Why The Real Annual Cost Of The Chase Sapphire Reserve Is $150

Filed Under: Chase, Credit Cards
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The Chase Sapphire Reserve® Card has quickly become one of the most popular travel rewards credit cards in the US, despite having been introduced in the US market less than two years ago.

What makes this $450 annual fee card so great? It offers:

  • A welcome bonus of 50,000 Ultimate Rewards points after spending $4,000 within three months
  • A $300 annual travel credit
  • Triple points on dining and travel
  • A Priority Pass membership with unlimited guesting privileges
  • Fantastic travel and car rental protection
  • The ability to redeem points for 1.5 cents each towards travel purchases
  • A Global Entry fee credit every four years
  • The ability to add authorized users for $75 each

The Chase Sapphire Reserve® Card is fantastic largely because it’s a $450 annual fee card for people who don’t usually pay $450 annual fees. This is the case because you get a $300 annual travel credit that will automatically be applied to any travel purchase, and Chase has a really broad definition of travel:

Merchants in the travel category include airlines, hotels, motels, timeshares, car rental agencies, cruise lines, travel agencies, discount travel sites, campgrounds and operators of passenger trains, buses, taxis, limousines, ferries, toll bridges and highways, and parking lots and garages.

This means that the first $300 you spend per year on the card for hotels, Ubers, taxis, flights, ferries, tolls, parking, etc., will be reimbursed.

When I talk about this benefit, I typically say that as long as you spend at least $300 per year on purchases in the travel category (which I assume a vast majority of people with this card do), your real “out of pocket” on the card is $150 per year. Yes, you do pay $450 upfront, but then over the course of the year you’d be reimbursed $300.

This brings me to a comment left by reader Jared on a post a couple of days ago:

Hey Lucky, I think saying the $450 annual fee is really only $150 because of the $300 travel credit is a little dishonest. I’m relatively new to the points game, and you certainly know more than I do, but as someone who has thought about upgrading to the CSR, I tried thinking through the cost of the card and if it’s worth it for me. I don’t travel as much as I would like, but the benefits of the CSR still sound really good. Here’s why I think it’s dishonest, and correct me if I’m wrong.

You pay the $450 annual fee regardless if you have spent on travel, so it’s a “sunk cost.”

You buy a cheap flight ticket and take an Uber to the airport, which totals $300, and the $300 credit kicks in to cover that.

$450 (spent on AF) + $300 (spent) – $300 (credit) = $450.

The $300 credit wipes out the travel spend, not deducts from the AF, so the real out of pocket is still $450 for the AF. I know other factors like the Global Entry fee and lounge access (which I would like to have) could factor into the lowering what would be considered the “real” out of pocket, but I think it still stands that the $300 only affects travel-spend on the card, not the annual fee.

Yes? No?

Jared isn’t incorrect in his view, so maybe this is an important point to clarify, in case it’s confusing others as well. I think of everything in the miles & points world as having an opportunity cost, and my analysis of things is always based on what I would be spending in a particular category anyway.

The way Jared is looking at it, you pay a $450 annual fee, then you’re paying $300 for travel (which he views as a sunk cost), and then the $300 is reimbursed, so you’re still “out of pocket” $450. If you look at it that way, that’s accurate.

The way I view it, you pay a $450 annual fee, then you’d just spend $300 on travel that you would have spent anyway over the course of the year, and then you’re reimbursed $300. You paid the $450 annual fee, but you got a $300 discount on purchases you would have made anyway, meaning your real cost is $150.

That’s why I always add the disclaimer that this only applies if you’d spend $300 on travel anyway. I think almost everyone who has this card would naturally spend that much on travel annually, especially since it includes things like Ubers, taxis, parking, etc. You don’t even have to “travel” (in the traditional sense) to get value out of that credit.

So perhaps to make my statement as clear as possible: while the Chase Sapphire Reserve® has a $450 annual fee that you have to pay upfront, holding onto the card should really only cost you $150 per year, assuming you’d otherwise naturally spend $300 per year in categories that qualify as travel.

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  1. I think the biggest problem with taking this view is that people tend to double-count that $300:

    “Ah, well the annual fee is only $150 because of the travel credit.”

    “Ah, well the rental car was $137, but basically free because of the travel credit.”

