Does It Make Sense to Upgrade to the Chase Sapphire Reserve from the Preferred?

We’ve raved about how the Chase Sapphire Reserve is the “must get” credit card of 2016. With a signup bonus of 100,000 UR points, most people can get $2,000 to $3,000 in value from the card in the first year.

Some people aren’t able to get the Reserve because they’re affected by Chase’s 5/24 rule. Others may be looking to get a mortgage soon and don’t want to add another credit card to their credit report.

Many people considering the Reserve already have the Chase Sapphire Preferred, so we wanted to analyze whether it would make sense to upgrade to the Reserve.

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Who can upgrade

If you’ve had your credit card for more than 12 months, you can freely upgrade within the product line.

That means that you can upgrade your Preferred to a Reserve, or downgrade it to the Freedom.

Who SHOULD upgrade

You shouldn’t upgrade if you’re looking to add a new credit card and you’ll be under 5/24 soon.

For example, if you had 5 new accounts in the past 24 months and one of them was in September 2014, it might make sense to wait until October 2016 to apply for the Reserve and get the lucrative bonus.

Analyzing your benefit

For your own analysis, use our calculator tool and see if it makes sense for you.

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Comparing the cards

The Reserve gives you a $300 travel credit that’s based off calendar years, 3x points on travel and dining, a $100 credit for Global Entry, Priority Pass Select (with unlimited guests), and 50% discount when redeeming UR points with the portal.

This compares with the 2x points on travel and dining and the 25% discount in the UR portal for the Preferred.

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Why you should upgrade for at least a year

If you upgraded right now, you’ll be able to get the travel credit for both 2016 ($300) and 2017 ($300) since they’re based on the calendar year.

That means you’ll be able to claim the 2016 credit between now and December 31, 2016. You’ll be able to claim the 2017 credit on January 1, 2017 and onwards.

By upgrading, you’re getting $600 in value for a $450 annual fee, meaning Chase is paying you $150 to have the credit card. This easily beats the $95 annual fee you’re paying for the Preferred. That’s before considering the other perks like the Priority Pass Select.

Long-term break-even

The calculation for year 2, year 3… year x are the same. It mainly just depends on how you’ll redeem your UR points.

To find the break-even — the point where you’re impartial to either card based off the value — we’ll only look at the travel credit, annual fee, and the travel/dining multiplier. If you value Priority Pass and the Global Entry credit above zero, the break-even figure will be even lower.

If you’re looking to redeem for cash, your break-even is $5,500. That means that if you spend more than $5,500 in travel and dining, you’ll get more value from the Reserve than the Preferred. If you’re looking to redeem using the portal, this figure drops to $2,750. If you use transfer partners, it drops to $2,619.

Again, these figures ignore the other benefits. Even if you valued Priority Pass Select at a conservative $50, you’re break-even for spend drops dramatically. Redeeming for cash, the Reserve makes more sense if you spend more than $500 in travel and dining. Using the portal, it drops to $250. Using transfer partners, it drops to $238.10.