Should You First Apply for Chase Sapphire Preferred or Reserve if You Are New to Miles and Points Hobby?

Ok, folks, the dust has settled and official link for Chase Sapphire Reserve has arrived. If you’ve been living under a rock for the last week, I congratulate you, but you may want to read this post to get an idea on what I’m talking about. Unfortunately, it does look like Chase  5/24 rule applies, but as I’ve mentioned in that post, you should check your local branch. Lots of encouraging reports from those who were first pre-approved by the banker before applying.

This particular post is mostly directed at those who are new to miles and points hobby and have a sqeaky clean (or mostly clean) credit report. Before Chase Sapphire Reserve came out, the official party line was  that you should apply for Chase Sapphire Preferred first. After all, the bonus is terrific and if you end up getting addicted to switching credit cards (and you probably will!), it could make it harder to apply for this card down the road. This was my advice for a long time.

Chase Sapphire Reserve has changed everything. My advice now is to apply for it first before getting any other  cards. Both Chase Sapphire Preferred and Chase Sapphire Reserve pay me commission if you apply through my site, so there is no incentive to recommend one over the other. In fact, I posted direct link (pays me nothing) for Chase Sapphire Reserve as soon as it came out. You can read more details on both cards and respective sign-up bonuses on this page 

But, but, but… what about non-waived $450 annual fee on Reserve?  

Yes, it’s a bummer. Unfortunately, in this case, you can’t have your cake and eat it too. Wait a second, yes you can! You are getting 100,000 Ultimate Rewards plus $300 annual credit good towards travel purchases. Those  include cruises, car rentals, flights and hotels. There are a bunch of other fancy perks that come with Reserve, but let’s ignore those for a minute. Let’s do basic math, shall we?

The sign-up bonus on Chase Sapphire Preferred is 55,000 Ultimate Rewards points once you add an authorized user and spend $4,000 in 3 months. The annual fee is waived for the first year. Those points can be transferred to a variety of programs, but let’s assume you will simply redeem them on travel and get 1.25 cents per point. That’s almost $688 towards travel purchases. Fantastic!

Now let’s compare it to the bonus on Reserve. Those 100K points are worth $1,500 towards travel. Even if you don’t take advantage of $300 calendar year credit, you’ll still come out ahead. If we deduct $450 annual fee, you’ll  be left with $1,050 good towards travel.

But maximizing $300 credit is super easy. Yes, a monkey can do it! You should be able to buy certain airline gift cards (Southwest usually works) and get reimbursed. Yes, if you decide to resell them, you’ll take  around  25% loss. That would amount to $150, but you’ll pocket $450 (cash) to pay off the annual fee on Chase Sapphire Reserve. Don’t want to deal with gift cards? Alright, just treat yourself to a getaway that won’t cost more than $300. You shoud be able to find something locally. Then do it again at the beginning of the year.

I just wrote a post on how my husband and I are planning on flying to Aruba. I’ve mentioned that I saw March roundtrip fares from Newark for less than 25,000 Rapid Rewards points. If you get Reserve, just one bonus can potentially take care of 4 tickets (UR points transfer to Southwest 1:1), and you can use   $300 credit to completely cover your taxes. This is just one example, and there are many possibilities when it comes to Ultimate Rewards points.

Even if you are absolutely not interested in travel, you should still apply for Chase Sapphire Reserve. At the very least, you’ll pocket $1,050 once you sell your airline gift cards. A note of caution: I would buy a small amount first and see if Chase reimburses you. The credit is cumulative,  so the purchase doesn’t have to be done in one transaction.

I don’t believe this bonus will stick around for very long

No, I’m not saying “get it RIGHT NOW,” but I do believe  the term “limited time offer” is actually justified in this case. I can’t imagine that Chase will still offer 100K points bonus on this card next year. Yes, I could be wrong, but let’s look at the facts. At the moment, the only two cards that are somewhat similar when it comes to benefits and earned currency are American Express Platinum and Citi Prestige.

The standard offer on both is 40,000 points, though occasionally you can get a higher bonus on Amex Platinum. Travel credit reimbursement terms are not nearly as generous on those two cards as they are on Chase Sapphire Reserve. Remember, on the latter, ANY travel expense qualifies. With Citi Prestige it has to be airfare, and Amex Platinum’s credit is only good toward incidental fees, though many regularly circumvent this rule.

So, the question is: while Chase obviously wants a leg up on competitors, why would it offer  a sign-up  bonus that is more than twice as lucrative?  Obviously, they are trying to create hype, and boy, did they succeed! Once they hit the target number of sign-ups, I believe the “carrot” will become smaller.

But what about Chase Sapphire Preferred? What if they reduce the sign-up bonus  on that card? Well, they might. I suppose it could go down to 40,000 UR points, a difference of 15,000 points. On the other hand, the offer on Chase Sapphire Reserve might be reduced to 60K points (which I think is likely). What would you rather lose: 15,000 points or 40,000 points? And like I said, I’m not even taking the perks  like Priority Pass lounge access or TSA pre-check into account. Those are great, but we regular folks are here mostly for the points, right?

Bottom line

If you are eligible for Chase Sapphire Reserve, I strongly recommend you consider getting it in a near future. You can always apply for Chase Sapphire Preferred later on. Of course, be careful not to overspend and check this post for some ideas on how you can meet minimum spending requirements. Many will be complaining about affiliate bloggers flooding the internet with posts on this card. As always, I only recommend offers I absolutely believe in. Even if this card paid me zero, I would still write the exact same post. This is a good one, folks, once in lifetime, perhaps.

Click here to view various credit cards and available sign-up bonuses