Yesterday I wrote about your options downgrading a Chase Sapphire Reserve Card, and all the factors you should consider when choosing to downgrade or cancel.
One point I did not bring up, that I wished to elaborate more on in a separate post, is picking an optimal time to downgrade if you applied for the Sapphire Reserve before May 21, 2017.
This is because earlier this year, Chase changed the way a very valuable benefit of the Sapphire Reserve works–the $300 travel statement credits.
History of the Sapphire Reserve’s Travel Statement Credit Benefit
The Sapphire Reserve’s most valuable benefit that helps negate the expensive annual fee is the annual travel statement credit. The first $300 of travel related expenses charged on your card are refunded back to you.
When the card was first released, this annual benefit was based on the calendar year, meaning January through December. So if you applied in, say, October of 2016, you got $300 in travel statement credits through 2016 and then in 2017 your statement credits reset and you received another $300 worth. This made it very easy to come out ahead of the $450 annual fee, as you could get $600 back (if you consider travel purchase reimbursement like cash, which personally, I do) before paying a second annual fee. You would net +$150 without even considering all the bonus points and other valuable benefits like lounge access.
In May of this year, Chase decided it was too easy to exploit that benefit and changed the way they defined “annual”–not surprising as they are always the first of the big boys to tighten the purse strings. Instead of basing the benefit on the calendar year, they changed it to cardmember year. This was the exact wording of the new terms from Chase:
$300 Annual Travel Credit: A statement credit will automatically be applied to your account when your card is used for purchases in the travel category, up to an annual maximum accumulation of $300. Annual means the year beginning with your account open date through the first statement date after your account open date anniversary, and the 12 monthly billing cycles after that each year. (For applications submitted before May 21, 2017, annual means the year beginning with your account open date through the first December statement date of that same year, and the 12 billing cycles starting after your December statement date through the following December statement date each year.)
The new terms went into effect for all those that applied on May 21, 2017, and later.
So, if you applied for the Sapphire Reserve by May 20, 2017 you will collect $300 in travel statement credits through December of 2017, and then your $300 travel statement credits resets again in 2018.
If you applied May 21 or later, you will collect $300 in travel statement credits over the course of the first year that you hold your card, as in from the date you’re approved to one year later. The travel statement credit will not reset in 2018.
Taking Chase’s Annual Fee Refund Policy Into Consideration
In the beginning of What You Need to Know if Downgrading or Canceling Your Sapphire Reserve, which I published yesterday, in regards to Chase’s policies on annual fee refunds, I stated…
“…if you choose to downgrade a Chase card 60 days past when your annual fee is charged, you can still get a refund, it will just be pro-rated.”
Considering the way the travel statements are credited for those that applied pre-5/21, and Chase’s policy on pro-rating annual free refunds for downgraders, let’s work through an example.
Let’s say your second annual fee was posted at the beginning of this month (September). You are staring at that annual fee in your online account and you don’t like it–you want to downgrade it and get all the money back. But before you do, think about your travel statement credits.
Your 2018 travel statement credits will become available to you at some point in December of 2017, the day after your December statement closes (just like your 2017 travel statement credits did in December of 2016).
Again, for the sake of this example, let’s say your December statement closes on December 12. On December 13, your 2018 travel statement credits are re-upped and you have $300 of travel money to spend. If you waited until the end of December to downgrade your card, and can plan to spend all $300 of your travel purchases in that window after you receive the credits and before you downgrade, then you can pay four months worth of your pro-rated annual fee (which would be $150) and net $150 because of your travel statement credits.
$300 in travel statement credits – $150 in pro-rated annual fee = $150
If your annual fee is charged even later in this year, you can bank even more from your travel statement credits as you’ll pay less of your pro-rated annual fee.
The key is being able to plan all your travel purchases in that window in December after your 2018 travel statement credits hit, and before the month ends. Of course, you could always just wait another month to downgrade, you’d just have to pay another month of pro-rated annual fee (an additional $37.50). If you opted to do that instead, you’d still net $112.50 ($300 – $187.50).
Not to mention you get to enjoy all the perks of your Sapphire Reserve and maintain any remaining Ultimate Rewards’ value for the rest of the months you keep your card a Reserve.
If you want to downgrade your Chase Sapphire Reserve, and can plan your travel purchases to maximize 2018’s travel statement credits, then wait. There’s more money to be made.
Hat tip Points Yak