Why You Should Have a Travel Rewards Card
Have card, will travel
Let me start by saying this isn’t a new concept. I’m sure many of you have a rewards card of some type, but I want to show you why you shouldn’t be scared of travel credit cards with high annual fees that are doing the MOST in the rewards space. Today’s focus is on the Chase Sapphire Reserve.
Disclaimer: If you cannot use a credit card responsibly, it doesn’t matter how sweet the rewards are. If you’re going to rack up thousands in debt trying to meet spending minimums, and if affording a vacation feels out of reach pre-card, this isn’t the article for you right now! This one may be a better place to start.
The Cost
The Chase Sapphire Reserve has a $550 annual fee and, at the time this article was written, you must spend $4,000 on the card within the first 3 months to earn the 50,000 point sign up bonus. Chase also hits you with the annual fee in the month you open the card.
Total cost in the year you open the card: $4,550
Note: You could spend less than $4,000 in the first 3 months, but you would be forfeiting 50,000 in points which are valued at ~$750.
The annual cost after year 1: $550
I get it. These numbers seem really high, and that’s because they are! BUT I’m going to prove to you that the benefits of the card far outweigh the cost for frequent travelers (or for those who take at least 1 luxury trip per year!) The people who get sticker shock looking at these numbers don’t bother to research the extensive card benefits and end up missing out on major savings on their next big adventure.
The Benefits
I’m going to break these into 2 different categories based on my own spending and experiences - Realized Value and Available Value. While I opened my card in 2015, I wanted to give you a taste of the savings that you could expect to realize within a single year. For purposes of this article, we’re going to analyze the value I received from the card in 2021 (the most recent full year’s worth of data.)
Note: Card benefits change often, so you’ll see some benefits will be used every year, some will help you once every 5 years, some are only available for 3 years, etc. After having the card for almost 7 years, I have received more money back in benefits than I’ve ever paid in annual fees.
Oh yeah, one more thing - My annual fee for 2021 was $450. Chase recently upped the annual fee by $100, but because I’m an #overachiever, I’m going to show you the 2021 value compared to the updated $550 annual fee just to prove how good this thing is.
Realized Value
$300 travel credit - Every year Chase automatically reimburses you up to $300 in travel related expenses via statement credit. No paperwork or action is required, and we easily spend more than $300 annually on travel.
Annual Fee Cost: $550 - $300 = $250
Complimentary Airport Lounge Access with Priority Pass™ Select - Finding places to sit, power outlets, and affordable food can be hard in airports, so visiting lounges with complimentary food, beverages, and ample seating are hard to beat. The Select membership gets you a free membership, $0 entry fees for the cardholder, AND $0 entry fees for 2 guests for all lounge visits. Valuing this Priority Pass™ Select membership is tough since it’s only available through banking institutions like Chase, but the standard PP membership starts at $99, and each visit requires a $32 entry fee per individual. I’m going to value this perk at $163. Here’s how I got there:
$99 (membership cost) + $32 (my entry fee) + $32 (Bryan’s entry fee) — assuming we’ll use it once annually. (Obviously the value of this perk would increase as your lounge visits increase.)
Annual Fee Cost: $250 - $163 = $87
Global Entry or TSA Pre✔® credit - Chase will reimburse you up to $100 for the cost of these memberships that must be renewed every 5 years. I had to renew my TSA Pre✔ membership in 2021 for $85. (Global entry costs $100.) For purposes of this article, I’m going to include the full value of $85 since we’re looking at the value I received in 2021. If you wanted to take an annualized view of this benefit, divide the $85 cost by 5.
Annual Fee Cost: $87 - $85 = $2
Luxury Hotel Collection Benefits - In 2021 we went on our honeymoon to Maui and 2 of our 6 nights were spent at the Andaz. We booked our stay using my Reserve card through the Luxury Hotel Collection portal of the Chase rewards site. We were given free breakfast for 2 each day of our stay, a $100 resort credit, a free room upgrade, and early check in and out just for being card holders. The total value of those perks totaled $432. Read more about how much we saved on that trip with the Reserve card here.
