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Update: Some offers mentioned below are no longer available. View the current offers here – Chase Sapphire Reserve
One of the biggest bits of credit card news in 2016 was the introduction of the Chase Sapphire Reserve Card, a new addition to the premium travel rewards card segment of the market. Many of you probably agreed with our assertion that American Express and Citi needed to step up their game to make their premium cards more competitive. Fortunately, it took less than two months for this to happen, as The Platinum Card from American Express recently announced that it will begin offering an unlimited 5x Membership Rewards points on airfare purchases made directly with the airline. Today I’ll take a look at when the Amex Platinum is now a better option to carry in your wallet.
To come to this decision, I’ll take a look at this from a mathematical perspective (much like my break-even analysis on the Sapphire Reserve compared to the Chase Sapphire Preferred Card). Both the Reserve card and the Amex Platinum carry $450 annual fees, but these can be cut by utilizing the travel credits they provide. For this analysis, I’ll assume that you maximize both the $200 airline fee credit on the Amex Platinum and the $300 travel credit on the Sapphire Reserve. This means that the Amex Platinum “costs” an additional $100 per year, so we’ll first look at how much you need to spend on airfare to cover this added fee.
In TPG’s most recent valuations, he pegs Ultimate Rewards points at 2.1 cents apiece, while Membership Rewards points come in just a bit behind, at 1.9 cents apiece. That means you’d earn the following on eligible airfare purchases when you use one of these two cards:
- Sapphire Reserve: 3 points x 2.1 cents = 6.3 cents
- Amex Platinum: 5 points x 1.9 cents = 9.5 cents
In other words, every dollar you spend on airfare using the Amex Platinum would give you an additional 3.2 cents of value. From there, the calculation is straightforward to identify how much you need to spend on airfare to cover the additional $100 annual fee:
$100 ÷ $0.032 = $3,125
Here’s how that works out in terms of points:
$3,125 x 5 points = 15,625 Membership Rewards points (worth $296.88)
$3,125 x 3 points = 9,375 Ultimate Rewards points (worth $196.88)
As you can see, at this level of spending, the additional Membership Rewards points you’d earn on airfare are worth exactly $100. If you typically spend more than that in a year, you’ll come out ahead by using the Amex Platinum.
However, chances are quite high that you’ll be using these cards for other purchases outside of airfare. As a result, you need to consider your spending levels across other categories to really calculate if this new bonus on the Platinum Card from American Express makes it a better option than the Chase Sapphire Reserve Card. Here’s a quick summary of the earning rates on each card:
Airfare: 5x Membership Rewards points
All other purchases: 1x Membership Rewards point
Travel purchases: 3x Ultimate Rewards points
Dining purchases: 3x Ultimate Rewards points
All other purchases: 1x Ultimate Rewards points
For example, let’s say that you typically spend $200 per month on airfare, $300 per month on other travel purchases, $300 per month on dining and $500 per month everywhere else. Here’s how those spending patterns would earn points on each card:
Airfare: $200 x 12 months x 5 points per dollar = 12,000 points
Other travel: $300 x 12 x 1 = 3,600 points
Dining: $300 x 12 x 1 = 3,600 points
Other: $500 x 12 x 1 = 6,000 points
Total earnings: 25,200 points, worth $478.80
Airfare: $200 x 12 months x 3 points per dollar = 7,200 points
Other travel: $300 x 12 x 3 = 10,800 points
Dining: $300 x 12 x 3 = 10,800 points
Other: $500 x 12 x 1 = 6,000 points
Total Earnings: 34,800 points, worth $730.80
In this case, you’re getting an additional $252 of value by using the Sapphire Reserve for these purchases.
As you can see, this can get quite complicated with these different categories of purchases and valuations of the points you’re earning. To help with the calculations, I created a spreadsheet for you to use. Simply input your valuations of Ultimate Rewards points and Membership Rewards points (if you don’t agree with TPG’s valuations, which are already in the spreadsheet) along with how much you typically spend in a month in each category and Excel will identify which card is best for you.
Here’s the link to access the file: Sapphire Reserve and Amex Platinum break-even spreadsheet.
Of course, this analysis is limited in that it’s only looking at the earning rates on these two cards. There are many other benefits that could push you toward one card or the other, most of which are much hard to quantify or only apply to the first year of cardmembership. Here are some of the key perks that may factor into your decision:
- Sign-up bonus: Currently, the Sapphire Reserve is offering 100,000 bonus points after you spend $4,000 on purchases in the first three months of account opening, while the Amex Platinum is offering 40,000 bonus points after you use your new card to make $3,000 in purchases in your first three months. The Sapphire Reserve’s is clearly the superior offer, but remember that this only helps in the first year of cardmembership, and the Amex Platinum has offered 100,000-point bonuses in the past, most frequently targeted through the CardMatch tool.
- Lounge access: Both cards offer access to Priority Pass lounges, but only the Sapphire Reserve includes guest privileges. However, the Amex Platinum will also get you into Delta Sky Clubs (no guests), Airspace Lounges (two guests) and Centurion Lounges (two guests or immediate family). If you regularly travel to or through an airport with these lounges but no Priority Pass lounges, this could push you toward the Amex Platinum.
- Hotel status: This is another category where the Amex Platinum really shines, offering complimentary Hilton HHonors Gold status and SPG Gold status (which for now actually gets you Marriott Gold status when you link your SPG and Marriott Rewards accounts). If you regularly visit these properties, this can be a nice way to make your stays a bit more rewarding.
- Car rental coverage: This perk swings in the favor of the Sapphire Reserve, since it offers primary car rental coverage (the Amex Platinum’s coverage is secondary, though you can pay a flat rate per rental to “upgrade” to primary coverage when you enroll in Amex’s premium car rental protection program). While you certainly hope you’ll never need to use this benefit, it provides nice peace of mind in case your rental car is damaged or stolen.
These are just some of the valuable perks offered on each card, so be sure to factor these into your decision making process as well. For a more comprehensive overview of these benefits, be sure to read my post on the Battle of the Premium Travel Rewards Cards.
It’s great to see American Express responding to the release of the Chase Sapphire Reserve Card by improving the benefits on the Platinum Card from American Express. However, unless you spend a lot of money on airfare in a year, the Sapphire Reserve is probably still the better bet for most travelers out there. That being said, some of the other benefits on the Amex Platinum could make it a great addition to your wallet, even if the earning rates still leave a bit to be desired. Here’s hoping that this new 5x bonus on airfare is just the beginning of issuers’ responses to the Sapphire Reserve!
What are your thoughts on this new Amex Platinum perk?
The Platinum Card® from American Express
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