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The Chase Sapphire Reserve and the Chase Sapphire Preferred Card are two of the most talked-about travel credit cards, thanks to the valuable Ultimate Rewards program, top-notch benefits and valuable travel protections.
You might assume that the Chase Sapphire Reserve — which comes with a higher annual fee and more luxury benefits — is always the better choice. It is the higher-tier card, but that doesn’t mean it’s necessarily the better card for you. With the Chase Sapphire Preferred offering a higher sign-up bonus of 80,000 points after you spend $4,000 in the first three months and travel understandably on the back burner for many cardholders, there are plenty of reasons why it could be the more attractive option for your wallet.
Before we get into the benefits of these two cards, note that you can’t hold the CSP and the CSR at the same time, and you need to wait at least 48 months between earning the sign-up bonus on one card before you can earn it on the other. Also, make sure you don’t bump up against Chase’s infamous 5/24 rule.
Travel coverage and purchase protection
It’s also worth comparing the coverage offered by these two cards for things like travel delays, trip cancellation and purchase protection.
An argument for the Reserve
The Chase Sapphire Reserve is obviously the more premium of the two cards. If you’re a frequent traveler, the Reserve will likely give you more long-term value.
Premium travel benefits
If you’re looking for premium perks, the Reserve is the way to go. You’ll get a $300 travel credit each year with the Reserve, a $100 credit for the TSA PreCheck or Global Entry application fee every four years and a Priority Pass Select membership that gives you entry into airport lounges around the world. Plus, the card just added new benefits.
As part of a new partnership with food delivery service DoorDash, cardholders receive a $60 annual DoorDash credit to use on food delivery each year in 2020 and 2021 and a one-year complimentary subscription to DashPass (which waives the delivery fee at eligible restaurants and discounts service fees on orders of more than $12). Cardholders will also get a free one-year Lyft Pink membership, which includes a 15% discount on all rides and free bike and scooter rentals each month.
While some of these perks can’t be used right now, if you take advantage of these perks later on in 2020 and into 2021, you’ll more than offset the cost of the Sapphire Reserve’s $550 annual fee each year.
Higher earning rates
The Chase Sapphire Reserve has a higher earning rate than the Chase Sapphire Preferred. Those who spend a lot on Lyft, travel and dining will find the added points per dollar on those purchases rewarding. For example, if you know you’ll spend $50 per month on Lyft and $1,000 a month on travel and dining
You can see that there is potentially a huge difference in earnings over the course of a year. Even though TPG values all Ultimate Rewards (no matter which card earns them) at 2 cents each, the Reserve provides $300 more in annual rewards value in the above example. The more you plan to spend in those bonus categories, the bigger the difference in rewards. Let’s say you spend $2,000 a month on travel and dining and the same $50 on Lyft. That would bring your Reserve earnings up to 78,000 points annually ($1,560 in value) versus 51,000 points with the Preferred ($1,020).
Keep in mind, though, that you won’t earn 3x on travel until you have used up your $300 travel credit.
Both cards have received temporary benefits from Chase to help cardholders maximize their cards while travel may not be in everyone’s 2020 plans, and the Chase Sapphire Reserve has understandably gotten higher temporary earning rates as well — 10x on select streaming services (on up to $1,500), 5x at gas stations (on up to $1,500) and 5x on Instacart (up to $3,000) through Sept. 30, 2020.
50% redemption bonus
In addition to a higher earning rate, the Reserve also comes with a higher redemption rate when you book travel through the Chase Ultimate Rewards portal. The Chase Sapphire Reserve allows you to redeem each point at 1.5 cents each, compared to 1.25 cents each with the Preferred.
I don’t typically suggest booking hotels through a third-party portal unless you find a great deal, because you typically won’t earn hotel points, elite credits or have your elite status recognized (though that isn’t always the case). But if you are regularly booking airfare through the portal, it’s worth having the Reserve for the higher redemption rate. A $600 plane ticket will cost you 48,000 points with the Preferred but only 40,000 points with the Reserve.
Through Sept. 30, this 50% redemption bonus also extends to grocery stores, home improvement stores and dining establishment purchases that can be erased through Chase’s new Pay Yourself Back feature.
