Tag: credit card points

Why Cash Back is Not the Best Value for Points
If you have a travel rewards credit card, you likely have the option to use your points for cash back instead of transferring them to travel partners.

With the cash back option, you can exchange your points at a 1:1 ratio, meaning one point equals one cent. It may be easier to think of it as 100 points equals 1 dollar back.

Cash back is the easiest way to redeem value for your points. With a few simple clicks, you can either receive a direct deposit in your checking account or have a credit applied to your statement.

Sounds pretty good, right?

Yes, it may be tempting to exchange your points for cash. Before you do, I have a suggestion for your consideration:

Don’t do it.

With only slightly more effort, you can get so much more value out of those points by transferring them to a travel partner.

Today, we’ll look at an example to drive this point home. We will focus on three ways to book the same flights using only points earned with my favorite credit card, the Chase Sapphire Reserve.

After reviewing the options, you should see that the cash back option is by far the least attractive.

First, let’s think about why credit card companies make it so easy to redeem your points for cash.

Credit card companies want you to take cash back for your points.

The truth is that credit card companies are hoping you take the cash back offer.

When you take cash back, you are saving the credit card company money. That’s why they make it so easy for you to receive cash back with just a few clicks.

When you transfer your points to travel partners, it costs the credit card companies more money. That is one of their justifications for the higher annual fees on travel rewards cards.

They are hoping to recoup some of that cost by charging a fee.

For the same reasons, it’s also why rewards cards that don’t charge an annual fee only offer the cash back option.

Are you more interested in saving the credit card companies money or in saving yourself money?

If you want to save yourself money, read on.

But, isn’t cash more valuable than points?

I know how enticing it can be to have 70,000 points in your account and immediately turn that into $700.

That’s real money.

However, those points could be worth so much more money if you stay patient and use them to pay for your next vacation.

While putting a specific value on credit card points is not an exact science, there are some reputable companies that have undertaken the task.

For example, The Points Guy currently values Chase Ultimate Rewards points at 2.05 cents per point.

Credit Karma values Chase Ultimate Rewards points at 1.71 cents per point.

As mentioned above, cash back typically rewards you with 1 cent per point.

That’s a real difference.

But, that cash can offset my credit card bill! Who has time to travel anyways?

I want the cash back to help pay my bills this month!

I’m too busy to travel!

These are some of the justifications I hear from people who choose to take cash back.

I encourage these people to think about what they’re really saying.

For instance, if you really need to trade in your points to pay off your credit card bill, then you need to revisit your budget and spending choices.

I understand that sometimes money is tight and unexpected expenses pop up. That’s what your emergency savings account is for.

Ultimately, your credit card points should be viewed as a fun bonus, not as a key factor in paying your bills on time.

Now, if you are too busy to take even one trip a year, it’s probably time to think about why you’re working so much.

And, if you don’t even like to travel, you probably shouldn’t have a travel rewards credit card in the first place.

OK, with this context behind us, let’s take a look at a sample itinerary and see which option you prefer.

Photo by Christiann Koepke on Unsplash

Three ways to book flights to Colorado for a ski vacation without using money.

For this example, we’ll focus on Chase Ultimate Rewards points, which is what you earn using the Chase Sapphire Reserve.

My favorite way to redeem my Chase Ultimate Rewards points is to transfer them to United for free flights.

Let’s say you live in Chicago and want to go skiing in Colorado this winter. You have plenty of points saved up and you want to put them to good use.

You are a savvy traveler so you’re not messing around with peak holiday travel prices.

Instead, you wait until the holiday rush is over and plan your long-weekend trip from January 8 to January 13 (Thursday to Tuesday). That allows for four full days of skiing with a couple of easy travel days built in.

Let’s consider three options for booking these tickets without using any actual money:
1. Buy the tickets directly from the airline then reimburse yourself with cash back from your points balance.
2. Transfer your Chase Sapphire Reserve points to United and purchase the ticket with United miles.
3. Purchase the ticket through the Chase travel portal and pay with points.
Option 1: Buy the tickets directly from the airline then reimburse yourself with cash back.

In this first option, you check out United.com to see what decent flights would cost you if you paid in cash. The good news is that United has direct flights from Chicago to Denver (two United hubs) throughout the day.

You want to work a half-day on Thursday so choose the 2:36pm departure.

Coming home, the last thing you want to do is wake up early on your final day of vacation. So, you choose the 5:42pm return flight.

For a refundable roundtrip ticket, this itinerary will cost you $304.96.

Not bad, right? It pays to wait for the holiday season to die down.

You decide to purchase the ticket using your Chase Sapphire Reserve, earning 4 points per dollar for a total for 1,220 points.

