It’s great to earn credit card rewards, but the rule has always been that if you’re carrying a balance, you should avoid rewards cards and focus on finding a card with the lowest interest rate. Why? Since most reward cards have a high interest rate, the interest you’ll be forced to pay on your balances will far exceed any rewards you earn.
But what if you pay off your balance most of the time? Or what if you pay it off all the time, but still want to have a backup plan in case you ever run into a cash flow crunch? Is there a credit card that offers the best of both worlds – a low interest rate and great rewards?
Enter the Chase Sapphire and Chase Sapphire Preferred cards, which manage to combine compelling reward programs with an innovative system called Blueprint that can effectively lower your APR.
Key Features
- Ultimate Rewards. Both cards are eligible for Chase’s Ultimate Rewards program, which offers a single point per dollar spent on all purchases, and two points for any dining purchases. You also earn double points for travel purchased through Chase’s Ultimate Rewards booking tools. These points can be redeemed for travel purchases at a rate of one cent per point. The points never expire and there are no limits on how many you can earn.
- Preferred Benefits. The Preferred version takes the program a step further by offering a 20% points bonus on travel booked through Chase. There is also an annual points dividend of 7% of the total points earned during the year. Also, you can transfer points to a few other programs such as Continental, British Airways, Marriott, and Amtrak. Finally, the Preferred card is exempt from foreign transaction fees, which are 3% for the standard Sapphire card.
- Blueprint. The key feature that distinguishes the Sapphire cards from other reward cards are the benefits of Chase’s innovative Blueprint program. This program allows customers to designate some charges as Full Pay and other charges as Split Pay. Full Pay charges are paid off each month and enjoy an interest free grace period, while Split Pay charges incur interest. Blueprint also includes powerful budgeting tools that help you track your purchases by category and pay them off according to a plan you design.
- Rates and Fees. Both cards feature a 15.24% APR on purchases and balance transfers that varies with the Prime Rate. Balance transfers are subject to a 3% fee (or $5, whichever is greater). There is no annual fee on the standard Sapphire card, but the Preferred version has a $95 annual fee that is waived the first year.
- Sign-Up Bonus. The Chase Sapphire Card currently offers a 10,000 point sign-up bonus that is received when you spend $500 in the first three months. The Sapphire Preferred Card offers a 40,000 bonus after spending $3,000 – worth $500 toward travel expenses.
Advantages
- Competitive Rewards. The standard card offers the equivalent of 1% cash back, which is typical of a reward card without an annual fee. The Preferred version increases those rewards slightly with the 7% annual dividend and other bonuses while offering points transfers like those seen in the American Express Starwood Preferred card.
- Access to Blueprint. This card is one of four Chase cards eligible for the Blueprint program which is offered at no cost. This program is the only way to avoid paying interest on all of your purchases when you have the ability to pay some of them in full within your grace period. The result can be an effective APR that is far below what is listed. If you can utilize the budgeting features of the Blueprint system, you also have more tools to help you to pay off your debt as soon as possible.
- No Foreign Transaction Fees on the Preferred Card. If you travel outside the United States, or even make purchases that are processed in other countries, most cards will charge you foreign transaction fees. The Sapphire Preferred is one of a small, but growing number of cards that have eliminated this costly charge.
Disadvantages
- Higher APR. These cards are still reward cards and they will have a higher interest rate than some of the more competitive non-reward cards. 15.24% is not terrible, but if you don’t take advantage of the Blueprint program, you would be better off using a card with a lower interest rate.
- Reward Rate Could Be Higher. 1% cash back is fine for lower spenders who want a card without an annual fee, but other cards can offer higher reward rates. The Venture One card from Capital One, for example, offers an effective 2% in cash back.
- Highest Rewards Through the Chase Booking Tool. In order to get double points on travel, you have to use the Chase website. And although this tool works well, there can still be problems when there is a travel disruption or you need to change your plans. Your hotel, airline, or car rental company may refer you back to Chase in those situations, complicating matters further.
Final Word
In the quest to find the best credit card for the highest rewards and the lowest rates and fees, there will always be compromises. Certainly you can find better reward card offers or banks with 0% promotional APRs on purchases and balance transfers, but the Sapphire cards achieve a middle ground that is more than reasonable.
By combining competitive rewards with flexible payment options, the Chase Sapphire and Chase Sapphire Preferred credit cards appeal to people savvy enough to seek rewards, but realistic enough to know that they may be forced to carry a balance from time to time.
