Well, it was inevitable. I told myself I would’t go there again, but my arch nemesis (aka Chase Sapphire Preferred) keeps taunting me. I keep seeing in blogs and comments how this card is worth $95 annual fee for everyone. OK, let’s settle this once and for all. The post is a bit of a monster, so get a snack ready.
We’ll assume that a family has around $20,400 per year in non-bonus spending, or $1,700 per month. They pay their mortgage and other loans through Evolve and get a few new bonuses per year. They also spend quite a bit on dining and travel. Here is the breakdown of this imaginary family’s monthly budget:
1) Groceries: $500
2) Gas: $300
3) Dining: $400
4) Travel: $200
5) Everything else: $300
They have other bills, but they go toward meeting minimum spending requirements. Also, I wanted to highlight these categories because they earn bonus points on either CSP or AEP (the abbreviations for both cards, I’m coining the last one).
CSP (Chase Sapphire Preferred) earns 2 points on dining (3 on first Fridays of the month) and 2 points per dollar on travel purchases. Chase will eliminate 7% bonus on spending, so I’m not taking it into account.
AEP (Amex Everyday Preferred) earns 4.5 Membership Rewards points on groceries, 3 points on gas, and 1.5 points on everything else. It’s important to note that you need to have 30 transactions per billing cycle in order to get this rate of return. You can always puchase $1 Amazon gift cards to make sure you hit this threshold.
I’m assuming that the family likes to keep things simple and only wants one card for all of their non-bonus spending. They don’t like to keep track of rotating bonus categories. So, if they use CSP all year, they would get: 14,440 Ultimate Rewards from dining and travel (my family doesn’t eat out on Fridays) and 13,200 points from other spending. Grand total : 27,640 Ultimate Rewards points.
If they use AEP, they would get 27,000 points from groceries, 10,800 points from gas and 16,200 from other categories. Grand total: 54,000 Membership Rewards points.
That’s almost twice the points compared to CSP card. The annual fee is $95 on both. However, you will most likely make up for it with AEP card through various Amex promotions, not so with CSP.
Ok, now let me address some obvious objections from CSP apologists, and you know who you are.
1) AEP is an Amex card, which is still not accepted everywhere.
OK, that’s true. But remember, you are constantly working on minimum spending for other cards. Presumably, you will have a Visa or Mastercard at some point. What if it’s an Amex? There are a couple of ways to solve this problem. You can carry some cash with you.
Don’t like the idea of cash? Just buy a Visa gift card with your AEP card. If you can find one in a gas station, it would be a win-win, since you would get 3 Membership Rewards points per dollar. You can also pay your power bill with it and so on. Yes, it’s a bit of a hassle, but nothing terribly difficult. Most likely, this will only present an issue once in a great while.
2) Ultimate Rewards are more valuable than Membership Rewards.
Sure, they can be more valuable. You can redeem them and get 1.25 cents per dollar on travel expenses, while Amex will only give 1 cent. Still, are they twice as valuable? No way, Jose! To me, the biggest advantage to Ultimate Rewards is the fact that they transfer to Southwest.
However, Membership Rewards points transfer to Jet Blue, which has a similar rewards program. Plus, very often Amex runs bonuses on airline transfers. Not to mention, if you are solely after Southwest Rapid Rewards, you will do better collecting cash back.
Otherwise, the value of UR compared to MR is a wash.
3) Ultimate Rewards transfer to United Mileage Plus, Amtrak and Hyatt
An update: UR points no longer transfer to Amtrak.
First, how many families redeem their points on Amtrak? I’m guessing not that many. Unless you live on the East coast near a large city, you are probably not going to use this option all that often.
Besides, if you are a huge Amtrak fan, you will do better with Amtrak Guest Rewards World MasterCard. It only earns 1 point per dollar, but… It has no annual fee, and if you spend over $200 per year on Amtrak travel, you can transfer your points 1:3 to Choice points. That’s a great deal, which I’ve mentioned several months ago in one of my posts.
Now, on to United transfer. I’ve mentioned before that for the most part, you can do just as well or better by redeeming your Membership Rewards points for United flights by going through one of its Star Alliance partners. One exception is if you are planning to redeem for flights on Lufthansa, which has great coverage in Europe.
