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Getting new rewards credit cards is way more fun than closing them down, but you need to be prepared to handle both sides of the equation in this hobby. Some credit cards may be the perfect match when you get them, but eventually may not suit your needs enough to warrant paying the annual fee. Some cards you may have applied for because of the valuable sign-up bonuses, never really intending to keep them beyond a year. I don’t recommend hauling through rewards credit cards like a toddler turned loose on a bag of Goldfish, but you also don’t have to keep every single credit card you open forever and ever.
Deciding to cancel the Chase Sapphire Reserve
This one year and then out strategy has been the plan from the beginning for my dad’s Chase Sapphire Reserve. He got the card last year towards the end of the 100,000 point sign-up bonus offer. That was a tremendous bonus worth at least $1,500 towards travel, and on top of that, the card awarded him a $300 travel credit in 2017 and then again in 2018. They have since changed how the Sapphire Reserve travel credit works so that it is awarded once per cardmember year for those who applied on May 22, 2017, or after. Since he got the card before that date, he got $600 in travel credits in his first 12 months of having the card.
In the first year, he paid the big $450 annual fee just like everyone else, but that sort of fee is just not a good fit for him long term. If you knew my dad, and maybe you do somewhat through the Grandpa Points posts he shares here occasionally, you would know that it is almost unbelievable that he ever got a credit card with a $450 annual fee. To give context, he is the kind of guy who flies Spirit Airlines and doesn’t pay for any of the ancillary fees for bags, seat assignments, or onboard drinks. He will pack for a ski trip in a backpack to avoid the fee. He doesn’t have a cell phone, he has driven the same car since I was in the 8th grade (I’m now 37 years old), and for the longest time he wouldn’t spend the extra $1 per month to make his office phone touchtone instead of rotary…you know where you push a seven and wait for it to go da-da-da-da-da-da-da.
He’s not a cheapskate by any stretch, he just isn’t going to frivolously spend money in most areas of life, and lots of things that bother those who are always in a hurry don’t really bother him. However, a $95 annual fee for a credit card is a big deal in his world, and a $450 annual fee is almost incomprehensible. He understood and agreed with the math on getting the Sapphire Reserve the first year, and but no amount of Priority Pass visits, Global Entry reimbursements, or 3x points on his weekly $12 meal at Jason’s Deli are going to justify keeping this card beyond the first year.
Spend the $300 Annual Travel Credit
Before we close his Chase Sapphire Reserve card we have some housekeeping to do in order to not let anything go to waste. First, we checked the math on the travel credit to be sure he has used it up for the year. There wasn’t a ton of time from when his December statement closed and the $300 annual travel credit reset until we are going to close the card, but there was enough time for him to book a few things for an upcoming Vegas trip. We kept an eye on the credit, and it indeed all posted as statement credits offsetting some travel charges.
While we are on the topic of credits provided by the Sapphire Reserve, if you need to apply for or renew your Global Entry in the near future, of course, you could use the Sapphire Reserve to pay for that before you cancel and have the $100 application covered. This is assuming you haven’t already used that benefit on the card since it is only valid once every four years.
Use what you can, transfer the rest
In terms of the points attached to your Sapphire Reserve, you can use them up to book travel at 1.5 cents per point through the Chase Travel site, transfer them to another Ultimate Rewards credit card if you have one, transfer them to an Ultimate Rewards hotel or airline partner such as United or Hyatt, or even transfer them to another household member who also has an Ultimate Rewards card. Be aware if you transfer them to a hotel or airline partner that they will now fall under the expiration rules of that program. In other words, don’t just transfer them somewhere and forget about them for years on end.
Whatever you do, don’t just let these valuable points go to waste just because you want to close your card. Move them out of your Ultimate Rewards account before you close your card. Alternatively, perhaps you shouldn’t close your Sapphire Reserve at all and should instead…
Don’t cancel, just downgrade
One way to keep the points safe, in a sense, is to not cancel your Sapphire Reserve at all, but instead just ask Chase to downgrade it to a no annual fee card such as one of the Freedom cards. You could then keep your points and account history, though remember with the Freedom, the points are worth less towards travel (1 cent each instead of 1.5 cents) and you can’t transfer them to the hotel and airline partners without also having a premium Ultimate Rewards credit card.
Still, this downgrade strategy would keep your points safe until one day when you again get a premium Ultimate Rewards card such as the Sapphire Preferred or Ink Business Preferred. Downgrading is also a good way to potentially get a card like the no annual fee Chase Freedom that perhaps you wanted for the rotating 5x categories, but that you wouldn’t necessarily normally spend a whole new card application to obtain.
Don’t wait too long
If you do want to cancel your Chase Sapphire Reserve to avoid paying the $450 fee for yet another year, don’t wait too long to do it once the renewal fee posts to your account. Chase has a policy where they will refund the fee off of the account if you cancel within 30 days of the fee posting, but don’t accidentally wait longer than that.
As far as my dad goes, we plan to close down the card in a couple weeks after his next trip is over. I’ll give him the option to downgrade to a no annual fee Chase card, but he doesn’t have a complicated credit card strategy, so it won’t make a huge difference one way or another if he downgrades or cancels. We have a plan to use up some of his Ultimate Reward points to book flights for planned 2018 trips at 1.5 cents per point and then move the remaining points into his United and Hyatt accounts. We know he will put those points to good use for planned trips over the next couple of years. His Ultimate Rewards balance isn’t so huge that we need to move points to my mom’s Sapphire Preferred since we have plans to use all of his points in one way or another.
When all is said and done, he will have gotten more than $2,000 in travel benefits from a credit card that he paid a $450 annual fee to obtain. I’d call that a big win, even if it is still a bit shocking that he ever had a $450 annual fee credit card to begin with!
What’s your plan going forward with your Sapphire Reserve? Are you keeping it like me or closing it out like my dad?
Editorial Note: The opinions expressed here are mine and not provided, reviewed, by any bank, card issuer, or other company unless otherwise stated.