Chase Sapphire Reserve Card Review: 100,000 Points Bonus = $1,500 in Travel, $450 Annual Fee

chasereserve200newChase has a new ultra-premium credit card, the Chase Sapphire Reserve Card, which has headline features of Visa Infinite benefits, 100,000 Ultimate Rewards points sign-up bonus, and a $450 annual fee. That’s a huge sign-up bonus and a big annual fee. Is this expensive travel-focused card designed to compete with the American Express Platinum and Citi Prestige worthy of your attention?

Card highlights:

  • 100,000 Ultimate Rewards points after you spend $4,000 on purchases in the first 3 months from account opening.
  • $300 annual travel credit. Each year, automatically receive up to $300 in statement credits as reimbursement for travel purchases such as airfare and hotels charged to your card.
  • Up to a $100 statement credit towards your Global Entry or TSA PreCheck application fee.
  • Priority Pass Select membership. Provides free access to 900+ VIP lounges in over 400 cities worldwide.
  • Earn 3X points per $1 spent on travel & dining worldwide.
  • Earn 1 point for every dollar in other purchases.
  • 1.5 cents per point value when redeemed towards travel booked through Chase Ultimate Rewards
  • 1:1 points transfer to various frequent flyer and hotel loyalty programs.
  • Annual fee is $450, not waived the first year. Additional cards are $75 per year, each.

Details on Ultimate Rewards points redemption:

  • Cash rewards. Cash redemptions are a bit ordinary but easy… 100 points = $1.
  • Points redeemed towards travel are worth 1.5 cents when applied towards any hotel, flight, car rental, or cruise available on their travel portal UltimateRewards.com. Redemptions can also be maximized because you can book wherever you want and simply pay the difference. For example, 25,000 points can be used for any ticket up to $375, but if say you wanted a $400 ticket you could just pay the $25 difference. You’re able to use every last point on this program, and you don’t have to worry about room or flight availability.
  • This means the 100,000 point sign-up bonus is worth $1,500 towards any travel booked through Chase.
  • This also means your existing Ultimate Rewards points balance could be increased in value by getting this card.
  • This also means that if you also have the Chase Freedom Unlimited card, you’d be getting 2.25% back on all purchases when redeemed towards travel through Chase.
  • This also means that if you also have the Chase Freedom card, you’d be getting 7.5% back on the quarterly rotating categories when redeemed towards travel through Chase.
  • Points can be converted to frequent flyer miles a 1:1 basis to the following airlines: United Airlines, British Airways, Singapore Airlines, Korean Air, Southwest, Virgin Atlantic, and Air France.
  • Points can be converted on a 1:1 basis to the following hotel loyalty programs: Hyatt, IHG, Ritz-Carlton, and Marriott
  • Sharing points. Ultimate Rewards points are instantly transferable to other accounts like family members, as long as they have their own Chase card with Ultimate Rewards as an authorized user (free with Chase Freedom). This way, you can pool points together for transfers and redemptions if you like.

Other card benefits:

  • Dedicated customer service line with a live person that answers the phone 24/7. No waiting or complicated phone trees.
  • No foreign transaction fees.
  • Primary car rental collision damage waiver insurance. Decline the rental company’s collision insurance and charge the entire rental cost to your card. Coverage is primary and provides reimbursement up to $75,000 for theft and collision damage for most rental cars in the U.S. and abroad. Most other cards only offer secondary coverage that kicks in only after the deductible of your individual insurance policy is used.
  • Trip Cancellation/Trip Interruption Insurance. If your trip is canceled or cut short by sickness, severe weather and other covered situations, you can be reimbursed up to $10,000 per trip for your pre-paid, non-refundable travel expenses, including passenger fares, tours, and hotels.
  • Trip Delay Reimbursement. If your common carrier travel is delayed more than 6 hours or requires an overnight stay, you and your family are covered for unreimbursed expenses, such as meals and lodging, up to $500 per ticket
  • Enjoy special car rental privileges from National Car Rental, Avis, and Silvercar when you book with your card.

This is still a new card, but there is reported success in people “upgrading” their existing Chase Freedom, Chase Freedom Unlimited, and Chase Sapphire Preferred cards to this new Sapphire Reserve card. If you convert, you will not be eligible for the 100,000 point sign-up bonus, but you will still get the standard card features like the $300 calendar year travel credit which can still offset the $450 annual fee.

Note that Chase has a widely-reported but unofficial rule that they will automatically deny approval on new credit cards if you have 5 or more new credit cards from any issuer on your credit report within the past 2 years (aka the 5/24 rule). This rule is designed to discourage folks that apply for high numbers of sign-up bonuses.

As for the $300 annual travel credit, “annually” means the year beginning with your account open date through the first December statement date of that same year, and each 12 billing cycles starting after your December statement date through the following December statement date. So it’s not exactly by calendar year, but roughly close and you can likely get this twice under the first year’s annual fee.

In terms of first-year value, this card is probably one of the highest in recent memory. You get 100k points worth $1,500 towards travel booked through Chase, $300 in travel credit that can be used once in 2016 and again in 2017, Priority Pass Select membership, up to $100 Global Entry application credit, and more…. all for $450 annual fee. Your potential net value for the first year is easily over $1,650. If you spend enough to trigger the sign-up bonus and the annual travel credit, can redeem the points for something you want, and haven’t racked up 5 new credit cards in the last 24 months, this is quite a deal.

Using Your 401(k) and Roth IRA as Emergency Funds

savebuttonbankWe’ve all heard that you should keep an emergency fund in case of unexpected expenses or unemployment. But does it have to be in cash? Personal finance author Jonathan Clements presents a mathematical argument for using your 401(k) as an emergency fund in his recent article The Terrible Twenties. Here’s how the math works.

Let’s say you are in the 15% federal income tax bracket and you put $2,000 in your employer’s 401(k) plan. Your out-of-pocket cost would be $1,700, thanks to the initial tax savings. At the same time, your employer matches your contributions at 50 cents on the dollar, with the matching contribution vested immediately. Result: Your $2,000 investment gets you a $1,000 match, bringing your account balance to $3,000.

If you are then laid off and forced to liquidate your retirement account to pay living expenses, you might lose 15% to federal income taxes, plus another 10% to the tax penalty for making a retirement account withdrawal before age 59½. That combined 25% hit would still leave you with $2,250, well above your $1,700 out-of-pocket cost.

To be fair, this isn’t nearly as radical as it seems. Most prioritized lists of “where I should put $XXX?” will put a 401(k) up to the company match as the #1 priority, even above a cash emergency fund.. A company match gives you a way to earn a 50% or 100% instant, risk-free return on your money. This is a rare opportunity that you shouldn’t pass up.

However, not mentioned is that after you exhaust any 401(k) match, you could also consider contributing to a Roth IRA and using that as your emergency fund. The primary reason for this is that Roth IRA contributions can be taken out at any time, without penalty. Unlike Traditional IRAs, withdrawals from Roth IRAs are subject to ordering rules (see Chapter 2 of IRS Pub 590-B), which state that you always withdraw your own contributions first.

In either case, since you can only contribute a certain amount to 401(k) and/or IRAs every year, it would be wise to take advantage of this tax-sheltered space as much as possible. Don’t make a withdrawal if you can avoid it, but if you have limited options, it can make sense to contribute first and hope you can keep the money invested for retirement.

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