    It’s reasonable to take either one of those views, but not both. And I see way too many people end up taking both.

  2. If you have $300 of already planned travel then the net cost of the card is $150.

    If you spend $300 in travel BECAUSE you have the card and want to trigger the credit then I agree the annual fee cost is more. But i think for a majority of the people that follow this blog the $150 math works.

  3. People just don’t understand finance.
    Same as why Tesla has higher market cap then GM even if they never made profits EVER.

  4. I think the correct way of looking at this is to calculate 2 separate values, and compared the difference.

    with-reserve = $450 + $300 – $300 = $450
    w/o-reserve = $300

    Thus, the reserve card costs the difference between with-reserve and w/o-reserve. And the difference is $150.

    That said, this works if and only if the $300 is going to be spent anyway. Which is not true 😛

  5. I think the difference unless I’m missing something is you’re not actually spending the 300. It’s coming from the 450.

    What would be your out of pocket without the card? 300 bucks. With the card it’s 450-300 = 150. You’re not paying 750 dollars.

    Maybe my logic is off but that’s the way I look at it.

  6. I mean the cost to have the card is $450. At the end of the day you are paying $450–end of story. What one gets in exchange for paying $450 varies from person to person. I don’t think it’s wrong to say that the $300 credit reduces the cost of having the card, but $450 is $450. I get great value out of having an Amex Platinum in my wallet (use Skyclubs all the time, fully use the uber/airline credits, once in a while book through FHR, etc…), but at the end of the day you have to know very clearly that you’re paying $550.

  7. This guy just doesn’t understand dunk costs. A sunk cost by definition CANNNOT be recovered therefore he travel credit isn’t one it’s completely recoverable. Also in total between tolls, Uber, airfare, parking, and hotels who doesn’t spend 300 a year in that very broad travel category I mean 1 flight or one 4/5 star hotel covers the entire thing.

  8. The real cost of the card is $450, with a $300 annual travel credit. You are billed $450 annually. That’s the real cost that we pay to have this card.

    The travel credit is getting you something discounted or free with that $300. I used my annual travel credit to take a weekend trip with my wife that I otherwise wouldn’t have taken. Chase still gets my $450 though.

    The card is an absolute keeper if you can use that credit to your advantage and have good spend in the 3x category. I don’t use the Chase portal to book flights so the 1.5 cent per point deal doesn’t impact me. Everything gets transferred to partners.

  9. Understand both views but seems like it’s just over complicating a simple thing.

    if you don’t spend $300 worth of travel expenses a year, you have no business getting this card. Period.

  10. Agree that the card costs only $150 only if you are absolutely planning on spending $300 on ‘travel’ expenses in a year. That is easy for me, and many others that have the CSR. If you aren’t spending $300 on ‘travel’ each year, than this card probably isn’t worth it for you at all.

    @LAXJeff – If you really wouldn’t have taken that weekend trip if you didn’t have the travel credit to ‘use’, well I don’t really understand your logic on getting the card. I hope you got good use out of the 50k bonus and other benefits. Probably wouldn’t make sense to keep this card long term though. Maybe the Preferred instead, and if you can get the first year waived, even better.

  11. @ Ben

    I put well over $20K a year of spend on this card in the 3x category, probably closer to $30K. Its a keeper.

    Also, I got the 100K signup bonus for this card 🙂

    Last year I used my travel credit to help lower the cost of expensive flights over a holiday weekend. I fully understand the $300 credit is a credit against what you are buying whether you intended for it or not.

  12. If you spend >= $300 on travel per year on the CSR, Chase keeps net $150 of your money. Depending on billing statement timing there may be a CF out and then credit back.

    But if you meet the above criteria you are incorrect in your analysis if you consider this a $450/year credit card.

    The math changes if Chase alters it to an AMEX Platinum style credit.

    If you are purposefully spending $300 on travel just to get the credit then you have bigger problems than this in the points game.

  13. Lucky,
    you already have posted numerous posts that explain why the effective annual fee on the CSR is $150.
    It make me frown every time you post the same post again.

  14. Lucky- I think the person you quote in your story is missing the complete point with what you are saying. He thinks that it is $450+300-300=$450. This is completely illogical because it means that he he is not giving a value to the $300 purchase. What he is doing by deducting the $300 credit from the $300 cost means that he is not giving the $300 cost a value. This is not the case. So the equation should be 450+300-300-300(the value of the goods)=$150.