Annual Fee Cost: $2 - $432 = -$430
5x on flights through Ultimate Rewards - If you book your flights through the Chase portal, you earn 5x the amount of points per dollar vs. the 3x points you would earn when booking directly through an airline. Prices are usually the exact same, so we almost exclusively book through the Chase portal. In 2021, we booked our flights to Hawaii through Chase and spent $1,686.10. You earn 5x the points on these bookings, so we earned 8,430 points. Points are valued at $0.015 each, so we earned $126.46 booking those flights.
Annual Fee Cost: -$430 - $126 = -$556
3X Points on Travel and Dining - Paying for food with your Reserve card earns you 3x the number of points per dollar. After you’ve been credited your $300 travel credit, you earn 3x points per dollar on travel expenses, too! It would take me forever to add up how much we spent on food last year, so let’s just look at the value we got from booking a 3 night stay in Seattle last summer. The hotel stay cost us $654.40. You earn 3x the points on these bookings, so we earned 1,963 points. Points are valued at $0.015 each, so we earned $29.45 on our stay.
Annual Fee Cost: -$556 - $29.45 = - $586
Free Point Transfers to Travel Partners - The value of this benefit varies, but in 2021 we transferred 100,000 Chase Ultimate Rewards Points to Hyatt and received $2,343 in value (4 nights free including taxes and fees.)
60,000 of those points were given to me when I signed up for the card in 2015, so our true cost was whatever we spent to earn 40,000 points. (And before you freak out - we did not spend $40,000 to earn 40,000 points - look at 3x points on food, 5x points on Chase travel, etc.) Another thing to keep in mind is that we are both frugal to a fault, so we were earning points on money that was going to be spent anyway - not spending exorbitant amounts of money just to earn points. In this example, had we not had a rewards card, we would have given up $2,343 in value at an incredible resort in Maui.
Annual Fee Cost = -$586 - $2,343 = -$2,929
Rewards Travel Booking through Chase - Every year we take a domestic trip to visit friends across the country. In 2021, we went to Seattle and purchased 2 round trip tickets for 56,906 points. The dollar value of those tickets was $853.60.
2021 Annual Fee Cost = -$2,929 - $853.60 = -$3,783
We actually MADE money having the credit card in 2021. Are you sold yet?
Available Value
These are perks that we don’t use as routinely but are also included in your membership benefits and could be “Realized Value” depending on your lifestyle.
No Foreign Transaction Fees - We didn’t travel internationally in 2021, but typically there is a 1% fee for each foreign transaction made on your credit card. For those who travel internationally often, this is a HUGE perk that could save you trips to the bank for cash and hundreds of dollars annually.
Peloton Statement Credit - In 2020, during the height of the pandemic, Chase partnered with Peloton to give card members $120 in statement credits to help cover Peloton membership fees. The monthly cost is around $42 with tax, so we got roughly 3 months free with this perk. I’m excluding this benefit from our 2021 analysis, because I received the full $120 value in 2020. Since this perk is available through June 2022, it was worth noting for Peloton members who may not have taken advantage of this benefit!
10X total points on Peloton Equipment purchases through 6/30/22 - This wasn’t available when we purchased our Peloton, and I’m so bummed about it! If you had your eye on the new Bike+ or Tread, this is your sign.
10X pts on Lyft Rides through 03/2022
Complimentary DashPass Subscription
10x on hotels through Ultimate Rewards
10x on car rentals through Ultimate Rewards + Additional Benefits & Perks when you use the provided worldwide Discount number
Earn 10x points on Chase Dining
Trip Cancellation / Interruption Insurance
Baggage Delay Insurance - $100 a day for 5 days
Roadside Assistance - $50 per incident 4 times a year
If I haven’t made it abundantly clear, travel rewards credit cards are a no-brainer for someone who likes to travel even just a few times per year. If you are able to front the cost of the annual fee, don’t shy away from the rewards cards offering thousands of dollars worth of benefits.