Spsqg asked a question in the Ask Lucky forum regarding how to optimize a Chase card strategy. While most people won’t have exactly the same question, hopefully the thought process that goes into this and general tips are useful for others. To summarize:
- Spsqg has the Chase Freedom® Card since 2006 and the Chase Sapphire Reserve® since December 2016
- Spsqg‘s husband opened the Chase Sapphire Preferred® Card in June 2016
The questions are:
- Could Spsqg‘s husband apply for his own Sapphire Reserve Card and be eligible for the bonus? If so, would he have to downgrade his Sapphire Preferred to a Freedom Unlimited prior to doing that?
- If Spsqg‘s husband isn’t yet eligible for the Sapphire Reserve, would it make more sense to downgrade the Sapphire Preferred to the Freedom Unlimited to save the annual fee, and make him an authorized user on the primary Sapphire Reserve account?
- If he becomes an authorized user on the Sapphire Reserve, would he be eligible for the card in his own name in the future?
- Should Spsqg apply for a Freedom Unlimited directly regardless, since it has no annual fee?
To give some general advice based on these questions:
Being an authorized user doesn’t prevent you from getting a card yourself
It doesn’t matter what the credit card is — being an authorized user on a particular credit card doesn’t preclude you from getting the card yourself, and for that matter, it doesn’t preclude you from earning the welcome bonus on the card. So if your spouse has the Chase Sapphire Reserve® and you’re an authorized user on the card, you can still earn the bonus on the card yourself.
The best way to switch from the Sapphire Preferred to the Sapphire Reserve
Do you currently have the Chase Sapphire Preferred® Card but want to transition to the Chase Sapphire Reserve®? There’s definitely a right way to do this and maximize your points. As is suggested in the above question:
- Downgrade the Chase Sapphire Preferred® Card to the Chase Freedom Unlimited®
- Apply directly for the Chase Sapphire Reserve®
What’s the advantage of this? For one, you’ll be eligible for the generous sign-up bonus on the Sapphire Reserve Card. But much more important is that the Sapphire Reserve and Freedom Unlimited is the single best card duo out there, in my opinion. That’s because the Sapphire Reserve offers triple points on dining and travel, while the Freedom Unlimited offers 1.5x points on everyday spend. You can redeem points for a minimum of 1.5 cents each towards a travel purchase if you have both of those cards, meaning you’re earning a 4.5% return on travel and dining, and a 2.25% return on everything else.
There are two major restrictions here to be aware of:
- You’re generally not eligible for any of these cards if you’ve opened five or more new card accounts in the past 24 months
- You’re only eligible for the sign-up bonus on the Sapphire Preferred or Sapphire Reserve if you haven’t received a new cardmember bonus on either card in the past 24 months
The one alternative that’s worth considering is just adding him as an authorized user on your Sapphire Reserve. The way I see it, the out of pocket on the Sapphire Reserve is $150 per year, when you subtract the $300 annual travel credit. Instead you could add your husband as an authorized user on the Sapphire Reserve for $75, and in theory you’d come out $75 ahead. That might just be worth it. However, that wouldn’t get him the sign-up bonus, and also wouldn’t get him the Global Entry fee credit, and a few other perks.
Specific advice for the above situation
To answer Spsqg‘s questions:
- In general your husband can get the sign-up bonus on the Chase Sapphire Reserve® in spite of being an authorized user on your card, though he’d need to downgrade his Chase Sapphire Preferred® Card to the Chase Freedom Unlimited® prior to doing that
- The catch is that if your husband only opened the Sapphire Preferred in June 2016, he’d have to wait 24 months from when he earned the sign-up bonus, meaning he’d only be eligible around June-September 2018
- I don’t think there’s much value in applying directly for the Freedom Unlimited if you’re already an authorized user on your husband’s card, unless it would somehow make your accounting easier; the card has no annual fee so you’re not gaining anything by doing that
- If I were in your shoes I’d wait until your husband is eligible for his own Sapphire Reserve this summer, and then execute the Sapphire Preferred to Freedom Unlimited switch, and then apply for the Sapphire Reserve outright
I’m curious if other people would handle this situation differently?