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New offer: The IHG Rewards Club Select Credit Card is a great way to pad your IHG balance with 70,000 points after $2,000 spent within the first 3 months.
Last week, American Express announced that, starting in 2015, the Premier Rewards Gold card would no longer offer a 15,000-point bonus for spending $30,000 or more in a calendar year.
That prompted us to reevaluate Amex’s Membership Rewards cards in a showdown that pitted the Premier Rewards Gold against the Platinum and EveryDay Preferred cards. When the EveryDay Preferred came out on top in terms of points-earning, many readers wrote in asking for a follow-up post comparing it to one of the other points powerhouses out there, the Chase Sapphire Preferred. Today, TPG Special Contributor Eric Rosen compares the benefits and earning potential of these two popular cards to help you decide which is the best choice for you.
With the recent changes to the Amex Premier Rewards Gold, the new all-star card in the Amex portfolio might just be the recently launched EveryDay Preferred. Not only does this card award a 50% bonus on points earned when you make 30 transactions per billing cycle, but also it earns full Membership Rewards points, which means you can transfer them to the program’s dozens of travel partners.
In its corner, Chase has fielded the Sapphire Preferred for a few years now as its premium consumer credit card. With these two heavyweights in the ring, let’s look at their benefits and drawbacks, and which card is the right choice for whom.
Before I get into the details, I suggest looking over these two recent posts for more information on applying for credit cards and how to decide which ones might best suit your needs:
- How Card Applications Affect Your Credit Score
- Choosing a Rewards Credit Card: 5 Questions Before You Apply
Here’s a quick rundown of the current details of both cards.
EveryDay Preferred Credit Card
Current Sign-up bonus: 15,000 points when you spend $1,000 in 90 days.
Category Spending Bonuses: Earn 3x Membership Rewards points at U.S. supermarkets (not including warehouse stores like Costco) on up to $6,000 of purchases annually (then 1x); 2x on US standalone gas stations; and 1x points on all other purchases.
Other Bonuses: Use the Card to make 30 or more purchases in a billing period and get 50% extra points on all those purchases (less returns and credits).
Other Benefits: 0% introductory rate on purchases and balance transfers for the first 12 months.
Annual fee: $95
Chase Sapphire Preferred
Current Sign-up bonus: Earn 50,000 points after you spend $4,000 in the first 3 months, and an additional 5,000 bonus points when you add an additional cardholder within the first 3 months.
Category Spending Bonuses: Earn 2x points per dollar on all travel and dining, and 3x points per dollar on dining on the first Friday of every month.
Other Benefits: No foreign transaction fees.
Annual Fee: $95 waived the first year
Just to keep things simple, the table below shows the various factors I’ll take into consideration, and how each card stacks up.
|Sign-up Bonus||Annual Fee||Other Bonuses||Forex Fees||Travel Partners|
|Sapphire Preferred||50,000 points /$4,000 spend||$0, then $95||2x on dining and travel||None||11 total|
|EveryDay Preferred||15,000 points /$1,000 spend||$95||3x on groceries, 2x on gas, 50% transaction bonus||2.7%||21 total|
CURRENT SIGN-UP BONUS
Sapphire Preferred: 50,000 points after you spend $4,000 in the first 3 months, and an additional 5,000 bonus points when you add an additional cardholder within the first 3 months.
EveryDay Preferred: 15,000 points when you spend $1,000 in 90 days.
Winner: Sapphire Preferred. Though the spending requirement is three times as high as EveryDay Preferred, you can earn three times as many points with the sign-up bonus and authorized user bonus, which is worth it in my book.
Sapphire Preferred: $95, waived the first year
EveryDay Preferred: $95
Winner: Though things even out after the first year, the Sapphire Preferred edges ahead here by waiving the first year’s annual fee – a move Amex would be wise to duplicate in order to remain competitive.
For more information, check out this post on Ways To Minimize Annual Fees.
CATEGORY SPENDING BONUSES
Sapphire Preferred: 2x points per dollar on all travel and dining, with no cap. Travel includes:
- Auto/truck/RV rental
- Limos and taxis
- Travel agencies
- Tolls and bridges
- Parking (lots, meters, garages)
- Time shares
EveryDay Preferred: Earn 3x Membership Rewards points at U.S. supermarkets (not including warehouse stores like Costco) on up to $6,000 of purchases annually (then 1x); 2x on US standalone gas stations.
