Should you cancel your Chase Sapphire Reserve?
In a year marked by significant changes in the credit card landscape, the Chase Sapphire Reserve® has emerged as a focal point of debate among cardholders and financial experts alike. In June, Chase raised the annual fee for the Sapphire Reserve to $795, one of the highest among premium travel rewards cards. To balance this increase, the card now offers enhanced earning rates and a suite of travel and lifestyle credits. While some users, like TPG credit card writer Danyal Ahmed, view these changes as beneficial—believing the new credits and earning rates can justify the higher fee—others, such as TPG’s newsletter editor Emily Thompson, are more skeptical. Thompson plans to evaluate the card’s value before her annual fee comes due, considering a potential downgrade to the less expensive Sapphire Preferred® if the benefits do not meet her expectations.
For those contemplating their options with the Sapphire Reserve, two primary paths emerge: canceling the card or downgrading to a card with a lower annual fee. Financial experts generally recommend downgrading rather than canceling, as cancellation can negatively impact credit scores by increasing the credit utilization ratio and counting against Chase’s 5/24 rule. Moreover, canceling the card would result in the loss of any accumulated points. Downgrading to the Sapphire Preferred, which has a much more manageable $95 annual fee, allows cardholders to maintain access to valuable travel benefits while protecting their points. Alternatively, those seeking to eliminate annual fees altogether can consider downgrading to no-annual-fee cards like the Chase Freedom Unlimited® or Chase Freedom Flex®. These options enable users to retain their hard-earned points and keep their credit line intact, providing flexibility for future travel and rewards opportunities.
In summary, while the Chase Sapphire Reserve offers premium benefits, the steep annual fee necessitates careful consideration for cardholders. As the credit card market continues to evolve, understanding the implications of downgrading versus canceling can help users make informed decisions that align with their financial goals and lifestyle needs. Whether opting for the Sapphire Preferred or a no-annual-fee card, maintaining access to rewards and protecting credit scores should be paramount in the decision-making process.
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 included increasing its annual fee to $795. To offset it, new earning rates and a range of travel and lifestyle credits were added.
Now that the Sapphire Reserve has one of the highest annual fees for a premium travel rewards credit card, you may be questioning whether it’s worth continuing to hold. After all, paying $795 in one billing cycle is a big ask.
If you’re crunching the numbers and it seems the Sapphire Reserve may no longer fit your budget or lifestyle, it’s important to consider your options.
Should you cancel your account? Or, should you 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 credit cards writer
Danyal Ahmed
, carry the
Chase Sapphire Reserve
thanks to its impressive earning rates and travel benefits.
He doesn’t view the changes to the card and the increase in the annual fee as negative developments. The new statement credits enhance the value proposition for him, and the new earning rates actually help him earn
Chase Ultimate Rewards
points more quickly.
NATALIA GDOVSKAIA/GETTY IMAGES
However, TPG newsletter and partnerships editor
Emily Thompson
had a different take on the recent changes and annual fee increase.
“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,” she said. “My annual fee won’t hit until May, though, so I’m going to see how much value I get from the card between now 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.”
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, 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 may increase because your overall line of credit across all your cards will decrease.
Also, keep in mind
Chase’s 5/24 rule
. 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.
WYATT SMITH/THE POINTS GUY
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:
Booking travel through
Chase Travel℠
at 1.5 cents per point or up to 2 cents per point with
Chase Points Boost
Transferring your remaining balance to one of Chase’s partners, like
Air Canada Aeroplan
or
World of Hyatt
Transferring your points to another one of your Chase accounts or an
eligible household member
When downgrading a card, there are some restrictions to keep in mind as well. For example, Chase requires that you stay within the same card family. So, you can’t change your Sapphire Reserve to, say, a
cobranded Marriott card
.
One of the biggest drawbacks of canceling or downgrading a credit card is that you’ll no longer have access to any of that card’s perks, which, in the Sapphire Reserve’s case, include an
annual $300 travel credit
, hotel statement credits and
lounge access
.
Related:
The best rewards cards to add to your wallet
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 Card holders also get access to some great travel protections, including
primary rental car insurance
.
FOKKEBOK/GETTY IMAGES
Even though the Sapphire Preferred may be new to you, you’re not considered a new cardholder. Therefore, you’re ineligible to earn the welcome bonus.
Cardholders can hold both the
Sapphire Reserve
and the Sapphire Preferred at the same time,
a shift
from Chase’s previous rules.
Related:
Chase Sapphire Preferred Card review: A top travel and dining card
Downgrade to a no-annual-fee Chase card
If you’d 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. They can still be used for travel purchases on Chase Travel or redeemed for cash back, both at a rate of 1 cent per point.
By downgrading to either card, you won’t earn any kind of
welcome bonus
for the card you choose.
FG TRADE/GETTY IMAGES
In the future, if you decide to apply for the
Chase Sapphire Preferred
or the
Ink Business Preferred® Credit Card
, you could transfer the points back to an account that earns true Ultimate Rewards points, which you can then transfer to
Chase’s airline and hotel partners
.
The information for the Ink Business Preferred has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
Related:
Best Chase credit cards
Bottom line
The
Chase Sapphire Reserve
has a steep annual fee that may not be worth it for every cardholder. If you’ve decided it isn’t the right fit for you anymore, consider downgrading to another Chase product instead of outright canceling your card.
Cards like the
Sapphire Preferred
and the
Chase Freedom Unlimited
are great options to weigh for a downgrade. 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?
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.
