It’s been a turbulent year of sweeping changes to popular credit cards, so you might be thinking about which ones still deserve a spot in your wallet.
The Chase Sapphire Reserve® (see rates and fees) underwent major changes in June, which increased its annual fee to $795. To offset it, new earning rates and a range of travel and lifestyle credits were added, so some cardholders might find these changes appealing.
However, the Sapphire Reserve now has one of the highest annual fees for a premium travel rewards credit card, and this could be troublesome for some cardholders.
If you’re crunching the numbers and it seems the Sapphire Reserve may no longer fit your budget or lifestyle, here are some options to consider first. Should you cancel your account? Or maybe ask for a product change? Let’s walk through some of the possibilities to see which one is best for your situation.
TPG staff on the changes
Several TPG staffers, including me, carry the Chase Sapphire Reserve thanks to its impressive earning rates and travel benefits.
I don’t view the changes to the card or the increase in the annual fee as negative developments. The new statement credits increase the value proposition, and the new earning rates actually help me earn Chase Ultimate Rewards points faster.
Starting Oct. 26, existing cardholders will pay the new annual fee on their next anniversary date. So, if the anniversary date occurs before then, you’ll be charged the current lower annual fee. For me, this means I’ll be able to try out the new credits and benefits from late October before my annual fee posts on my account anniversary in December.
TPG Newsletter & Partnerships Editor Emily Thompson had the following to say:
I’m not sure whether I’ll get enough value from the card’s updated benefits to justify the steep increase in the annual fee. My annual fee won’t hit until May, though, so I’m going to see how much value I get from the card between when the new benefits go into effect for me in October and when I have to pay the fee in May. If I’m not able to justify paying that much, I’ll downgrade to the Preferred.
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Related: Your biggest Chase Sapphire Reserve questions answered: From bonus eligibility to earning rates
Downgrading vs. canceling
If you’re looking to get rid of the Sapphire Reserve, you have two options:
- Cancel it
- Request a product change to a card with a lower annual fee
In most situations, I would say it’s better to downgrade the card than to cancel it.
Credit scores are made up of several factors, with a major one being your credit utilization ratio. After cancelling your Sapphire Reserve, your credit utilization ratio could increase because you’d decrease your overall line of credit across all of your cards.
Also, keep in mind Chase’s 5/24 rule because if you cancel your Sapphire Reserve and then apply for a new credit card, the new application will count against your 5/24 limit. However, when you downgrade a card, it doesn’t count as a new account and won’t count against your 5/24 limit.
One of the biggest drawbacks of canceling a credit card is that you’ll no longer have access to any of the card’s perks, which, in this case, include an annual travel credit, hotel statement credits and lounge access.
When canceling a card, you’ll forfeit any points that remain in your account. Some examples of ways to use your Chase points for great value include:
When downgrading a card, there are some restrictions as well. For example, Chase requires that you stay within the same card family and cannot change it to a cobranded Marriott card, for example.
Related: The best rewards credit cards
Downgrade to the Sapphire Preferred
One common option is to downgrade to the Chase Sapphire Preferred® Card (see rates and fees). This is a good choice for frequent travelers as it earns bonus points on travel, has access to Chase’s transfer partners and comes with a more manageable $95 annual fee.
Sapphire Preferred cardholders earn 3 points per dollar spent on dining 2 points per dollar spent on travel, 1 point per dollar on all other purchases and get access to some great travel protections, including primary rental car insurance.
Even though the Sapphire Preferred may be new to you, you’re not considered a new cardholder and, therefore, you’re ineligible to earn the welcome bonus. Chase has updated its rules for welcome bonus eligibility. Cardholders can hold both the Sapphire Reserve and Sapphire Preferred at the same time, but if you’ve already earned a welcome bonus on the Sapphire Reserve, you will not be eligible to earn another bonus on the Sapphire Preferred.
Related: Chase Sapphire Preferred Card review
Downgrade to a no-annual-fee Chase card
If you would rather not pay an annual fee, consider downgrading to a no-annual-fee Chase card like the Chase Freedom Unlimited (see rates and fees) or the Chase Freedom Flex® (see rates and fees). What this means for you is that you won’t lose all your hard-earned points, and they can still be used for travel purchases on Chase Travel or redeemed as cash back, both at 1 cent per point.
By downgrading to either card, you would still forfeit the ability to earn a welcome bonus if you were to apply for the card separately.
In the future, if you decide to apply for the Chase Sapphire Preferred or the Ink Business Preferred® Credit Card (see rates and fees), you could transfer the points back to an account that earns true Ultimate Rewards points, which you can then transfer to Chase’s airline or hotel partners.
Related: Maximize your wallet with the perfect quartet of Chase cards
Bottom line
With the overall changes to the Sapphire Reserve, you may be second-guessing whether to keep the card. I’d highly recommend not canceling the card and instead waiting until Oct. 26, when the card’s new earning rates and perks will be available to existing cardholders.
Then, if you don’t think the card is worth it when the increased annual fee posts to your account, you can downgrade it to the Sapphire Preferred or a no-annual-fee card like the Chase Freedom Unlimited. By downgrading your card, you’ll protect your points and line of credit.
To learn more, read our full review of the Chase Sapphire Reserve.
Related: Chase Sapphire Preferred vs. Sapphire Reserve: With new changes in effect, which card is best for you?
