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Credit Card Review: Chase Sapphire Preferred (JPM, COF)

Author: Ethan Smith

The Chase (JPM) Sapphire Preferred card is a great fit for the wallet of a world traveler or culinary aficionado. It enables you to accumulate rewards points that can be redeemed for airline miles, gift cards and merchandise. This card is an especially good fit if you enjoy traveling and eating out; it offers additional benefits when you use it at restaurants and to pay for travel expenses. Foreign travel is made easier with the Chase Sapphire Preferred, which offers many built-in features to make purchasing things abroad cheaper and more secure for cardholders.

The Rewards and Benefits

The most salient benefit of the Chase Sapphire Preferred card is its generous rewards program, which offers its best deals to cardholders who travel and eat at restaurants frequently. When you use your card to pay for these expenses, not only do you accumulate rewards points, you earn them at double the normal rate. You may redeem rewards points for airline miles along with other merchandise, including gift cards.

Another benefit of using your accumulated Chase Sapphire Preferred rewards points to pay for travel expenses, such as airfare, hotel bookings and car rentals, is you receive 20% off the normal cost of these items.

The Chase Sapphire Preferred card has no annual fee for the first year, and its annual percentage rate (APR) is competitive; Chase determines this rate by adding 12.74% to the prime rate. As of 2015, the APR for anyone approved for a Chase Sapphire Preferred card is 15.99%.

You can start accumulating big rewards points quickly the day you receive your Chase Sapphire Preferred card. When you make your first purchase with the card, as long as it is within three months of opening your account, you receive 5,000 points.

Those who travel abroad frequently enjoy the Chase Sapphire Preferred card because they are assessed no fees for foreign transactions.

The Fine Print

Starting the second year, you incur a $95 annual fee to remain an active Chase Sapphire Preferred cardholder. The card's APR adjusts periodically based on the prime rate. The prime rate, and therefore the card's APR, has been historically low for most of the 2010s. An increase in the prime rate, however, means a concomitant increase in the Chase Sapphire Preferred card's APR. The maximum APR for the card, set by Chase, is 29.99%. Therefore, if you tend to carry a balance on your card, watch your statements and keep up with the prime rate closely so you can be aware of any interest rate increases.

Cash advances and overdraft advances have a higher APR than purchases by 9%. Late fees can be anywhere from $15 to $35 depending on your card's balance when the late payment is made.

Main Competitors

The Capital One (COF) Venture card serves as the main competitor to the Chase Sapphire Preferred card. Both cards offer a $0 introductory annual fee for the first year. Beginning the second year, the Venture card's annual fee is lower than the Sapphire Preferred at $59 versus $95.

The rewards program, however, is more robust with the Chase card. While the Venture also offers travel discounts and points that can be redeemed for airline miles and hotel stays, it does not offer the opportunity to receive travel costs at a 20% discount. Additionally, the Venture card's sign-up bonus is worth about 20% less than the corresponding bonus offered by the Sapphire Preferred card.

Who Should Get It

Anyone who enjoys rewards for making everyday purchases and does not mind a small annual fee is a candidate for the Chase Sapphire Preferred, but the card is primarily aimed at those who dine out and travel a lot. These activities are where using the card has the most benefits.

With a flat APR based only on the prime rate and not on the cardholder's creditworthiness, the Chase Sapphire Preferred card may also provide a way to secure a card at a lower interest rate than your current credit cards. Everyone approved for the Chase Sapphire Preferred card receives the same APR.

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