    I think that we are all giving this too much thought. It’s very simple.

  15. Actually, one could argue the real cost is $141 because of the min 3x on the $300 travel spend (=$9)

  16. I think anyone who qualifies for this card will have $300 in sunk travel costs considering Chase counts not just air, hotel, and rental cars, but also toll roads, bridges, and public transit.

  17. I love self-purchased company-reimbursed travel related expenses. In this case it really is $150 AF. If I had to pay it out of pocket then sure, it’s the full $450 AF

  18. @DJ There’s a disclosure at the top of every post about this. Did you not see it?

    Getting back on topic, the travel category is so broad that I always hit the $300 amount in the first month or two. Heck, I even got it for tickets on a pleasure boat ferry that went along the Potomac in Washington, DC.

  19. @Jack , before you accuse other people don’t understand something, you should ask yourselves the same question first.

    No, you don’t understand what is the “sunk cost”.

    The reason for the concept of “sunk cost” is to making decision without consider cost already occurred. The timeline is very important. Decision making has to be AFTER cost occurred

    Here we are talking about how much this card truly cost is for making decision if we should apply or renew this card. This is BEFORE the cost has occurred.

    By the way, if someone have to do something extra to get the credit, this card is not for you. Period.

  20. The way I see it is Chase gets 450 and sends 300 of that to my ezpass account that I would have funded anyway. thus 150 net cost for keeping the card

  21. @Lu you should understand it better. you have to assume the annual fee is already paid because he’s classifying it as a sunk cost and you can think of something as a sunk cost in the decision making process. Say I want to buy a airplane ticket home, but it’s possible I have to stay longer, I can think of the airplane ticket as a possible sunk cost if I don’t make it you can still do the analysis. In that case there is no reimbursement(unless buying refundable) if you can’t make the flight it’s a sunk cost to you which factors in to your decision making process. You can absolutely view things as potential sunk costs why do you think refundable airplane tickets exist. Most large companies only buy refundable tickets because else they are stuck with the sunk cost of the flight.

  22. For the second year in the row, I have gotten $300 in travel credit solely on parking, toll and ferry costs that I would have to pay regardless of whether I had the card or not. And in some cases I have also gotten reimbursed for some of those same expenses by my office. So yeah, that actual out of pocket annual cost of the card for me is $150. The value I get from the other perks more than offsets that.

  23. This is totally off topic, but I was just wondering about the longest possible airline routing between cities of any size (ie no military airports on uninhabited islands). The longest I could find was Auckland-Malaga (AKL-AGP) at 12393 miles as per Great Circle. Any takers on this challenge?

  24. Some of the comments here illustrate exactly why the points game isn’t for everyone. A basic knowledge of accounting (credit vs debit) is probably a pre-requisite to expand beyond a plain vanilla cashback card.

    Personally, I put nearly $100k on the CSR in 2017 (including reimbursable expenses) with over 99% of that in either 3x bonus categories or non-USD transactions with no FTF. Between the lounge visits using Priority Pass and the insurance claim for delayed baggage, I more than made up my annual fee on benefits alone, not even considering the value of the travel credit or the 200k+ points earned.

    I’ve also earned $900 in travel credits since getting the card in August 2016 (viz. 3 calendar years) and paid only $675 in prorated annual fees, so I’m actually ahead of the game vis-a-vis a straightforward credit vs fees calculation as well.

    Bottom line is that any semi-regular traveler should find tremendous value in this card. If you hold the competing products from Amex or Citi as well however, the value may be diminished due to an overlap of benefits.

  25. Why in the hell would you get this card if you aren’t planning to spend way more than $300 in travel annually (especially broadly defined as it is)? As such, it’s definitely $150 out of pocket for the cost of the card. And if you consider it a sunk cost once you pay for the card, it’s not $450 +300 -300, it’s $300 -$300 = $0 or for me, as a sunk cost, it’s $300 benefit – nothing in cost as I spend thousands and thousands in travel annually between work and personal.

    When you are looking at getting the card or renewing, the $450 cost nor the $300 benefit is a sunk cost/benefit.

