Why I downgraded my Sapphire Preferred to the Freedom
I receive a lot of questions from readers who hold the Chase Sapphire Preferred® (doesn’t everyone?) about whether they should pay the $95 annual fee, cancel, or downgrade the card.
First, the Sapphire Preferred is a great card that’s well worth the annual fee. I’ve held it in my wallet for almost two years. My favorite features of the card are the 2x Ultimate Rewards points for dining & travel, no foreign transaction fee, 7% annual dividend bonus, and the transfer partners. Oh, the transfer partners.
Those are the reasons I gladly paid the annual fee my first year of card membership. But things have changed. I’ll always remember the days when I had my new shiny (and heavy) Sapphire Preferred in my wallet and the comments I’d get when I used it to pay. “Wow, this card is heavy!”…”What’s this thing made of?”…etc. It never got old.
Anyway, I’ve overcome my nostalgia and realized that it doesn’t make sense for me to pay the annual fee again. Here’s why:
- Jordan has her own Sapphire Preferred (every family needs at least one), so I still have access to the card’s great benefits I’ve been using my Ink Bold® Business Card or Ink Plus® Business Card more and more. I just love the 5x earning opps! Plus, 2x on gas and hotels (book directly) doesn’t stink either.
- By having an Ink card, I’m still able to transfer Ultimate Rewards points out to their many transfer partners.
- I don’t spend enough on my Sapphire Preferred that the 7% annual dividend on all miles earned erases the annual fee. My annual dividend last year was around 1,500 Ultimate Rewards points. That’s a nice bounty, but I don’t value 1,500 UR points at $95. I spread out my spending over too many cards to maximize category bonuses and meet minimum spending requirements. But if I only used my Sapphire Preferred, then the 7% annual dividend alone could easily justify the annual fee.
So, I’ve established that I’m not maximizing the Sapphire Preferred’s benefits and that I wouldn’t be losing any perks because Jordan holds a CSP. Also, I hold a couple of Ink cards. So, now what? Cancel? Heck no.
I prefer to not cancel cards (when possible) because shortening your average age of account can have a negative impact on your credit score (although it takes 7-10 years for your account to fall off your credit report). Instead, I want to create a loooong credit account history. Plus I like to keep my line of credit so I can have some wiggle room on future apps, and keep my credit utilization low. I pay off my credit cards bills in full at the end of every month so it’s always under the recommend 20% anyway.
So the best option, imho, to help you do that is to downgrade your current card to a card that doesn’t have an annual fee. The banks keep you as a customer, you get to keep your account history, and possibly a new card with new benefits that may suit your needs better.
The first option you will have is to downgrade your Preferred to the standard Sapphire. Here’s what you will get (or won’t get, I should say) with the standard Sapphire:
- Doesn’t let you transfer your Ultimate Rewards points to the travel partners. That’s a big one, but not an issue if you hold an Ink product, or your significant other has a Sapphire Preferred.
- There is a foreign transaction fee
- No 2x points on travel
- No 7% annual dividend bonus
- No 20% off airfare when booking the UR portal
- And it’s not made of metal.
It doesn’t have an annual fee and you can still earn 2x points on dining (probably my favorite feature of the CSP). This is a pretty decent downgrade option, but not the one I decided on.
I decided to downgrade to the Chase Freedom® Visa which has no….annual fee. But that’s not even the real reason I went with it. I have long lusted after the quarterly 5x earning opportunities with the Freedom. And although you can’t transfer your Ultimate Rewards points in your Freedom account to travel partners – I can transfer them to either one of my Ink’s, or Jordan’s Sapphire Preferred Ultimate Rewards accounts.
The 5x earning is capped at $1,500 a quarter, so 7,500 Ultimate Rewards points. I’ll take the extra boost to my Ultimate Rewards account.
Everyone may not have the opportunity to downgrade to the Freedom, though. I’ve heard stories that you have to have your Sapphire Preferred for over a year to qualify, but I think it’s a total ymmv situation.
What am I losing out on by downgrading?
I lose out on the opportunity to get the sign-up bonus on the regular Sapphire or Freedom cards. Currently both sign-up bonuses are at 10,000. Eh. That’s what has kept me from applying for the Freedom this long, so I don’t see this as a big loss. I prefer to not waste my Chase inquiries on cards with bonuses less than 40,000.
I see this as a win-win. I get to keep my credit account history, avoid an annual fee, and get a card with new benefits that suits my spending needs better. Chase will benefit as I will be using my Freedom more than I was using my Sapphire Preferred. Plus I may be able to get the Sapphire Preferred Mastercard at a later date.
I still think the Sapphire Preferred is easily worth the $95 fee, but I couldn’t get myself to pay for it again with Jordan having one (and since my spending has declined on the card). It’s always one of the first cards I recommend to people, because it’s an all star, and not everyone can apply for a business card. So if you don’t have any Ink cards, or a spouse with a CSP, then I highly recommend keeping the card and paying the annual fee.
I hope this helps you weigh out your options!
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— Noob Master