Why you’ll want to pay the $95 annual fee on the Chase Sapphire Preferred
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One of the questions I get asked a lot when I recommend a starter travel card that comes with a fee is whether or not it’s worth it to pay for it when there are so many no-annual-fee ones out there. If you are a beginner, you may be hesitant to jump in with a card that comes with an annual fee.
Every card is different, but there are a lot of ways you can utilize your Chase Sapphire Preferred to make it worth the cost. Today, I’m breaking down some of the math behind why you’ll want to pay the $95 annual fee to get the Chase Sapphire Preferred.
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Generally, cards that come with annual fees also come with higher sign-up bonuses. While you shouldn’t make a habit of applying for cards purely for the sign-up bonus when you don’t plan to keep it long-term, it is a great perk that helps offset the first-year cost of a card.
The Chase Sapphire Preferred currently offers one of the top sign-up bonuses out there. You’ll earn 80,000 Ultimate Rewards points after you spend $4,000 on purchases in the first three months of account opening, plus up to $50 in statement credits toward grocery purchases in your first year after account opening.
Now, TPG values the points portion of that bonus at $1,600 because of the card’s array of transfer partners. But even if you’re not maximizing your redemptions and only getting only 1 cent in value per point, that’s still $800 — more than eight times the annual fee.
25% redemption bonus
Something else to look at — especially beginners — is the 25% redemption bonus when you book travel through the Chase Ultimate Rewards portal.
At TPG, we talk a lot about utilizing transfer partners, since you can really outsize the value you get from your points by strategically transferring them. But the Chase Sapphire Preferred also offers an easy way to get 1.25 cents out of each point when you book travel through the portal or through the Pay Yourself Back program, which Chase has extended through Sept. 30, 2021.
Let’s say you book a flight for $500. If you’re using a cash-back card or one that redeems points at 1 cent per point, that flight will cost you 50,000 points. However, that same $500 flight booked through the Chase Ultimate Rewards portal will only cost 40,000 points because of the 25% redemption bonus.
The 10,000 points you save by having the Chase Sapphire Preferred covers the annual fee by itself.
Partner perks from DoorDash and Peloton
You’ll get up to $60 back on eligible Peloton Digital or All-Access Memberships through Dec. 31, 2021. And you also get a minimum complimentary year of DoorDash’s subscription service DashPass (which comes with $0 delivery and reduced fees on eligible orders over $12). DashPass normally costs $9.99 per month, which makes this a $119.88 value.
If those subscriptions are something you would pay for with or without the card, you could save $179.88 total between both benefits — almost double the Chase Sapphire Preferred’s $95 annual fee.
There are many ways that the Chase Sapphire Preferred card’s annual fee can be worth the cost. Even without a long list of luxury benefits such as a travel credit or lounge access, you can easily get $95 worth of value each year from your Chase Sapphire Preferred.
Of course, if you have other credit card pairings that give you comparable or even more value (such as TPG Senior Writer Katie Genter’s Ink Business Preferred Credit Card alongside her husband’s Chase Sapphire Reserve), having the Chase Sapphire Preferred on top of that may not be worth it in the end.
But if you are a beginner still wondering if the card’s $95 annual fee is worth it, I’ll say this: If you maximize even one of the benefits I listed above, the Chase Sapphire Preferred is definitely worth applying for — annual fee and all.
Featured image by Isabelle Raphael / The Points Guy.
Welcome to The Points Guy!
WELCOME OFFER: 80,000 Points
TPG'S BONUS VALUATION*: $1,650
CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 when you redeem through Chase Ultimate Rewards®. Plus earn up to $50 in statement credits towards grocery store purchases within your first year of account opening.
- Earn 2X points on dining including eligible delivery services, takeout and dining out and travel. Plus, earn 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards®. For example, 80,000 points are worth $1,000 toward travel.
- With Pay Yourself Back℠, your points are worth 25% more during the current offer when you redeem them for statement credits against existing purchases in select, rotating categories.
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on eligible orders over $12 for a minimum of one year with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Count on Trip Cancellation/Interruption Insurance, Auto Rental Collision Damage Waiver, Lost Luggage Insurance and more.
- Get up to $60 back on an eligible Peloton Digital or All-Access Membership through 12/31/2021, and get full access to their workout library through the Peloton app, including cardio, running, strength, yoga, and more. Take classes using a phone, tablet, or TV. No fitness equipment is required.