  26. JP Morgan Reserve offers the same PLUS United Club membership, which makes that a crazy good deal in case anyone is a Private Client and flies United.

    And why do people complain when Lucky promotes products? For those that don’t know, you see, this is his job, and that’s how he earns his income along with advertising. I really don’t understand what people have against him earning a living.

  27. @Diotallevi I hear you. Lucky needs to promote all kinds of travel chats as well as make a living. You are right. I think Lucky is very fair and reasonable. He offers many takes and gives a lots of news. I enjoy his blog a lot. It is those who want to use his info for free without giving back and supporting our loving blogger and his team. He also never expects us to buy into it or click on anything. He is professional and those peeps are just haters.

  28. Since the travel credit resets after the last statement closing in a year, I’ve already twice used the complete travel credit for a year before January 1st without even trying. As said before – if you really wouldn’t spend $300 in the broad travel category this card probably isn’t for you.

  29. Think of the CSR $300 travel credit as a BOGO, because that is effectively what it is! You are getting back $1 for every $1 you spend on travel, up to $300. Monitor your account: you spend $10 on a taxi ride, when the $10 charge posts, it is immediately negated, making it look like you did not take the taxi ride at all. Therefore, the “value” of the $300 must be multiplied by 2 = $600.

    $600 – $450 = $150, which is the effective AF for having the CSR.

    As others have already said, however, it is a BOGO if and only if you were going to make the purchases whether or not you had the CSR.

  30. Please don’t talk about Chase Sapphire Reserve anymore unless there’s major changes. I don’t get why you had to keep bringing this card up. Can you do more flights review?

  31. Hello, all. Jared here, the reader who asked the question that initiated this post. Thank you all for the responses and feedback, though I ask for a bit more charity in those responses. For example, Jack, I was an Economics major, so I understand what sunk costs are. Being that I’m new to the credit card “game,” I may just need to adjust my thinking/approach to AFs. I was just getting started when the CSR was introduced, so the $450 was a bit of sticker shock to a newbie like me. In hindsight, I wish I had just gotten it and the 100,000 UR points. Oh well…

    My wife spends $75 about every 2 months on her EZ-Pass for tolls, so $75 x 6 months/year = $450 spent on tolls alone, not including the travel we sometimes take. So maybe I should upgrade to the CSR when I’m eligible (after having the CSP for 2 years, which will be about another year or so).

    So again, thank you all for your input, but for those of you who did so, please don’t discredit someone’s intellect because they’re still learning and asking questions. In straight dollar value, $450+$300-$300 is indeed $450, so I’m not wrong in that. I’ll need to adjust my thinking in approach to AFs and the value of what the $450 AF allows access to, with a budget that already includes at least $300 in travel-spend.

    So simmer down and let the rest of us mortals catch up 😉

    And thank you, Lucky, for the response. I know someone complained about you writing multiple posts about the real annual cost being $150, but it’s a nuanced approach to why that is, so I appreciate the further explanation. Much appreciated.

  32. Applied for the card off @Lucky’s link on Monday and received it via UPS on Wednesday, just 2 days later. Amazed at the service from Chase so far.

  33. Let’s beat that dead horse dead!

    Here’s is succinctly why the “value” of the CSR $300 travel credit should count as 2x.

    Above I’d written: “Monitor your account: you spend $10 on a taxi ride, when the $10 charge posts, it is immediately negated, making it look like you did not take the taxi ride at all. ”

    I would like to add to that statement so that it is absolutely clear why the $300 should be valued as worth 2x:

    “Monitor your account: you spend $10 on a taxi ride, when the $10 charge posts, it is immediately negated, making it look like you did not take the taxi ride at all AND YOU STILL HAVE YOUR ORIGINAL $10 TO USE FOR A SIMILAR TAXI RIDE OR EQUIVALENT.”

    Without the $300 travel credit, you are out of $10. Period. With the $10 credit, your original $10 is still in your pocket, ready to be used again. It’s like hiring two taxis that would have cost $10 each and then ending up paying just $10 for both! 😉

    $300*2 -$450 = $150.

    Another way of looking at it is that $300 that you spend on **NECESSARY** travel-related expenses remain in your account because each $1 you spend, up to $300, is returned to you as part of the CSR travel credit, so that when you pay the $450 AF, you’re paying just:

    $450 – $300 = $150.

