Tag: credit card

Smartest Credit Card For Everyday Use

Smartest Credit Card For Everyday Use

Travel hacking is a big deal these days and there are whole websites dedicated to maximizing credit card offers and spending. Instead of going down that rabbit hole we are going to briefly explain why we think the Chase Sapphire Reserve is the smartest credit card for those that want to use one primary credit card for everyday purchases.

The Chase Sapphire Reserve is considered a premium credit card and is targeted to compete with cards like the Amex Platinum charge card. It does have a $450 annual fee but also has $300 of extremely flexible travel credit (basically anything you charge to it travel related counts automatically ex. uber, hotel, airfare, car rental, etc). The effective annual fee, after the travel credit is $150, below we’ll show you why we think this is still a good deal.

Chase Sapphire Reserve Card Benefits

Main Benefits

  • Points are worth 1.5 cents each when used on travel
  • Earns 3x points on restaurants and travel
  • Complimentary airport lounge access (Priority Pass)
  • $100 statement credit every 4 years for TSA Precheck or Global Entry
  • No foreign transaction fees

Additional Benefits

  • Trip cancellation/trip interruption insurance, trips are reimbursed up to $10,000 (be sure to read the fine print)
  • Car rental damage coverage
  • Trip delay reimbursement
  • Baggage delay insurance, up to $100/person per day
  • Roadside assistance
  • Lost luggage reimbursement, up to $3,000 per person
  • Travel and emergency assistance
  • Emergency evacuation and transportation
  • Emergency medical and dental benefit
  • Rental car upgraded status
  • Access to VIP events and experiences
  • One-to-one point transfers
  • The Luxury Resort & Hotel Collection

The card has an impressive list of benefits but the majority of users won’t get much value outside of the main card benefits we listed. Here’s a simple example to show you how much value we would calculate for an average card user (adjust to your spending). Let’s assume the following, which we find to be a somewhat conservative spending example:

Annual Card Spending Example

  • Annual fee: $450
  • Travel credit used: $300
  • TSA Precheck signup: $85
  • Annual travel spending: $5,000 = 15,000 points (5,000 * 3x points)
  • Annual restaurant spending: $8,000 = 24,000 points (8,000 * 3x points)
  • Additional annual card spending: $18,000 = 18,000 points

The above usage of the card would net the following expected value from points:

(15,000 + 24,000 + 18,000) points * 1.5 cents = $855 expected value – $450 annual fee + $300 travel credit + $85 TSA credit = $790 value

Based on our example above, it is easy to see even with a high annual fee and what we consider a fairly conservative budget for an everyday credit card, this card definitely generates a positive value without factoring the majority of the benefits. Keep in mind the $85 TSA credit is only useful every 4 years. Now, let’s take a look at the card value when including the signup bonus and assign some dollar value to the other benefits. The signup bonus varies between 50,000 points and 100,000 points, we’ll use 60,000 points in our example. The value that you get from the following benefits can vary widely from person to person, we are assigning some conservative values.

Benefit Value (in dollars)

  • 60,000 points * 1.5 cents = $900
  • Complimentary airport lounge access (Priority Pass) = $50
  • No foreign transaction fees = $25
  • Car rental damage coverage = $25
  • All other benefits combined = $50

Total card value (year one) = $790 + $900 + $50 + $25 + $25 + $50 = $1,840

Total card value annually = $790 – $85 (TSA pre) + $50 + $25 + $25 + $50 = $855

It is clear to see that The Chase Sapphire Reverse is one of the smartest credit cards as it conservatively has an expected value in year one of $1,840 and an expected annual benefit of $855. For someone that wants one primary card without having to think about optimizing every part of their spend, this is the smarest credit card for you!