Winner: Tie. This is one of the more complicated comparisons, and really the decision comes down to where you spend your money.
If you’re a mobile professional who spends a lot of time traveling and dining out, then Sapphire Preferred is the better card for you. If you tend to spend more on groceries than dining out, and have a commute or regular driving needs that mean you’re filling up your gas tank regularly, you’ll likely get more value from EveryDay Preferred. In this case, it really pays to parse out your expenses for a year and see what categories your spending falls into.
Sapphire Preferred: Though it will end as 2015 comes to a close, existing cardholders as of July 20, 2014 will still receive a 7% annual points dividend on all points earned (base and bonus). After that, the 7% dividend will no longer be included as a benefit. Update – The 7% bonus has officially ended.
EveryDay Preferred: Make 30 or more purchases in a billing period and earn 50% extra points on all those purchases, including on bonus points earned in certain merchant categories.
Winner: EveryDay Preferred. This is where the Amex card really pulls ahead. A potential base earning rate of 1.5 points per dollar plus the ability to earn up to 3 points per dollar on gas and 4.5 points per dollar on groceries (up to the annual maximum) is the most valuable perk this card carries. Granted, you do have to make 30 transactions or more per billing cycle, but with today’s spending habits, that’s not an onerous requirement.
FOREIGN TRANSACTION FEES
Sapphire Preferred: None
EveryDay Preferred: 2.7%
Winner: Sapphire Preferred. No contest here. The Sapphire Preferred is squarely aimed at international travelers, and as such, it carries no forex fees. The EveryDay Preferred does, however, and its category spending bonuses are for US supermarkets and gas stations only, which optimizes it for domestic use instead.
For more information, see this post on Top Travel Credit Cards that Waive Foreign Transaction Fees.
Sapphire Preferred: As a Visa Signature card, Sapphire Preferred comes with a slew of value-added benefits like trip cancellation and interruption insurance, lost and delayed baggage insurance, and (specifically to this card) primary rental car insurance.
EveryDay Preferred: This card carries Amex purchase protection, though its suite of travel benefits is not as solid as those on Sapphire Preferred. However, it does offer Amex’s premium primary car rental coverage for $24,95 ($17.95 for CA residents) per rental. This card also currently offers a 0% introductory rate on purchases and balance transfers for the first 12 months.
Winner: Sapphire Preferred. If you intend to use your card when traveling, the benefit package on Sapphire Preferred is the hands-down winner, and the purchase protections it offers is comparable to that on the Amex EveryDay Preferred. However, if you’re looking for a card to carry a balance on for a few months after applying, you might like the introductory rate on EveryDay Preferred.
One of the main selling points of each of these cards is that the points you earn can be transferred to travel partners in the respective programs – Membership Rewards for Amex and Ultimate Rewards for Chase. Below is a brief rundown of each program and its travel partners; for a more detailed explanation and comparison, check out Jason Steele’s post on Comparing the Transferable Points Programs: Partners & More.
Sapphire Preferred: Ultimate Rewards program.
- Airlines: British Airways, Korean Air, Singapore Airlines, Southwest, United, Virgin Atlantic
- Hotels: Hyatt, IHG Rewards, Marriott, Ritz-Carlton
EveryDay Preferred: Membership Rewards program.
- Airlines: Aeromexico, Air Canada, Air France/KLM, Alitalia, ANA, British Airways, Cathay Pacific, Delta, EL AL, Emirates, Frontier, Hawaiian, Iberia, JetBlue, Singapore, Virgin Atlantic, Virgin America
- Hotels: Best Western, Choice, Hilton (1:1.5 ratio), Starwood (3:1 ratio)
- Other: None
Winner: Sapphire Preferred. This is bound to be a controversial call, and like much else here, it depends on how you want to use your points.
While Ultimate Rewards has just 6 airline transfer partners compared to 17 for Membership Rewards, I would argue that those 6 airline partners are superior based on the ease of accrual for US-based customers, instant transfers (which is not the case for many Amex partners), and coverage in the three major alliances as well as some outside partners like Virgin Atlantic and Southwest.