    Well, the point should be clear… 😉

  34. Lucky, I like your blog, but I think you are trying too hard to sell credit cards
    Don’t you think that people will not click on your links when they get tired of wasting their time to read the same information over and over again in different ways?

  35. First off, there is no reason on earth why some would get this card who doesn’t already spend $300+ on travel. Just think of it as a rebate: “A rebate is an amount paid by way of reduction, return, or refund on what has already been paid or contributed.”

  36. I’ve always seen this as a $150/year travel card. Ever since I’ve had the card, the $300 travel credit gets spent within 1 week, so no problems there. Keep in mind you still earn 3x points on the $300 of reimbursed expenditures.

    Now, to get the rest of the $150 value out of the card, which I easily have every year. Usually Price Match alone will get me $150+/year back.

    Then there’s Priority Pass. Anyone who does international travel should be able to clean up handsomely here. Lounges are asking $35-$70 per visit. One trip with stops at lounges along the way will easily reach the $150 mark. I think their asking prices are ridiculous and value it more at $20-30 per visit; even then any serious traveler can get their money’s worth. Add a companion or two and you’ll sink it in the first trip. In this case, if I didn’t have this card, I probably wouldn’t use most of the lounges except for IRROPs and long layovers. Even factoring $20 of “value” for the lounge (1 adult beverage, some snacks at the airport), a single traveler should be able to get $150 of value from this benefit easily.

    Fortunately I’ve not had to make use of any of their insurance products (funny how that works, haven’t had a misconnect or bump or wx delay since getting the card), but it’s nice to know they’re there.

    I know a lot of people got this card for the large signup bonus and publicity it generated, but it’s taken up nice permanent spot in my wallet. I do miss the Amex service of old, but not even Amex has that anymore.

  37. In my accounting I always classify the travel rebates from Chase, Citi, and Amex and a refund of fees, as I’d have spent on the travel anyways. If you have to spend additional money to recoup the rebates, then I think there are better cards out there for you, like double cash, quicksilver, amazon, or uber.

  38. Long time lurker, first time commenting on any OMAAT article since there is a great lack of understanding of basic counting principles.

    Jared states: $450 annual fee +$300 travel charge -$300 travel benefit =$450 annual fee. By this equation he is saying that the net annual fee for the CSR is $450. This is completely wrong.

    The $450 annual fee is paid to Chase out of pocket. The $300 travel charge is only a charge to your CSR account, using the credit line that Chase has extended to you. You don’t actually pay this out of pocket, because the $300 travel benefit wipes it out. You get to enjoy that travel without any additional spend out of your own pocket.

    In other words, you “prepay” that $300 travel charge, which is contained in the $450 annual fee. And you get that back after you make the charges. So the net annual fee is $150.

    Jared, economics is a fine major, but keep hitting those books, and maybe take up an accounting class or two.

    And Lucky, thanks for the content, keep up the good work.

  39. Thanks for clarifying, Lucky! I love this card. Love your blog. The CSR is loaded with so many perks that even if it didn’t have $300 travel credit, I’d still feel like I’M ROBBING Chase! LOL

  40. Agreed I spend $300 on travel easily so getting the travel credit makes my AF $150. Now here is the real question. I have a chase ink card that lets me transfer points and I have an amex business plat card that gives me lounge access. How much travel/dining spend do I need in a year on the CSR to break even on the CSR? I also have the chase sapphire card that gives me 2pts per $ on dining. My AF on the CSR just hit but I’m wondering if I should keep it after I just got the plat.

  41. If you aren’t spending $300/year in parking, tolls, Ubers or trains, why would you even get the card?

  42. the only i see $450 AF becomes $300 AF is when you expense the $300 travel to the company you work for. So, you not only get the $300 back from the workplace but $300 back from Chase. Does it make sense?

  43. the only way i see $450 AF becomes $300 AF is when you expense the $300 travel to the company you work for. So, you not only get the $300 back from the workplace but $300 back from Chase. Does it make sense?

  44. Laura – work reimbursement works, but if you already plan to travel for personal (family vacation, soccer tournament, etc) whatsoever, then that expense is already a sunk cost, and therefore the $300 credit is all upside, whether for work or not.

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