How the Chase Sapphire Preferred Card Can Pay for Its Annual Fee 9 Times Over

Credit cards can help foot the cost of traveling. Chase offers a couple of the most popular travel credit cards out there.

The Chase Sapphire Preferred® Card is one of the most generous. Its biggest downside is the $95 annual fee, but the card can quickly pay for its yearly fee seven times over if you take advantage of the sign-up bonus.

Chase Sapphire Preferred: A valuable welcome bonus

For new Chase Sapphire Preferred® Card holders: Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening.

That's over nine times the $95 annual fee when used for travel at Chase's portal -- or more than seven times if you redeem the points for cash. If you can earn that bonus, the card will pay for itself for the first seven years at least. That doesn't include the card's regular points accrual, which you can redeem through Chase or partners. Nor does it include hotel credits or the anniversary bonus.

Chase $50 hotel credits

Chase offers cardholders $50 worth of hotel credit annually. Users can spend these credits booking a hotel through the Chase travel portal.

If you subtract the credits from the annual fee, you're only on the hook for $45 yearly. Factoring in hotel credits, the Chase sign-up bonus pays for its annual fee a whopping 16 times over.

This only applies if you use the credits, though. You can only use them through the Chase portal, which may limit your options.

Chase 10% anniversary bonus

Cardmembers earn bonus points equal to 10% of total purchases made in the previous year. For example, if you earn 50,000 points in year one, you'll earn an additional 5,000 anniversary bonus points in year two.

Let's say you spend $15,000 annually with the card, which is a reasonable amount for frequent travelers. At the end of the year, you'll receive a bonus of 1,500 points (10% of 15,000), which adds more value to the card.

If you value Chase points at $0.0125 each (which is their worth when redeemed through the Chase travel portal), the 1,500 bonus points are worth $18.75. Therefore, your effective annual fee is reduced to $76.25 ($95 minus $18.75). That doesn't include other benefits the card offers.

How to spend enough to pay the annual fee

Let's set aside the welcome bonus, hotel credits, and anniversary reward. You can earn enough points to pay for the annual fee and then some.

You must earn at least 7,500 points to get $95 worth of value. To earn 7,500 points, you must spend one of the following:

• $7,500 on purchases that aren't travel or dining-related
• Less than $7,500 on purchases that are travel or dining-related.
• Some combination of the two.

How many points you earn depends on your spending categories:

• Book travel through Chase: 5 points
• Other travel: 2 points
• Select streaming services: 3 points
• Online groceries (except Target, Walmart, wholesale clubs): 3 points
• Dining: 3 points
• Lyft rides (until March 31, 2025): 5 points
• Other purchases: 1 point

If you spend points outside Chase's travel portal, you will get less bang for your buck, and you may need to spend more to make the card worthwhile.

Frequent travelers benefit the most

Those who benefit most from using the Chase Sapphire Preferred® Card are frequent travelers. If you spend a significant amount on travel, you could rack up rewards fast.

Super-frequent travelers might prefer the Chase Sapphire Reserve® instead. The annual fee is much higher ($550), but so are the spending rewards. If you spend tens of thousands of dollars on travel and dining each year, it might be worth your while.

Travelers with modest needs who spend a few hundred dollars annually are better suited to a no annual fee travel card. When in doubt, check those spending bills. That way, you'll have a better idea of whether paying an annual fee is worth it.