate for each card
- Half bonus/half non-bonus spending with points worth 2 cents each
- All bonus spending with points worth 2 cents each
In This Post
1. Chase Sapphire Preferred
- Link: Chase Sapphire Preferred – Compare this card
- Link: The Top Card for Beginners? Yeah, the Chase Sapphire Preferred
CSP, you’re up first.
If you’re new to collecting points & miles, the Chase Sapphire Preferred is hands down the best place to begin. It’s where I started. And when anyone asks me “What’s the BEST points card if you can only have one?” (I get this question a lot), this one is the answer.
With the Chase Sapphire Preferred, you get:
- 2X Chase Ultimate Rewards points on travel and dining purchases
- 1X Chase Ultimate Rewards point on all other purchases
The card also has a sign-up bonus of 50,000 Chase Ultimate Rewards points when you spend $4,000 on purchases in the first 3 months from account opening. And the $95 annual fee is waived the 1st year – so you won’t have to worry about these calculations until the second year.
The points you earn are worth at least 1.25 cents each because that’s their base rate on travel booked through Chase. However, I like my points to be worth 2 cents apiece, so I save them for high-value travel awards to get the best bang for my buck. Okurr?
Half/half & 1.25 cents each
Let’s say you spend roughly half on travel or dining, and the other half on everyday spending. And you use the points to book travel through Chase, where they’re worth 1.25 cents each.
To recover the cost of the $95 annual fee the second year (because it’s waived the first year), you’d need to earn 7,600 Chase Ultimate Rewards points. Of those, you’d need to spend:
- $1,900 on travel and dining (to earn 3,800 points @ 2X)
- $3,800 on other purchases (to earn 3,800 points @ 1X)
Per month, you’d need to spend:
- ~$158 on travel and dining
- ~$317 on other purchases
Which is totally doable if you keep this as your everyday card. Once you recover the cost of the annual fee, all the other points you earn are yours to spend however you want!
Half/half & 2 cents each
In this scenario, you’d only need to earn 4,750 Chase Ultimate Rewards points in a single year to make the card worth keeping. It breaks down to:
- ~$1,188 on travel and dining (to earn 2,375 points @ 2X) or ~$99 a month
- $2,375 on other purchases (to earn 2,375 points @ 1X) or ~$198 a month
That’s even easier. And attainable for even casual points earners.
Full 2X & 2 cents each – My personal valuation
I added this one because this is how I personally spend and view the points. With these values, the card is an exceptional no-brainer to have and keep long-term.
Again, you’d need to earn 4,750 Chase Ultimate Rewards points to make the card worth keeping.
But if all your spending is for travel and dining, you’d only need to spend $2,375 a year to earn that. That’s only ~$198 a month in those categories.
I personally spend much more in those categories. Because “travel” includes things like:
- Airbnb bookings
- Toll tags
- Parking garages
- Award bookings (taxes and fees)
- And of course air travel and hotels
The “dining” category is broad, too – and includes:
- Fine dining
- Bars (yep!)
- Fast food
- Casual restaurants (like Panera, Start, and similar)
- Coffee shops (Starbucks, Coffee Bean, and similar)
So really, the Sapphire Preferred is worth keeping for nearly anyone if you transfer your points to travel partners.
2. Chase Sapphire Reserve
- Link: Chase Sapphire Reserve – Compare this card
- Link: Why I Product Changed to the Chase Sapphire Reserve
Think of this card as the Sapphire Preferred’s older sibling. The one who grew up and got all fancy. 💃
There’s also a sign-up bonus of 50,000 Chase Ultimate Rewards points when you spend $4,000 on purchases in the first 3 months from account opening. BUT – the $450 (!) annual fee is NOT waived the 1st year (stay with me).
You also get:
- 3X Chase Ultimate Rewards points on travel and dining purchases
- 1X Chase Ultimate Rewards point on all other purchases
- $300 annual travel credit
- Priority Pass Select membership
- $100 Global Entry credit
Your points are also worth a baseline of 1.5 cents each when you book travel through Chase. This, and all the other benefits, are what prompted me to ask Chase to change my Sapphire Preferred to a Sapphire Reserve card.
Plus, the travel and dining category gets a bump to 3X per $1 spent. Let’s see how much you’d need to spend to recoup a much larger annual fee. I won’t include any of the other benefits – only spending to recover the fee.
Half/half & 1.5 cents each
Again, when you spend roughly half on travel or dining, and the other half on everyday spending. And you use the points to book travel through Chase, where they’re worth 1.5 cents each.
To recover the cost of the $450 annual fee, you’d need to spend to earn 30,000 Chase Ultimate Rewards points – much more than the Preferred. Of those, you’d need to spend:
- $5,000 on travel and dining (to earn 15,000 points @ 3X)
- $15,000 on other purchases (to earn 15,000 points @ 1X)
By month, you’d need to spend:
- ~$416 on travel and dining
- $1,250 on other purchases
Assuming this is your everyday card, you’d need to spend around $1,600 per month to justify the annual fee. With the Preferred card at these levels, you’d only need to spend $475 per month. Not the best option if you’re unsure or don’t have a clear earning focus.
Half/half & 2 cents each
Here, you’d need to earn 22,500 Chase Ultimate Rewards points in a single year to make the card worth keeping. That’s:
- $3,750 on travel and dining (to earn 11,250 points @ 3X) or ~$313 a month
- $11,250 on other purchases (to earn 11,250 points @ 1X) or ~$938 a month
It’s starting to become clear that your personal valuation of the points and how much you spend per month becomes a deciding factor of which card is best for you.
This scenario could be feasible for lots of peeps, assuming this is their everyday go-to card. Next up…
Full 3X & 2 cents each – My personal valuation
I only put my travel and dining purchases on this card. And other purchases on other cards. So here’s how it breaks down if you’re in my boat.
You’d need to earn 22,500 Chase Ultimate Rewards points. And you’d need to spend $7,500 per year on travel and dining to earn that many. That’s $625 a month on travel and dining, which is super manageable if you eat out and travel even semi-regularly.
The card shines when you make use of the bonus categories and get high value from your points. And that’s before you factor in the lounge access, $300 annual travel credit, and all the other perks of the card.
If you spend a lot on travel and dining, I’d recommend springing for the Sapphire Reserve.
Your points can be worth so much when you transfer the points to travel partners. Here’s how I recently got a $2,000+ vacation to Puerto Vallarta for $90 using Chase Ultimate Rewards points.
As with everything points-related, the answer is subjective. However, most peeps will do well to keep and hold the Sapphire Preferred for the long-haul. And those who are moderate to big spenders in the bonus categories should probably grab the Sapphire Reserve.
In either case, it’s almost always worth paying the annual fee – because once you do, the rest is free travel banked right to your account.
Keep in mind, you can always product change from one to the other after a year, like I did. And you can’t earn the bonus on both cards or have both at the same time. So once you choose, you can cancel or change the card down the road.
I must mention you will NOT be approved for either card if you’ve opened 5+ cards in the last 2 years. But either card is an excellent place to begin if you’re new.
Finally, with the Sapphire Reserve, my calculations do NOT include the huge list of card benefits. But you can do well even without those in the mix, which goes to show how strong this premium card really is. It’s a nice step up, and a worthwhile card to hold long-term.
If you have either card, do you prefer one over the other? I’d also be curious to hear how you redeem and value the points you earn!
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