Of course, you know that $304.96 is the equivalent of 30,496 Chase Sapphire Reserve points (1 point equals 1 penny; 100 points equals 1 dollar).

After buying the ticket, you go to your Chase portal and convert 30,496 points into cash back, which equals $304.96.

The end result is that this option costs you 30,496 points but no real money.

One side note: Because you purchased this itinerary with your Chase Sapphire Reserve, the 1,220 points you earned reduced the true cost of the ticket to 29,276 points. However, these points will be deposited into your account after your next statement closes so don’t actually help you here.

Option 2: Transfer your Chase Sapphire Reserve points to United and purchase the ticket with United miles.

Next, let’s see what happens If you wanted to book this exact same itinerary by transferring your Chase Sapphire Reserve points to United.

Looking at United.com, this exact same itinerary costs 19,000 points.

You login to your Chase account and instantly transfer 19,000 points to United. Then, you return to United’s website and book the flights.

Remember, the cash back option cost you 30,496 points for this same itinerary. By transferring your points to United, you saved 11,496 points.

That’s 60% of the points you need to book another plane ticket on this itinerary. You may have enough points leftover to bring a friend!

And, if you really wanted to, you could even book this itinerary using United miles, and then give yourself $114.96 cash back as a thank you gift with your remaining points.

I personally wouldn’t do that- I would just save those points for the next plane ticket.

You should now see how much money you’re leaving on the table if you opt for cash back instead of redeeming your points for travel.

On just this one trip, you saved $114.96. Think about how much that savings adds up if you book more than one plane ticket each year.

Photo by Clay Banks on Unsplash

Option 3: Purchase the ticket through the Chase travel portal and pay with points.

As a third option, you could use your points to purchase this itinerary directly through the Chase travel portal.

Pursuing this option would cost 20,331 points. That’s definitely a better option than the cash back option, but not quite as valuable as booking directly through United.

If you choose to go this route, be aware that you may lose out on certain perks available when booking directly through the airline.

That’s because using the Chase portal is the equivalent of booking through a travel agent. You may not get to choose your seat, receive upgrades, or other benefits you’d get by booking directly with the airline.

Regardless, since it’s less expensive to book directly through the airline, I don’t see any real benefit to choosing Option 3 over Option 2 in this scenario.

That said, don’t write off Option 3 in every circumstance. There are certainly times when it’s a worthwhile option to consider.

I have used the Chase travel portal extensively to book boutique hotel overseas. These types of smaller, independent hotels are not typically affiliated with any credit cards and may not have rewards programs.

In that instance, I can use my points instead of cash to stay at these wonderful hotels.

So, what option would you choose?

With very little effort, you can save yourself real money by transferring your credit card points to travel partners.

I encourage you to think about this strategy before you elect to take cash back.

Do you prefer cash back? What is your favorite points redemption option?

Let us know in the comments below.
September 30, 2025
How to Use the Sapphire Reserve for Free Flights
One of my biggest financial challenges when I was in debt in my twenties was how to pay for travel.

My thought process could be summed up as “do fun things now, worry about it later.”

I did have some great trips, like going to Madrid and Rome with my brothers. I certainly don’t regret taking those trips.

In hindsight, I would just pay for things a bit differently.

Instead of recklessly paying for the trips with credit cards, I would have learned how to responsibly use credit card reward points.

That’s what I do today, even though I’m in a much stronger financial position than I was 10-15 years ago.

For some context, my family of five has settled into a predictable travel pattern for the past five years or so.

We aim to take annual trips to Florida (escape the Chicago winter), Colorado (all the fun things) and California (visit my sister).

Planning these trips well in advance gives me the advantage of strategizing how to pay for them, especially the expensive flights.

The thing is: I can’t remember the last time I paid for any of these flights with cash.

Instead, I use my Chase Sapphire Reserve points.

Why I’m happy I learned how to responsibly use my Sapphire Reserve points.

Redeeming credit card points for travel has been a major factor in allowing me to stay on budget and continue fueling my investments.

Have you heard?

It’s expensive to take a family on vacation.

But, I’m of the mindset that it’s also extremely important and a whole lot of fun.

So, instead of skipping out on travel, I use my credit card points to offset the cost.

Airplane tickets these days can be around $500 per person. By using my credit card points, I easily save $10,000 per year on flights.

Over the past five years, that totals $50,000. That’s enough money to fully fund my son’s future college tuition in his 529 savings plan.

To get all these points, you may be thinking that I must have 10 credit cards and constantly stress about which one to use for every purchase.

Nope.

I have just two credit cards.

Here’s how I do it.

Never spend money on your credit cards just to earn more points.