Better trip insurance coverage
With more cards cutting trip insurance, premium coverage is harder to come by. Both the Preferred and the Reserve offer a great selection of travel insurance benefits but you get better coverage with the Reserve — almost double the coverage amount on some benefits like travel accident insurance and purchase protection. On its own, this may not be a reason to choose the Reserve over the Preferred, but when combined with the other additional benefits the Reserve offers, it could be a deciding factor.
An argument for choosing the Preferred
The Chase Sapphire Preferred can’t compete with the Reserve when it comes to perks such as the annual travel credit and the return on bonus-category spending, but this card still could make more sense for you.
Lower annual fee
The first advantage of the Sapphire Preferred is the most obvious: a significantly lower annual fee. The Sapphire Reserve costs $550 per year while the Preferred costs only $95. Of course, it’s worth keeping in mind that the Sapphire Reserve offers a $300 annual travel credit, which effectively lowers the cost to just $250 per year — a $155 premium over the Sapphire Preferred.
If you’ll be spending at least $300 on travel in a year anyway, it could be worth paying more for the Reserve. If that fee doesn’t seem manageable, the Sapphire Preferred Card is a very worthwhile alternative. In fact, I’ve held off on upgrading my own Chase Sapphire Preferred to the Chase Sapphire Reserve this year in light of the coronavirus pandemic and my limited travel spending in 2020.
The Preferred’s elevated sign-up bonus
The Chase Sapphire Preferred currently wins out over the Chase Sapphire Reserve by offering a higher sign-up bonus. Right now, you’ll earn 80,000 points after you spend $4,000 in the first three months. TPG values Ultimate Rewards points at 2 cents each, meaning this bonus is worth up to $1,600. By comparison, the Reserve is offering 50,000 points after you hit $4,000 in spend within the first three months, which is worth only $1,000.
Here’s the caveat: you can only receive one bonus from a Chase Sapphire card within 48 months, which means you need to choose carefully. The additional $600 in value you’ll get with the Preferred’s sign-up bonus is a compelling reason to apply for it over the Reserve. If you decide that you would get more value with the Reserve card’s features, you can always request an upgrade later down the line.
Same access to Ultimate Rewards transfer partners
Even though it doesn’t offer all the same premium benefits, the Sapphire Preferred Card offers identical transfer benefits to the Reserve card. No matter which card you choose, you’ll be able to move your Ultimate Rewards points (earned both through the sign-up bonus and through spending) to the program’s airline and hotel partners at a 1:1 ratio. Chase’s airline partners give you access to all three of the top alliances (Oneworld, Star Alliance and SkyTeam), so you’ll have a strong variety of options for putting your points to use.
The two cards do, however, differ when it comes to redeeming points through the Chase Ultimate Rewards travel portal. With the Preferred, you’ll get 1.25 cents in value per point, while with the Reserve you’ll get a higher value of 1.5 cents per point.
Check out our guide on maximizing Chase’s transfer partners
You still get primary rental car insurance
Long before Chase introduced the Sapphire Reserve, award travelers sang the praises of the Sapphire Preferred card’s auto collision damage waiver (CDW) benefit. This perk provides reimbursement for damage as a result of collision or theft for rentals of 31 days or less when you decline the rental agency’s CDW. If you’re eligible, you’ll be reimbursed up to the actual cash value of most rental vehicles.
With the Chase Sapphire Reserve, the terms and conditions actually cap reimbursement at $75,000. (It’s unlikely you’d need more reimbursement from either card, since most rental cars are worth far less.) It’s worth noting that the Preferred’s coverage excludes “expensive, exotic and antique automobiles.”
No authorized user fee
There are various reasons to consider an authorized user. You could be looking to help someone build up his or her credit history; you might want to provide employees with cards for a business account or maybe you’re looking to earn bonus rewards for adding additional users. With the Preferred, there’s no cost to add additional users. With the Reserve card, on the other hand, it costs $75 per year for each authorized user (most likely because each gets his or her own Priority Pass Select membership for airport lounge access).