On the other hand, the number of partners Amex offers – including several choices in each alliance – is a big strength, because it helps insulate cardholders from devaluations by individual airline. If for example, you’re put off by the recent Delta-imposed changes like capping annual transfers at 250,000 miles, you can transfer your points to Air France/KLM instead. Also, Amex has periodically offered transfer bonuses to numerous partners. We haven’t seen a lucrative one in quite some time, but if they ever come back, that’s a real boon for cardholders.
On the hotel side of things, Ultimate Rewards offers superior partners, especially Hyatt. By including Gold Passport as well as Marriott/Ritz-Carlton and IHG, the program gives cardholders access to an enormous group of hotels in a number of categories all over the globe. While Amex offers Hilton and Starwood, the transfer rates are not exceptional.
OTHER REDEMPTION METHODS
Sapphire Preferred: Book travel at a rate of 1.25 cents per point with Pay With Points.
EveryDay Preferred: Book Airfare at a rate of 1 cent per point through Amex using Pay With Points.
Winner: Sapphire Preferred – you’re getting 25% more value per point.
For a final comparison, let’s put the spending/earning potential of each card to the test. For some realistic numbers, I looked up the latest Bureau of Labor Statistics consumer expenditure survey (which contained figures for 2013). I rounded the numbers slightly to make calculations easier, and included just the purchases that people are likely to make with credit cards.
Here’s how the average American’s spending breaks down:
- Groceries: $4,000
- Dining out: $2,600
- Gas: $2,200
- Transportation/travel (minus gas): $6,800
- Entertainment: $2,500
- Apparel/Services: $1,600
- Healthcare: $3,600
Below is the number of points you would earn using each card and the approximate value of those points based on TPG’s latest monthly valuations (which list Ultimate Rewards at 2.1 cents apiece and,Membership Rewards at 1.8 cents apiece). In this first scenario, I include the 7% annual points dividend on Sapphire Preferred and the 50% points bonus for making 30+ transactions per billing period on the EveryDay Preferred.
- Sapphire Preferred: 34,989 points = $735
- EveryDay Preferred: 50,250 points = $905
- Winner: EveryDay Preferred
Now consider another scenario that excludes the 7% annual dividend for Sapphire Preferred and the 50% bonus for EveryDay Preferred.
- Sapphire Preferred: 32,700 points = $687
- EveryDay Preferred: 33,500 points = $603
- Winner: Sapphire Preferred
Purely from a points-earning perspective, EveryDay Preferred beats Sapphire Preferred in both scenarios. However, taking value into consideration, Sapphire Preferred comes out ahead without the respective bonuses. Naturally, the results depend on a number of factors, including where you tend to focus your spending, how you value Membership Rewards points versus Ultimate Rewards points, and whether you’re eligible for the points bonuses. Aside from points, you should consider whether you can take advantage of other benefits (like no foreign transaction fees on Sapphire Preferred).
As with any credit card comparison, which card wins out all depends on your spending patterns and how you want to redeem the points you earn.
For folks who can max out the grocery and gas bonus categories, and who hit that 30-transaction magic number each billing cycle, the earning potential on EveryDay Preferred can’t be beat. However, its value is limited beyond the US thanks to hefty foreign transaction fees and less comprehensive travel protections.
For its part, the sign-up bonus on Sapphire Preferred’s is potentially three times that of the EveryDay Preferred. Its other spending bonuses are in solid and useful categories and have no cap, and the annual fee of $95 (the same as the EveryDay Preferred) is waived the first year, meaning you can try it out for a year without worrying about whether you’re getting that value back in terms of benefits. Furthermore, its comprehensive suite of travel protections (like primary rental car insurance and no forex fees) make it a no-brainer for those whose travel abroad frequently.
One option would be to just get both cards. Between them, you’d get two sign-up bonuses, no overlap in bonus spending categories, and a total of 21 airline partners, 8 hotel partners, and Amtrak, covering most of your bases and giving you flexibility when deciding where to redeem your points. Best of all, you’d only be paying the annual fee on EveryDay Preferred in the first year, so you’d get two cards for the cost of one, at least to start. You’d have a year to ponder which card works best for you if you only plan to keep one in the long run.
Do you have either or both of these cards? Please share your thoughts in the comments below.
Chase Sapphire Preferred® Card
|Intro APR||Regular APR||Annual Fee||Foreign Transaction Fee||Credit Rating|
|N/A||16.24%-23.24% Variable||Introductory Annual Fee of $0 the first year, then $95||0%||Excellent Credit|