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Is the Chase Sapphire Preferred worth carrying permanently?

Blogger

Is the Chase Sapphire Preferred worth carrying permanently?

I did a little mathematical analysis to help you determine if you should hold a CSP based solely on cash back rewards.

 

UR points are worth 2 cents if you transfer the points to travel partners. 

You earn 2.14 points on travel and dining purchases and 1.07 points elsewhere.

If you travel and eat out a lot, let's say one third of your purchases are on these categories of spending. 

The annual fee is $95.

There are 2 cards that offer flat 2% cash back but carry no annual fees: Fidelity and Priceline.

 

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For each $3,000 spending, which consists of $1000 in travel and dining expenses and $2000 in other expenses, the CSP will give you 2.14x1000+1.07x2000=4,280 points, worth $85.6. The Priceline card would give you $60. So the net gain is $25.6. 

 

In order to break even, you'd need to spend at least $11,000 on the CSP per year, or about $1,000 per month. This assumes that you transfer all UR points to travel partners.

 

It is also assumed that you won't be making purchases in a foreign currency. If you will, for each $1,000 in such spending, the CSP gives you a $10 advantage, which reduces the amount of overall spending needed by about $1,000. 

 

The bottom line is, the CSP is worth carrying for eternity if you travel and eat out a lot and spend more than 11k per year through credit cards.

 

Any input? Did I make any unreasonable assumption? 

39 REPLIES
Super Contributor

Re: Is the Chase Sapphire Preferred worth carrying permanently?

Im not exactly a mathematician, but even if you only did the 1% cash back (theoretically you never dine out or travel, and afaik UR points are 1 cent per point when converted to cash) you'd only need to spend 9500$ to break even, so when you mix in the 2% on travel and dining, you only need to spend less. Where did 11,000 come from?


Blogger

Re: Is the Chase Sapphire Preferred worth carrying permanently?


jsucool76 wrote:
Im not exactly a mathematician, but even if you only did the 1% cash back (theoretically you never dine out or travel, and afaik UR points are 1 cent per point when converted to cash) you'd only need to spend 9500$ to break even, so when you mix in the 2% on travel and dining, you only need to spend less. Where did 11,000 come from?

There's an opportunity cost of 2% on each dollar purchase because of the no-annual fee, 2% cash back cards.

Valued Member

Re: Is the Chase Sapphire Preferred worth carrying permanently?

CSP has a annual fee of $95, im still in the first year of mine so its free the first year.

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Super Contributor

Re: Is the Chase Sapphire Preferred worth carrying permanently?

There is also an opportunity cost on the fidelity amex, because im fairly certain you need to have some sort of account with them (401k or IRA or something)


Valued Contributor

Re: Is the Chase Sapphire Preferred worth carrying permanently?

The fidelity AMEX has really interested me lately, as I have 5-6 rewards cards but would like to get one card for everything and use it for all of my spending

 

how hard is it to get compared to say an AMEX revolver, CSP, or BOA card?

Chase Sapphire Perferred | Chase Freedom | AMEX Platinum | AMEX Delta Platinum | AMEX SPG | Capital One Venture | Capital One Quicksliver | Discover IT | ABFCU Visa | Citi AA WEMC
Blogger

Re: Is the Chase Sapphire Preferred worth carrying permanently?


jsucool76 wrote:
There is also an opportunity cost on the fidelity amex, because im fairly certain you need to have some sort of account with them (401k or IRA or something)

Well then, let's use the Priceline for the base card. 

Valued Contributor

Re: Is the Chase Sapphire Preferred worth carrying permanently?


jsucool76 wrote:
There is also an opportunity cost on the fidelity amex, because im fairly certain you need to have some sort of account with them (401k or IRA or something)

I believe you can open up a savings account with them with no fees

Chase Sapphire Perferred | Chase Freedom | AMEX Platinum | AMEX Delta Platinum | AMEX SPG | Capital One Venture | Capital One Quicksliver | Discover IT | ABFCU Visa | Citi AA WEMC
Super Contributor

Re: Is the Chase Sapphire Preferred worth carrying permanently?

Still has an opportunity cost... Its juniper/barclays... Fear of AA for new accounts.. XD


Valued Contributor

Re: Is the Chase Sapphire Preferred worth carrying permanently?


ryanbush wrote:

jsucool76 wrote:
There is also an opportunity cost on the fidelity amex, because im fairly certain you need to have some sort of account with them (401k or IRA or something)

I believe you can open up a savings account with them with no fees


Yes, I have an account with them that had $0.19 in it for years (from a share sale many years ago), no fees.  When I got my Fidelity Amex, I linked the card to that.  Just got my first $50 added there, and immediately transferred it to my real bank account.   So yes, I could potentially have been earning interest on that 19 cents, but a very small oppurtunity cost.

 

Re the analysis: CSP and the 2% cards aren't of course the only choices.   So for example, if eating out is a major portion, then something like Citi Forward would do well.