With all credit cards, the more you spend, the more you earn. That’s true whether you are accumulating points or utilizing shopping or travel credits and other discounts.

Before we go any further, please remember the first rule of responsible credit card usage:

Don’t spend money just to earn rewards. That’s a recipe for financial disaster.

Using the Sapphire Reserve to get free flights is no exception to this rule.

Photo by Nathan Dumlao on Unsplash

To read more about the responsible use of credit cards, check out my series on credit here.

A good place to start is my post on 10 credit card tips for lawyers and professionals.

If you’re currently working hard to pay off credit card debt, you can also check out my top 10 tips for paying off debt on a budget.

If you don’t already have it, now is a great time to consider the Sapphire Reserve.

Chase is currently offering a sign-up bonus of 125,000 points for the Sapphire Reserve, the largest bonus ever offered.

That translates to $2,562.50 in value, according to The Points Guy.

I recently wrote about why I’m keeping the Sapphire Reserve in my wallet, even with the higher annual fee:

Is the New Chase Sapphire Reserve Worth the Annual Fee?

The bottom line is that I will still earn a ton of points each year, not to mention the other benefits, that the Sapphire Reserve will remain the primary card in my wallet.

Check out my post to learn how I evaluate credit cards and how I came to the no-doubt conclusion that the Sapphire Reserve is still worth it for me.

Is there value in keeping both your Sapphire Reserve accounts open?

After I wrote that post, a number of readers (with spouses, partners, kids, etc.) reached out asking if there is value in keeping separate Sapphire Reserve accounts.

It was such a good question that I wrote a full post addressing it:

Is There Value in Keeping Both of Our Sapphire Reserves?

The short answer is that my wife and I each had Sapphire Reserve cards before we got married. We eventually closed one of the accounts and kept the other one open.

Today, we still each have a physical Sapphire Reserve card through the “authorized user” option on just the one account.

Keeping just one account between the two of us saves a bit of money, but more importantly, keeps things much easier for us.

As I mentioned, I value simplicity right now.

I recommend most couples with two accounts do the same.

Nonetheless, there may be valid reasons why you would want to keep both accounts open.

For my complete thoughts, and the reasons why you might want to keep both Sapphire Reserve accounts open, check out my post here.

I have two credit cards in my wallet: the Sapphire Reserve and the Freedom Unlimited.

At this stage in my financial life, I value simplicity as much as anything else.

That’s why I only use two credit cards.

I use the Sapphire Reserve for travel (4 points per dollar spent on airlines and hotels) and dining (3 points per dollar).

Then, I use the Freedom Unlimited for everything else.

The Freedom Unlimited earns 1.5 points across the board for every purchase. In contrast, the Sapphire Reserve only earns 1 point per dollar spent in non-bonus categories.

Same as me, my wife only carries the Sapphire Reserve and Freedom Unlimited. That means we can combine points to maximize our rewards.

Together, we have a simple approach and still earn plenty of points.

Now, let’s talk about whey the Sapphire Reserve and the Freedom Unlimited are the perfect combination for your wallet.

Why it’s a great strategy to have the Freedom Unlimited and the Sapphire Reserve.

If you have the Sapphire Reserve, the Freedom Unlimited is the natural companion for your wallet. These two cards work extremely well together to maximize travel rewards.

Here’s why.

As mentioned above, the Freedom Unlimited earns 1.5 points across the board for every purchase. For that reason, this is my default card for just about all spending other than travel and dining.

But, there’s a catch.

If you only have the Freedom Unlimited, the points you earn must be redeemed as cash back or through the Chase travel/shopping portals.

As a rule of thumb, cash back rewards like this are not as valuable as transferring your points to a travel partner.

Let’s emphasize that point for a moment: the best use of your credit cards points is almost always to transfer those points to a travel partner.

This is true for Chase, American Express and any other credit card that offers point transfers.

But, we just said that you cannot transfer your Freedom Unlimited points to travel partners.

That’s where the Sapphire Reserve comes in.

Photo by Alexander Schimmeck on Unsplash

You can combine your Freedom Unlimited points with your Sapphire Reserve points.

If you have the Freedom Unlimited and the Sapphire Reserve, you can combine your points.

This is the key to the whole strategy.

With the Sapphire Reserve, you earn Ultimate Rewards points. You can transfer Ultimate Rewards points to certain travel partners, like United. Each point translates into one United mile.

Then, you can use those United miles to book airfare directly through United’s website.

This is my preferred method for getting maximum value out of my credit card points.