Easier to get approved
A final reason to consider the Sapphire Preferred Card over the Sapphire Reserve Card is that it could be easier to be approved for the Preferred. As an ultra-premium card, the Reserve requires a top-notch credit score. You’ll still need a solid score for the Sapphire Preferred (typically somewhere in the high 600s to the 700s), but you might have an easier time getting approved for that card if your score is on the low end of the optimal range.
The Chase Sapphire Preferred Card has long been a TPG favorite. When the Reserve launched, however, it quickly became a go-to for luxury perks such as a Priority Pass Select membership and the annual $300 travel credit. You really can’t go wrong with either card; each has a lot to offer both beginners and veterans in the points-and-miles game.
If you’re looking at applying for one or the other right now, it’s important to consider the Chase Sapphire Preferred‘s elevated sign-up bonus. It’s worth hundreds of dollars more without the Reserve’s $550 annual fee. You can always request an upgrade later on if you decide the Reserve will better serve your travel needs.
Apply here for the Chase Sapphire Preferred Card with a 80,000-point sign-up bonus.
Featured photo John Gribben for The Points Guy.
Original Source: androidcentral.com
Launched in 2012, YourStory's Book Review section features over 250 titles on creativity, innovation, entrepreneurship, and digital transformation. See also our related columns The Turning Point, Techie Tuesdays, and Storybites.
Transformations in the worlds of money and technology are converging, as described in the book by Sanjay Phadke, Fintech Future: The Digital DNA of Finance.
The material is spread across 17 chapters, and makes for an informative read for beginners new to this field. However, the choice of font could do with considerable improvement, and there are several typos; more figures would have been a welcome addition to improve readability as well.
Sanjay Phadke is the Head of Global Platforms and Alliances at Vayana Network. He describes himself as a “tinkerer (almost) and teacher (hopefully)”. He graduated from Jamnalal Bajaj Institute of Management Studies and Sardar Patel College Of Engineering.
Here are my takeaways from the 190-page book, summarised as well in Table 1. See also my reviews of the related books Prediction Machines; Seeing Digital; A Human's Guide to Machine Intelligence; Machine, Platform, Crowd; and The AI Advantage.
Table 1: Fintech transformations (image credit: YourStory)
Evolution of money
The invention of language and money are key contributions to the evolution of society, Sanjay begins. Money acts as a bridge from past to present and future. It is a form of payment and trust, and even a way to acquire more money through financial investment.
Money is a means of exchange and way of comparing the worth of different assets and services. It has deterministic, probabilistic, and even emotional connotations. Evolving from shells to coins and banknotes, currency and its governance are being transformed in the digital era.
While coins did not need numbering, banknotes do. Banknotes today account for only five percent of monies globally, Sanjay explains; the rest is stored in digital or ‘dematerialised’ form.
“Digital money is data,” the author observes, it is a string of characters, and does not derive trust from its physical form any more. New risks arise, of course. “No digital property can be guaranteed to be foolproof from digital theft,” he cautions.
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Banks, big tech giants, and fintech startups are the three categories of players in today’s financial scenario, Sanjay explains. The industry is tightly regulated, so governments and exchanges play a key role as well.
There are significant differences in the mindset and operations of banks and tech-led firms. Tech DNA is about rapid change, agile development, and learning quickly from mistakes to develop easy-to-use offerings. Bank DNA is about being cautious, paranoid, careful in experimentation, and slow change.
One chapter traces the evolution of the “finscape” in the US, China, and India. The US already had a mature system in place in the pre-digital era, with social security numbers, credit cards, and credit bureaus. “China and India, in contrast, had vastly underdeveloped ecosystems,” Sanjay observes.
The US tech players have now set high expectations for engagement among the younger generation of mobile-connected always-on users around the world. “Silicon Valley is coming,” in the words of Jamie Dimon, CEO of JP Morgan.
The market value of US tech giants like Apple and Amazon is around half of India’s GDP, and they are entering the world of finance along with Google and Facebook as well, Sanjay explains.
Mobile payments and digital-only banks are some forms of Fintech 1.0, Sanjay explains. Alibaba’s Ant Financial set up MyBank as a digital-only bank to offer loans to small businesses in just minutes. It draws on transactional and social media data, fed into AI scoring models.
