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- There are a ton of rewards credit cards available, but if you’re just getting started with collecting points and miles, you should open the Chase Sapphire Preferred as your first card.
- The card earns 2x points on travel and dining, and offers a sign-up bonus of 50,000 points when you spend $4,000 in the first three months.
- The card’s annual fee is waived the first year, and is under $100 after that.
When I finished graduate school and started working (again), I decided that I wanted to open a new credit card in order to earn better rewards. At the time, I was still using my student credit card from college, which earned 1% cash back on purchases. It had a tiny credit limit, although that was okay since I never carried a balance, and no benefits that I knew of.
I did some research and opened a Capital One card that earned 2x miles/dollar spent on everything. It seemed like a great card, but as I started reading more and diving into the world of credit card rewards and “travel hacking,” I learned that it wasn’t actually the best option out there. While the points added up quickly, I quickly learned that they were fairly inflexible even though there were “no blackout dates.” While I could redeem them for 1¢ each as a statement credit against travel purchases, it was virtually impossible to maximize value or redeem points for cool experiences like flights in business class.
As I kept researching, I found out more about transferable points, which are the most useful type of credit card point. That’s because there are a few different ways you can use them, some of which can provide a higher value. For example, the starter card I kept seeing discussed was the Chase Sapphire Preferred. While the card earns points slower than the Capital One card I tried — although it still earns 2x points/dollar on all travel and dining purchases, which make up a significant amount of my spending — it offered much better ways to use the points.
Read on to learn why the Chase Sapphire Preferred is Insider Picks’ choice of rewards credit card for people who are looking to get started with credit card rewards, whether you’re just out of college, or you’re closer to retirement than graduation.
Earn rewards on everyday spending quickly.
The Chase Sapphire Preferred offers 2x points per dollar spent on travel and dining, and 1x point per dollar on everything else. Travel and dining are defined broadly — travel includes everything from taxis, subways, parking, tolls, and Uber to things like airfare, hotels, cruises, and Airbnb, while dining includes restaurants, bars, coffee shops, fast-food restaurants, most bakeries, and more.
Those points add up quickly — a significant amount of my own spending is on things that fall into the travel or dining categories, so getting bonus points on those purchases is incredibly lucrative, and made the Sapphire Preferred a great fit when I started out with points and miles.
Use points how you want, and get a great value no matter what.
The Sapphire Preferred earns Chase’s in-house rewards currency, known as Ultimate Rewards (UR) points, which can be redeemed any of a few different ways.
The easiest option is to simply redeem them for cash or gift cards. One UR point equals 1¢, so if you have 10,000 points, that’s $100. You can get the cash as a statement credit or direct deposited to your linked checking account.
Another option, which gets you more value for your points, is to use them to book travel through the Ultimate Rewards travel website. It works like any other online travel agency, such as Priceline or Expedia. You can search for flights, hotels, rental cars, cruises, vacation packages, or more. When you book travel through Chase and use points, you’ll get a 25% bonus, making each point worth 1.25 cents. If you have 50,000 points, they’ll be worth $625. If the trip you want to book costs more points than you have, you can always pay the difference.
My favorite way to use points is the third option: transferring them to Chase’s travel partners, including nine airline frequent flyer programs and four hotel loyalty programs. While this is more complicated, you can generally get more value by booking frequent flyer award tickets than you can by using your points as cash or through Chase. You can even book flights in business or first class for fewer points than it would cost if you used them as cash or through Chase’s website to buy the flights. You can read more about why transferable points are so valuable.
The annual fee is waived the first year — but after that, it stays low.
While there are other cards, like Chase’s Sapphire Reserve, that offer slightly higher rewards earning, or more benefits, they also come with higher annual fees. The Sapphire Preferred has an annual fee of $95, but it’s waived the first year. Even without getting the sign-up bonus the second year, it’s easy to negate the cost of the annual fee because of the rewards you earn and the card’s other benefits.
Get a huge sign-up bonus when you open the card.
When you open a new Sapphire Preferred card, you can earn 50,000 UR points when you spend $4,000 in the first three months, plus an extra 5,000 points when you add an authorized user to your account and they make a single purchase within the same timeframe. That’s worth $550 as cash back, $687.50 toward travel purchased through Chase, or more transferred to travel partners. It may be possible to get a slightly higher sign-up bonus through Chase — however, the annual fee won’t be waived, so you’ll have to pay the $95 on your first statement.
Chase only approves card applications if you haven’t opened too many cards recently.
Chase’s unofficial “5/24” rule makes it so that the issuer won’t approve card applications from people who’ve opened five or more cards in the past 24 months. While that may seem like a ton of cards, it isn’t actually that many — particularly if you practice “travel hacking” or open cards for the sake of collecting sign-up bonuses (and building your credit score). The rule is meant to prevent people from over-gaming the system, or from racking up too much debt too quickly and defaulting.
Because of that rule, it’s smart to open Chase cards first, even if you don’t have any other plans to open cards in the future. You never know when that might change, and you don’t want to end up excluded from collecting Chase cards, which arguably offer the most valuable rewards of any credit card issuer.
If you decide that you want the higher-annual fee Sapphire Reserve later, you can always convert your Preferred after your first year.
The Chase Sapphire Preferred card has some great benefits in addition to rewards.
One of my favorite benefits of the Sapphire Preferred is trip delay insurance. That insurance covers your expenses if you’re traveling and end up delayed overnight, or for at least 12 hours during the day. Each covered person on the trip can be reimbursed for up to $500 a day in reasonable expenses, including food, toiletries, a change of clothing, and hotel accommodations. This can be useful if you end up stranded due to delayed or cancelled flights — even when the cause is bad weather.
The Sapphire Preferred also offers a primary auto rental collision damage waiver, or free loss and damage coverage when you use the card to pay for a rental car. Just decline the collision/damage/loss coverage offered by the rental agency.
The card has several other benefits, including trip cancellation/interruption insurance, extended warranty coverage, luggage delay insurance, and other purchase protections.