To recap the strategy:
1. Use your Freedom Unlimited for all spending other than travel and dining.
2. Combine your Freedom Unlimited points with your Sapphire Reserve Ultimate Reward points.
3. Transfer your Sapphire Reserve points to a travel partner of your choosing, like United.
And, that’s all there is to it.

One final note: Make sure to send your Freedom Unlimited points to your Sapphire Reserve account, and not the other way around.

As soon as I have enough Sapphire Reserve points, I transfer them to United and book a flight.

I’ve found that the best use of my points is to transfer them to United for free flights. There are other options for travel partners, but with flights being so expensive, this is the best use for me.

To take it a step further, my personal strategy is to purchase flights as soon as I have enough points.

That’s because points tend to be worth less as time goes on.

For example, a roundtrip ticket that costs you 30,000 points today might cost you 35,000 points the next time you look. You can think of it the same way you think of inflation reducing the purchasing power of your cash.

Just last week I transferred my Sapphire Reserve points to my United account to purchase flights to visit my sister in California.

Once I build up my point balance again, I’ll look to book another flight.

My brother-in-law is getting married in Arizona next year. I’ll probably book those flights next.

Do you use your Sapphire Reserve points for free flights?

Now you know exactly how I use my Sapphire Reserve, combined with my Freedom Unlimited, to get free flights.

With just these two credit cards, I’ve been able to pay for all of my family’s flights for the past five years.

It takes a little bit of effort to maximize your credit card rewards, but the payoff can be well worth it.

With the money I save on travel every year, I have a better chance of staying on budget and hitting my investment goals.

That’s a win-win situation.

Do you have the Sapphire Reserve? What about the Freedom Unlimited?

How do you use your points?

What are your favorite redemption options?

Let us know in the comments below.
September 12, 2025
Is the New Chase Sapphire Reserve Worth the Annual Fee?

Disclosure: This page contains affiliate links, meaning I receive a commission if you decide to apply using my links, but at no additional cost to you. Please read my Disclosure for more information.

Making big waves in the credit card world, Chase just announced a major overhaul to its popular luxury credit card, the Sapphire Reserve.

Think and Talk Money readers know that I only have two credit cards in my wallet: the Sapphire Reserve and the Chase Freedom Unlimited.

Since the announcement of the changes to the Sapphire Reserve, I’ve received a number of questions about whether I’m keeping my card.

To be fair, all the changes are a bit complicated to sort through.

Along with a revamped points structure, the card offers new travel perks and a variety of spending credits.

However, it’s not the changes to the earning potential or redemption options that’s prompting all the questions.

What is the change to the Sapphire Reserve that’s driving most of the questions?

The Sapphire Reserve now comes with an annual fee of $795 (up from $550). That is the highest annual fee in the luxury credit card market.

On top of that, the fee for authorized users is increasing from $75 to $195.

Ouch.

Offsetting some of that pain for new cardmembers , Chase is currently offering a sign-up bonus of 125,000 points, the largest bonus ever offered.

That translates to $2,562.50 in value, according to The Points Guy.

Even with these increased fees, I am keeping the Sapphire Reserve in my wallet.

Today, I’ll walk you through my thought process as to why I’m keeping the card.

I’ll show you how I value certain benefits and ignore other potential benefits, mostly because they’re just too complicated or don’t apply to my personal situation.

Whether you are thinking about applying or are a current cardmember, this post will give you the tools to decide for yourself if the Sapphire Reserve is right for you.

Before diving in, let’s start with a little bit of context.

I used to have 10 different credit cards to maximize points.

There was a time in my life when I had 10 different credit cards because I wanted to maximize the points I earned on every purchase.

I had airline branded cards, hotel branded cards, and general travel rewards cards. I had credit cards with Chase, American Express, and CitiBank.

My wallet was thicker than my Chicago accent.

I did earn a lot of points. But, it was so stressful.

Keeping track of what card to use for every single purchase was complicated. Making sure I paid off each card every month was even harder. In the end, it wasn’t worth it.

Photo by rupixen on Unsplash

I now keep things simple and recommend people do the same. The exception would be if you enjoy the challenge of maximizing every credit card purchase and perk.

How do I keep my credit card life simple?

I use the Sapphire Reserve for travel and dining and the Freedom Unlimited for everything else.

Same as me, my wife only carries the Sapphire Reserve and Freedom Unlimited. This way, we can combine points to maximize our rewards.

Together, we still earn plenty of points and our finances are much simpler.

Before we go any further, to read more about the responsible use of credit cards, check out my series on credit here. A good place to start is my post with 10 credit card tips for lawyers and professionals.

The Sapphire Reserve’s benefits are geared towards high spenders and frequent travelers.

In its press release announcing the revamped card, Chase advertised $2,700 in annual value for cardmembers.