United does not impose fuel surcharges on that airline. But honestly, how many families absolutely have to fly to Europe on Lufthansa because they have relatives in Belarus? Anyone? For the most part, British Airways Avios program can get you to major airports in Europe (Dublin, Dusseldorf) with minimal or no fuel surcharges. Iberia program can get you to Madrid.
Some carriers, like LOT Polish Airways, also impose mild fuel surcharges, and you can redeem the miles on their flights by going through one of their Star partners that transfer from Membership Rewards. Plus, don’t forget Virgin Atlantic that imposes mild surcharges on flights to (not from) London and quite often has discounts on redemptions.
Air France, another MR partner, regularly has sales on awards. Between all these options, Membership Rewards should serve your needs just fine, without resorting to United program and redemptions on its Star partners.
What about domestic United flights that cost only 10,000 miles one-way through Mileage Plus, as long as the distance is 700 miles or less? In that case, you drive your own vehicle. For a family of four, it makes no sense to redeem 80,000 miles for roundtrip tickets, rent a car, all for a distance that can be covered in one (if very long) day. Only one of you is flying? Well, paying 5,000 extra miles won’t kill you, will it? Otherwise, use Avios or Jet Blue programs.
What about Hyatt and hotel points? Pay for condos, participate in IHG promotions, get a US Bank Club Carlson Visa and Chase IHG Mastercard. If you absolutely insist on Hyatt hotels, both spouses can get Chase Hyatt Visa and get at least 2 nights upon renewal in Category 1-4 after paying a $75 annual fee X 2. Pay for the other nights out-of-pocket. Boom.
4) But I like topping off my United and Southwest Rapid Rewards accounts
Watch for various promos or just buy (or transfer from partners) the points that you need. When you collect Ultimate Rewards or any other currency, you are already buying each point for 2 cents on non-bonus category spending, because you could have used Fidelity Amex card and earn 2 cents per dollar.
You could also sign up for CSP card and alternate your applications with your spouse. Chase now lets you get a new sign-up bonus every 24 months. So you could get CSP card, collect the bonus, then 11 months later get your spouse to apply for it. Transfer your points to his/her account and cancel your card. Then apply for CSP again once 24 months passes since you collected your last bonus. Rinse and repeat, as long as you are responsible when it comes to new credit.
By following this method, you will be without Ultimate Rewards for only a few months each year. In fact, by that logic, I would argue that Membership Rewards just became more valuable. Why? Because of Amex new rule of one bonus/ per card.
5) If you get Chase Freedom, you can supercharge your earning potential when pairing it up with Chase Sapphire Preferred
True, you can earn more points, but you still wouldn’t approach the amount you could earn by using only AEP card. Plus, the premise of this post is using only one card for simplicity.
Something else you shouldn’t forget: You can buy gift cards to various retailers by using AEP card at Giftcardgranny By that logic, Chase Freedom isn’t that much of a game changer with its 5% bonus categories.
Well, I hope I’ve convinced some of you to at least take another look at CSP and think twice when renewing it each year. Leslie from Tripswithtykes (good blog, check it out), I’m looking at you!
Of course, the amount you spend will most likely be different, so as always, I encourage you to do your own math. Both cards actually pay me commission, so there isn’t any incentive to recommend one over the other.
Bottom line
Chase Sapphire Preferred is good for the bonus, not as an everyday card when it comes to most middle-class families’ spending. Amex Everyday Preferred has a lousy sign-up bonus (note that some have reported receiving a targeted offer of 30,000 points sign-up bonus instead of the usual 15,000 points, but is great for those who prefer to collect flexible points through everyday spending and only get few bonuses per year.
Readers, what do you think? Case closed?
Author: Leana
Leana is the founder of Miles For Family. She enjoys beach vacations and visiting her family in Europe. Originally from Belarus, Leana resides in central Florida with her husband and two children.