Neo-banks do not have a banking license but partner with banks to offer banking services. Some existing banks have also rolled out their own digital-only banks, such as Fidor by JPMorgan Chase and Kotak’s 811.
Payment via QR codes has accelerated mobile payments even more. IoT and the emergence of 5G will speed up the momentum further. IoT sensors in vehicles are being used by automobile insurance firms; voice-based assistants and face-recognition technologies are other trends to watch in fintech.
Paypal was one of the first “native-Internet” fintechs. Microsoft is more likely to be a collaborator with banks than a competitor. Softbank is another player to watch, thanks to its investments in fintech startups, the author writes. Fintechs in other countries include Adyen (Netherlands) and Klarna (Sweden).
China has a highly-innovative landscape at scale, as seen in Alibaba’s Alipay, Yue Bao (money-market fund), and Sesame Credit (social credit rating). Ant Financial is the first of the “super fintechs," according to Sanjay. (See also my reviews of the related books Tech Titans of China, China's Mobile Economy, and AliBaba.)
There are new active players in wealth management, consumer loans and insurance. Alibaba also expanded into finance for logistics services, a move copied by other players around the world. Thanks to not having legacy baggage, China has created a “futuristic fintech ecosystem,” Sanjay explains. However, it is siloed into the BAT trio worlds.
India has emerged as a laboratory for global big-tech players, along with local firms like HDFC Bank and Bajaj Finance. Among startups, the book focuses largely on Paytm and not the broader spectrum of players. Paytm’s fortunes were boosted by events like demonetisation, and also received India’s first investment by Warren Buffet.
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The world is awash with money, yet few get loans, the author laments. Cautious banks need collaterals, guarantors, or credit history data based on past records. Unfortunately, the aspirational needs of low-income or poor people cannot be fulfilled in such a system, even though India has 120,000 bank branches – the highest number in the world.
“The poor pay the highest for a loan and gets next to nothing on deposits,” Sanjay observes. Even remittances of foreign labourers are charged relatively high service fees.
Frauds and false identities have plagued the banking system. Digital transformation can help in this regard, but there are also risks regarding theft of data, money and reputation, the author cautions.
India’s larger fintech moves have been cautious and led largely by the government, as seen by inter-connected developments in the B2C and B2B sectors like biometric UID, UPI (Unified Payment Interface), and GST. The author identifies other developments as well, such as DEPA (Data Empowerment and Protection Architecture), PCR (Public Credit Registry), and AA (Account Aggregator).
Aadhaar helped Jio acquire a million customers a day, and reduced activation times. Jio is forging alliances with a range of tech giants, Sanjay observes. Digital technology and finance innovations helped spur the Chinese economy and created a vast pool of SMEs; it is hoped that a similar boom can take place in India as well.
The API architecture is spurring a range of innovations on top of existing digital infrastructure, driven by the talent of entrepreneurs. Hopefully, these combined developments can make access to capital easier and more automated, given the rapid growth of data communications in India.
The success of emerging economies like India depends on democratising access to capital as raw material for the needy, the author emphasises.
InCred acquires Vishuddha Capital, to foray into asset management
The author charts a range of technologies in the next wave of fintech, clustered as the new ABC: AI, algorithms, autonomous operation; big data, blockchain, bitcoin; and cloud, crypto, cybersecurity. Other trends to watch are quantum computing, which can also pose risks to security via the ability to crack codes.
Continuous feeds of data and powerful algorithms can improve automation and robustness of financial processes at scale. For example, they can improve assessment of ability and willingness to pay by better understanding social psychology (though overcoming bias will be a challenge). Spotting anomalies and outliers can improve fraud detection defences.
Bitcoin regulations vary around the world, but some blockchain features are being implemented. Hybrid systems may emerge in such a context, the author observes.
Platformisation combined with AI is a powerful combination. But countries have adopted varying positions on cloud infrastructure and data sovereignty as well (eg. EU’s GDPR), and trade wars have triggered off new moves in geopolitics.
If all goes well, however, the dream of making financial security and prosperity for all can become a reality when arteries of finance become unclogged, the author sums up. Innovation, agility and scale can be enhanced through financial ecosystem partnerships and progressive regulation.
Edited by Kanishk Singh
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Original Source: yourstory.com