Compared to an annual fee of $795, that sounds like a whole lot of value.

For a complete description of all of the potential benefits, you can visit the Sapphire Reserve website.

The problem is it takes effort to receive all that value.

More than effort, it takes spending!

With all credit cards, the more you spend, the more you earn. That’s true whether you are accumulating points or utilizing shopping or travel credits and other discounts.

This is a good place to remind you of the first rule of responsible credit card usage:

Don’t spend money just to earn rewards. That’s a recipe for financial disaster.

The Sapphire Reserve is no exception to this rule.

In general, if you are a high spender and/or frequent traveler, the card likely offers more than enough benefits to make it valuable to you.

If you aren’t a high spender and/or frequent traveler, you may end up paying more than the card is worth.

Here are the Sapphire Reserve benefits that actually matter to me.

Today, I want to highlight the benefits of the Sapphire Reserve that matter most to me. The reality is that so many of the offered benefits don’t apply to my situation or are too complicated to use.

You may find value in some of the benefits that don’t matter to me. Regardless, you can go through the same thought process to determine if the Sapphire Reserve is right for you.

To begin, the Sapphire Reserve will cost my wife and I $990 per year in annual fees. To justify that cost, I’m looking for benefits that equal at least that much.

There are 3 annual credits that matter for my personal situation.

Not all of the offered credits are useful to me. Here are the three that matter for my personal situation:

1. $300 Annual Travel Credit

Each year, cardmembers earn $300 in credits for travel purchases. These credits are automatically applied when you make a qualifying travel purchase, which is broadly defined.

Put simply, the annual travel credit is not hard to earn. If you book even one flight throughout the year, you’ll qualify.

Applying the annual travel credit, the overall cost drops to $690 per year.

2. $125 credit for Apple TV+

I already subscribe to Apple TV+, so this one is a no-brainer.

I don’t currently have Apple Music, but there’s an additional $125 credit available for this subscription. Because I’m keeping my Sapphire Reserve either way, I’ll probably subscribe to Apple Music, too.

Important Note: if you’re not already spending money on Apple TV+ or Apple Music, I would not recommend using this benefit as a justification for offsetting the annual fee.

Remember the cardinal rule: never spend more money just to qualify for a benefit. Since I’m already a subscriber, this is a good benefit for me.

Applying the Apple TV+ credit, the overall cost drops to $565 per year.

3. $10 monthly credit for Peloton memberships

Like Apple TV+, I already pay for a Peloton membership. This one’s another no-brainer.

Applying the Peloton credit, the overall cost drops to $445 per year.

In total, these three credits reduce the true cost of the Sapphire Reserve for me to $445.

Cutting the true cost in half definitely helps me feel better about the initial sticker shock of the $990 annual fee.

Importantly, I do not have to change my spending habits in any way to qualify for the credits. I would be paying for these things regardless of the credits, so these are true benefits for me.

Here are some of the credits that I won’t ever use.

In contrast to the above credits, there are some other credits offered that are either too complicated or that I won’t really use.

Don’t overlook this distinction. You never want to justify having a credit card because of hypothetical perks. Only focus on the ones you’ll use.

For example, Chase advertises $300 in DoorDash promos. Here’s the offer:

DashPass members get up to $25 each month to spend on DoorDash, which includes a $5 monthly promo to spend on restaurant orders and two $10 promos each month to save on groceries, retail orders, and more.

Uh, come again?

I think what this means is I can save $5 once per month on a restaurant delivery. Then, I can spend more money on two other deliveries per month (but not for food), and save $10 each time.

Did I get that right?

This is way too complicated. I’m ignoring this credit for my analysis.

If I regularly used DoorDash, this might be a different story. Because I don’t use DoorDash, and the credit is so complicated, this one is meaningless to me.

Photo by Jon Tyson on Unsplash

There are other credits like this one attached to the card that don’t do anything for me.

Other examples include credits for dining through the Sapphire Reserve Exclusive Tables and credit for stays with The Edit. In all likelihood, I won’t ever take advantage of these credits.

When reviewing the offered credits, you should do the same analysis and only count what you’ll actually use.

If you won’t currently use the credit, don’t force yourself to use it to justify the cost of the card.

I also don’t put much weight on travel benefits like lounge access and hotel status.

The Sapphire Reserve offers access to 1,300+ airport lounges worldwide through Priority Pass, plus access to Chase Sapphire Lounges.

The Chase Sapphire lounges admittedly look awesome. The problem is there is not a lounge at my primary airport, Chicago O’Hare.

There also isn’t a lounge at any airports I regularly fly to. I likely will get very little benefit from these lounges, unless one opens at O’Hare.

