How the Chase Sapphire Preferred pays for itself
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The Chase Sapphire Preferred® Card charges $95 per year, which definitely gives some consumers pause. After all, paying an annual fee for a credit card only makes sense for people who are getting more than the fee in return.
Still, the Chase Sapphire Preferred is so useful that almost anyone could get at least $95 in value out of it each year—even if they only travel a few times per year. This is partly due to the generous welcome bonus and ongoing rewards it offers, but it’s also due to the plethora of valuable benefits cardholders get.
If you’re seriously considering the Chase Sapphire Preferred but wondering if the annual fee is worth it, read on to learn how this card pays for itself and then some.
A refresher: Details of the Chase Sapphire Preferred
Before you sign up for the Chase Sapphire Preferred, make sure you understand the welcome offer, earning rates and other details.
Chase Sapphire Preferred
- Earn 60,000 bonus points after you spend $4,000 on purchases within three months of account opening
- Earn 5X points on travel through Chase Ultimate Rewards and 5X points on Lyft rides through March 2025
- Earn 3X points on dining (including eligible delivery services), online grocery purchases (excluding Walmart, Target and wholesale clubs) and select streaming services
- Earn 2X points on all other travel purchases and 1X points on everything else
- $95 annual fee
- Variable APR of 17.49 percent – 24.49 percent
How the Chase Sapphire Preferred pays for itself
In the first year, the Chase Sapphire Preferred is easily worth up to $830 or more considering the rewards and benefits highlighted below.
This card’s generous sign-up bonus is worth $600 if you redeem for cash back, statement credits or gift cards or $750 if you redeem your rewards for travel through Chase Ultimate Rewards. You also have the option to use Chase Pay Yourself Back to get 25 percent more value on redemptions with Airbnb and Away (through awaytravel.com). Earn 60,000 bonus points after you spend $4,000 on purchases within three months of account opening.
Also, note that Chase points can be transferred to airline and hotel partners like British Airways, United MileagePlus or World of Hyatt, where they can be worth even more.
$50 annual hotel credit
The Chase Sapphire Preferred offers a $50 annual hotel credit that applies when cardholders book a hotel stay through the Chase Ultimate Rewards portal. While new cardholders get this credit right away, existing cardholders receive this credit on their cardmember anniversary.
Average value: $50
Rewards rate for Peloton
Earn 5x total points on each Peloton Bike and Tread purchase over $1,400, with a max earn of 25,000 total points. Now through March 31, 2022.
DashPass membership grants individuals a $0 delivery fee on unlimited deliveries and reduced service fees on DoorDash orders of $12 or more. This membership usually sets users back $9.99 per month (or $119.88 per year), yet Sapphire Preferred cardholders get a full year for free. You must activate this offer by December 31, 2024.
Average value: $119.88
Travel insurance and consumer protections
Also, note that the Chase Sapphire Preferred comes with an array of travel insurance benefits and purchase protections that can protect against unnecessary losses. Major benefits include:
- Trip cancellation and interruption insurance worth up to $10,000 per person and up to $20,000 per covered trip
- Primary auto rental insurance
- Baggage delay insurance worth up to $100 per day for up to five days
- Trip delay reimbursement worth up to $500 per ticket
- Travel and emergency assistance services
- Purchase protection worth up to $500 per claim and up to $50,000 per account
- Extended warranties on items with a manufacturer’s warranty of three years or less
While the travel and consumer protections you get with this card are difficult to value, they can easily be worth thousands per year if you actually use them.
Average value: Varies
Chase Sapphire Preferred spending example
While the benefits and welcome bonus on the Chase Sapphire Preferred can quickly add up during your first year, this doesn’t even take into account the rewards you can earn on purchases. While your specific rewards haul will depend on your spending habits, the example below shows how the Chase Sapphire Preferred can help consumers earn more than $750 per year in rewards.
Note that the United States Department of Agriculture (USDA) estimates the average family of four on a moderate budget spends $1,128.20 per month (or $13,538 per year) on groceries. For the purpose of this example, we’re assuming this family orders groceries through an online platform like Instacart or Shipt.
Let’s also imagine this family spends $300 per month ($3,600 per year) on dining out (including takeout and delivery), $1,000 on travel through Chase Ultimate Rewards and another $2,000 on additional travel purchases per year. In the meantime, they also spend $80 per month ($960 per year) on select streaming services and $1,000 per month ($12,000 per year) on other spending and bills.
In this example, the family would earn the following rewards over the course of 12 months:
- $13,538 in groceries (ordered online): 40,614 points
- $3,600 on dining out: 10,800 points
- $1,000 on travel through Chase: 5,000 points
- $2,000 on other travel: 4,000 points
- $960 in streaming services: 2,880 points
- $12,000 on other spending: 12,000 points
Total points earned: 75,294 points worth $752.94
The bottom line
Paying a $95 annual fee for this beginner travel credit card may not feel very natural at first, but the perks and rewards you get in return can be well worth it. The key to knowing for sure is taking a closer look at the cardholder perks you can qualify for and how much they’re worth. Also, look at the rewards rate for the card you’re considering, then compare it to your normal monthly spending to see how much in rewards you could earn.
The Chase Sapphire Preferred just so happens to be one of those rewards credit cards that easily pays for itself, but don’t take our word for it. Look over the perks outlined in this guide as well as the card’s welcome bonus and rewards rate. Once you do, you can decide for yourself.