Thank you for this post. I am sick and tired of reading 90% of the points guru sites and travel sites recommending and praising CSP. While those sites offer valuable information, I don’t agree with the “CSP is best” point of view. Many middle class families and couples will have more luck with the EDS. Additionally, I live in a US Airways hub (CLT). I have the CITI AAdvantage for AA and US flights. United is useless to me. I also travel WITHIN Europe a lot and EDS has the local carriers as transfer partners. The CSP partners are very limited in comparison. Next, I don’t dine out as much since 1. I am not lazy 2. I believe it’s a waste of money unless there is an occasion. Therefore, the CSP is a 1% card for me with an annual fee. Also don’t forget AMEX waives annual fees for active military and Chase only for accounts opened prior to joining service. The one place CSP really has it better is the no forex.
@Lubo Thanks for stopping by! That’s actually one of the reasons I started blogging; The CSP card! 🙂 It was universally praised to the point that even people who put $15K per year on credit cards were told to renew it. Umm, no.
I know it is valuable for some, no doubt. But I think it’s mostly business travelers who happen to be high spenders. And even then, there are probably better choices for many. My goal with this blog is to encourage people not to rely so much on bloggers and simply do their own math. Everyone is unique.
I didn’t know that Chase only waives fees to military members who had the card prior to joining the army. Interesting! Thanks for your insights.
I saw this trick just yesterday. If you’re purchasing on-line and they don’t take AMEX, but they take Paypal, you can link your Amex card to your Paypal account.
BTW, I killed my Amex Gold Rewards card for the AEP card. In the first month of use, my MR points doubled compared to the Gold card…And hitting 30 swipes per month was a no brainer.
@Chris L Nice! I haven’t heard of that. Will need to look into it. And yes, AEP is great for those who don’t constantly switch cards. It would be my top pick, for sure.
This is actually really helpful. I am holding out hope for a higher sign up bonus. Like Leslie, Marriott, Southwest, and United have a lot of value for our family for the next two years. But I use Avios quite a bit, so MR would come in handy there.
At the end of the Day, Chase just has such great transfer partners. Hyatt, Southwest (Disney), Marriott (Marriot Flight + Hotel Packages), United (Trip to Europe, Stopovers). And their bonus portal is incredible.
But this makes me more likely to spring when I see an increased bonus.
@Cheapblackdad All things being equal, I would take UR point over MR any day of the week and twice on Sunday. However, to me, the math just kills CSP value for most families compared to AEP card. It comes down to: is 1 UR point really worth 2 MR points? Plus, don’t forget that with Amex you can make up for $95 annual fee, but not with CSP card. Of course, there is no right or wrong answer here. To each his own.
Well, I’ve made it now that I’ve been called out by both Miles for Family and Travel Blogger Buzz. 😉 Thought-provoking post, but it isn’t case-closed for me. Chase just has the transfer partners that cover the programs I’m already in bed with (for better or worse) and that is worth something to me. Your post also assumes use of one card, which I don’t do. I divide the vast majority of my spending up between two cards (when I’m not working on a minimum spending requirement). Chase gets all my dining & travel, so I’m always earning 2x there (and we spend a lot in those two categories). Old Version Amex Blue Cash gets all my grocery & gas spending (I don’t do membership rewards), so I’m earning 5% cash back there. I’m grandfathered in with a no annual fee version of this Amex card, so I’m not paying another annual fee. It’s a pretty simple everyday strategy.
Leslie from Tripswithtykes, thanks so much for stopping by! I was afraid you would get offended, glad you are such a good sport about it. Your argument makes sense: If you maximize the bonus categories and spend a good bit there, it may be worth it. I don’t know your spending patterns, so can’t talk specifics.
The analysis was mostly meant to get my readers to rethink their card strategy. Now and again, I do these type of posts, because my goal is to encourage my audience not to rely so much on what blogs are saying. I realize, it sounds crazy coming from a blogger! 😉
These annual fees can really add up for low spenders.
Oh, and you have arrived long before this mention: A lawyer, a mom of two, and running a blog on top of it!
Been reading long enough to know not to take offense! 😉 I tell friends all the time that my card strategy won’t necessarily be the right fit for them. Our family is already quite wacky in that we spend way more on travel & dining than we do on gas & groceries. This is the opposite of the vast majority of American families. Good that you are making people THINK about the cards they use and how those cards fit into THEIR specific lives.
@Tripswithtykes You are a classy lady! That’s the thing with credit cards: There isn’t one perfect solution for everyone. All families are quite different. I can only hope to make decisions easier for others.