The same goes for the lounges offered through the Priority Pass program. I’ve found this to be a great benefit when traveling internationally but not very useful when traveling domestically.

If you are a frequent traveler and would take advantage of all these lounges, this is a major perk of the card. Personally, lounge access doesn’t do much for me.

The same goes for hotel status through IHG simply because I don’t typically stay at IHG branded hotels.

In short, these benefits may be meaningful to you but don’t provide much in terms of value for me.

If anything, I view them as a bonus. Maybe I’ll take advantage of these travel benefits a couple of times throughout the year, and that would be great.

But, they’re not a factor in my current decision to keep the card.

I am keeping my Sapphire Reserve because I will earn significantly more than $445 in points value.

By this point in my analysis, I’ve reduced the fee as much as possible for my situation. Instead of the sticker shock of $990, the real cost is $445 per year.

Now, I need to decide if I will earn enough points to justify the $445 cost of the card.

It is easier than you think to calculate how much value you’re getting in points.

I like The Points Guy for determining the value of credit card points. While it’s not an exact science, The Points Guy calculates the value of each credit card company’s points and miles every month.

The Points Guy currently values Chase Ultimate Rewards points at 2.05 cents/point. For comparison, American Express Membership Rewards are valued at 2 cents/point.

Meaningful to me, the new Sapphire Reserve offers 4 points per dollar spent on airfare and hotels. It also offers 3 points per dollar spent at restaurants. Finally, you’ll earn 1 point per dollar on everything else.

In my situation, I want to know if I will earn enough points to justify the $445 annual cost. This will require some basic math.

Here’s what the math looks like:

1 point = 2.05 cents.

$445 annual cost x 100 cents = 44,500 cents.

44,500 cents / 2.05 cents per point = 21,707 points.

So, I need to earn 21,707 points to justify keeping the card.

Now, I need to figure out how much I spend each year.

It’s easy to determine how much you spend each year.

The next step is to open your Chase app and look to see how much you normally spend in each category. This is very easy to do.

Chase, like most credit cards today, automatically categorizes your spending for you. Look for the “Spending Planner” option in your app.

Once there, you can find out exactly how much you spent on categories like travel, food, and everything else.

I recommend reviewing your spending for all of last year and so far this year. Then, you just need to do some quick math.

In my case, I use my Sapphire Reserve primarily for travel and dining out, so almost every dollar I spend earns 3 or 4 points.

I can see on the Chase app that I spend thousands of dollars in each category per year. That’s more than enough spending to earn 21,707 points.

In other words, my current spending levels make it an easy decision for me to keep the card.

To put it in perspective, if I spend $5,426.75 per year on flights and hotels, that alone would generate enough points to cover the cost of the card.

5,426.75 x 4 = 21,707 points

Or, if I spend $7,235.67 on dining, I would earn 21,707 points, enough to cover the cost of the card.

In reality, I spend in both categories so neither one has to even reach that level of spending.

That’s all there is to it.

You can follow these same steps to determine if the Sapphire Reserve is worth it to you.

If you aren’t getting enough value, consider the Chase Sapphire Preferred.

The Chase Sapphire Preferred is a less expensive version of the Sapphire Reserve with less overall benefits.

I had the Sapphire Preferred for years before my spending justified switching to the Sapphire Reserve.

You can do the same analysis that we just went through to determine if the Sapphire Preferred is a better card for your personal situation.

Now you can decide if it’s worth applying for or keeping the Sapphire Reserve.

Now you know the exact process I went through when I learned the Sapphire Reserve was undergoing some major changes.

I don’t put much weight on the harder-to-quantify benefits, like lounge access and hotel status, because I don’t have the chance to use those perks very often. If I do get the chance, that’s a nice bonus.

For me, I earn enough points each year to justify the true cost of keeping the Sapphire Reserve in my wallet.

Do you currently have the Sapphire Reserve?

Are you keeping yours or replacing it with something else?

Let us know in the comments below.

June 24, 2025
When to Think Cash Instead of Credit

Do you use credit cards for every purchase?

If you would have asked me this a couple years ago, the answer would have been “100% yes.”

I’ve long been a big fan of using credit cards to earn rewards points and to help track my spending. As long as you pay your credit card bills on-time and in-full every month, credit card rewards can be quite valuable.

The best vacations I’ve ever had were paid for using points instead of cash.

My wife and I have taken some amazing vacations that we would have never gone on if we had to pay in cash.

We used points to fly first class to Florence for our honeymoon. We’ve used points to stay at luxury hotels in Paris, Barcelona, and Santorini that normally charge more than a thousand dollars a night.

When my wife and I were still dating, we went to New York for a wedding. We got out there two nights early, and I used points to book us a room at the Waldorf Astoria. This was back in my real life, really lost boy days when I didn’t have any spare cash for something like this.

My wife and I had a great time at the Waldorf before heading out to Long Island for the wedding.

I may have forgotten to tell my wife that in Long Island, we’d be sharing a room with two (turned out to be three) of my buddies. I didn’t have any points left for this hotel. Oops.

She was a good sport. Not even the surprise ice storm from the groom in the middle of the night bothered her. She was a keeper.

I could go on and on. The point is there was a long period of time where all of our vacations were paid for using points instead of cash.

Subscribe Here to Join our Newsletter!
Please enable JavaScript in your browser to complete this form.
Name
First
Last

Name Email

Email

Using points also helped me stay on budget and build my net worth.

Besides the incredible memories, the other major benefit to using points was that we could save more money every year. We could then use those savings to fuel our Later Money goals, like investing in real estate.

That meant our net worth grew in the background while we were out having these amazing experiences.

I also have long been a fan of using credit cards to help me stay on budget. With credit cards, I can quickly track my spending online during the month to see if I’m on pace for a good month.

If I notice that I’ve overspent, I can slow down my spending to get back on track.

Between the rewards points and the ability to track my spending, I still am a big fan of using credit cards for most everyday purchases.

When used responsibly, meaning paying your credit card bill in full and on-time every month, credit cards can be part of a healthy financial life.

That said, nowadays, I’ve started using cash more frequently.

I’ve started using cash more often these days.

I still use credit cards more than cash, but I’m starting to use cash more often than I used to.

There are a couple main reasons for this.

I use cash for the convenience for smaller transactions.

I now use cash regularly for smaller or quicker transactions, like going to the farmer’s market, grabbing ice cream for the kids, or paying for taxis.

Yes, I still take taxis. I work as a mesothelioma attorney in downtown Chicago near the courthouse. Taxis are plentiful and a lot of times quicker and cheaper than ride share companies.

And, there are ATM’s on just about every corner near my office in Chicago, so it’s not inconvenient to keep cash on hand.

For these types of transactions, I value the convenience of paying with cash more than the small amount of credit card points I would earn.

I also like to pay cash to help out these types of small businesses because they seem to generally prefer being paid in cash. I leave whatever change I’m owed as a tip.

Also, I’m no longer worried about precisely tracking my cash spending in my Budget After Thinking.

Instead, I simply account for a few hundred dollars of spending using cash each month. I generally know what types of things I’m spending cash on, so I don’t worry about tracking each expenditure specifically.

Besides convenience, there’s another reason I use cash more frequently now.

Besides convenience, I’ve started to use cash regularly for another reason.

It’s not that the rewards have changed very much. Or, that I no longer like tracking my spending.

It’s for a different, and somewhat disappointing, reason:

More and more service providers, retailers, and restaurants are charging fees to use credit cards. These fees can be as high as 4% of the purchase price.

These additional fees are sometimes referred to as “surcharges” or “processing fees.”

Be warned, sometimes these fees are cloaked as “discounts for cash payments.” Don’t be fooled. This is just a sneaky way to say you will be penalized for using a credit card.

Why do businesses charge processing fees?

For a little bit of context, credit card companies make money by charging businesses a “merchant fee” or “interchange free” whenever customers pay with a credit card.

Most businesses pay these merchant fees. That’s because there are plenty of incentives for businesses to accept credit cards.

For one, many customers prefer to pay with credit cards, like me. Businesses typically don’t want to lose out on these customers who prefer to pay with credit cards.

For another, businesses are well aware of the fact that people tend to spend more money when using credit cards instead of cash. Obviously, it’s good for business when people spend more.

There are certainly other incentives, as well. The point is that businesses have long paid these merchant fees in exchange for benefits provided by credit card companies.

In recent years, more and more businesses have decided to pass these fees onto customers.

Businesses, especially smaller businesses, commonly point to the past few years of surging inflation for why they need to pass these processing fees onto customers.

Have you also noticed these fees popping up seemingly everywhere these days?

As a consumer, whether we like it or not, these processing fees seem to be sticking around.

So, what can we do about it?

We can choose to use cash instead of credit, or we can choose to not spend our money at that business.

Let’s look at an example to help you make that decision for yourself.

Who really cares about a small processing fee anyways?

A processing fee of 4% may or may not sound like a lot to you.

Let’s look at an example to put some real numbers on it.

Let’s assume you’re going to buy a new TV that costs $1,000.00 (all taxes included) from a reputable store. A 4% processing fee on the purchase of a $1,000.00 TV means adding $40 to the price of that TV.

That TV now costs you $1,040.00 with the processing fee.

That’s a $40 penalty simply for using a credit card instead of cash. That’s a penalty that the next customer paying in cash doesn’t have to pay for the exact same TV.

Keep in mind this is a $40 penalty charged on just this one purchase. Consider all the other purchases you make with a credit card and what those total penalties could add up to.

Since you really shouldn’t be buying that TV unless you have the cash available to pay for it, is there any good reason to willingly pay a $40 penalty?

We’re assuming you’re shopping at a reputable store, so you shouldn’t have to worry about purchase protection.

So, that really leaves only one potential benefit to using a credit card for this purchase.

What about the points you can earn?

Let’s play that out so you can decide for yourself.

Aren’t points worth more than whatever the processing fee is?

Let’s continue our same example of purchasing the TV for $1,000.

Including the 4% fee, the TV costs $1,040.00.

Let’s assume you buy this TV using the Chase Freedom Unlimited, which is the actual card I would use if I were making this purchase.

The Chase Freedom Unlimited offers 1.5 points per dollar spent. That means this TV purchase of $1,040.00 would earn you 1,560 points (1040 x 1.5 =1,560).

Next, let’s look at my favorite website for valuing rewards points, The Points Guy. Currently, The Points Guy values each Chase Ultimate Reward point at 2.05 cents.

So, 1,560 points, valued at 2.05 cents per point, is worth $31.98 ((1,560 x 2.05)/100=31.98).

Now, we can decide if paying the 4% service fee to earn points is worth it.

In this example, by choosing to use your credit card with the $40 processing fee, you’ll earn $31.98 worth of points.

In other words, even accounting for the points you’ll earn, this transaction still costs you an extra $8.02.

Does that sound like a good deal to you?

Personally, I would rather keep the $40 in my bank account instead of earning $31.98 worth of points.

To me, this is not even a close call.

It doesn’t make a lot of sense to trade in a higher amount of cash for a lesser amount of points. Not only are you technically losing money, cash is more flexible than credit card points. You can use cash everywhere.

I don’t think it’s a stretch to say you’d be hard pressed to find anyone who would take $31.98 worth of points instead of $40 in cash.

What if the processing fee was lower?

Even if the processing fee was lower, say 3%, my decision wouldn’t change.

At a 3% fee, the TV would cost $1,030 and you would earn 1,545 points valued at $31.67.

In this scenario, it’s true that the points are worth $1.67 more than the processing fee.

I’d still rather have the cash. I value the flexibility that $30 in cash provides me more than a comparable value in points.

Admittedly, it’s a closer call when the processing fee is 3%. I won’t argue with you if you’d rather go strictly by the math and have the points in this scenario.

Money is emotional, after all, like we saw when choosing to pay down debt using the Debt Snowball method.

I went through this exact process when paying my property taxes recently.

Recently, I went through this exact thought process when paying my property taxes. I had the option to use a credit card and pay a 2.1% convenience fee.

I chose to pay cash, even though the points I would have earned were worth $170 more than the convenience fee.

The math indicated I should have taken the points. Still, I didn’t like the idea of paying another 2.1% on top of my already sky-high property taxes.

Even though I lost out on valuable points, money decisions are emotional. It felt better to not pay the extra 2.1% and to keep that cash in the bank.

Setting aside the math and the value of credit card points, there’s another reason I have started using cash more frequently these days because of processing fees.

These processing fees really bother me on principle.

You may disagree, but I don’t think it’s right for businesses to pass this fee onto customers when businesses do benefit by accepting credit cards.

I especially don’t think it’s fair when businesses spring this fee on a customer when he is standing at the register about to pay.

Maybe it’s just me, but these fees annoy me so much that I won’t go back to a business that passes these fees onto customers.

If it’s a business that I simply can’t live without, and there are very few businesses that reach this level, I’ll pay cash instead of using credit.

I’m not insensitive to the fact that certain businesses are struggling with inflation. If a business is having a hard time staying profitable without charging a 4% fee, I would prefer that it raises its prices by 4% instead of surprising me at the cash register with this extra fee.

At least then, I can make an informed decision ahead of time about whether I want to eat at that restaurant or purchase that item before it’s time to pay.

I know this is a polarizing debate. There are business owners who I’m sure would vehemently disagree with my thoughts on the matter. That’s OK.

Businesses are of course free to choose how to run their businesses. As a consumer, I am free to choose to avoid certain businesses.

Have you noticed this processing fees more often lately?

Where do you come out on paying a processing fee to use a credit card?

Do you want the points or the savings?

Or, do you avoid that business altogether?

Let us know in the comments below.

March 28, 2025