Chase Credit Cards

Changes to Chase Sapphire Preferred – Dropping 7% Points Dividend, but Adding Primary Car Rental Insurance



One of the perks of the Chase Sapphire Preferred card that made it competitive against the the Barclaycard Arrival Plus™ World Elite MasterCard® was its 7% annual dividend on points earned. Historically with the 7% points dividend the Sapphire Preferred card essentially earned 2.14X points per dollar spent on travel and dining. In comparison, the Barclays Arrival Plus earns 2.28% back on all purchases with its 10% mile rebate on miles redeemed for travel.

No More 7% Dividend

From today forward Chase is not longer offering the 7% annual dividend on points earned for new applicants. For existing card holders, the benefit will remain grandfathered in until the end 2015 when it will be dropped as well.

Enhanced Travel Benefits

Other changes to the Chase Sapphire Preferred card include several new travel benefits—primary rental car coverage and increased Trip Cancellation & Interruption Insurance coverage. My best guess is that existing cardholders will start to receive information regarding the benefit changes within the next month or so.

Previously when you paid for a rental car with the Sapphire Preferred card the coverage provided was only secondary to your personal drivers insurance. However, now the card provides primary rental car insurance coverage when you pay for the car rental using your card. Having primary rental car coverage will only cover damage to your rental car, so be sure to look into additional insurance options if you want to be fully covered.

From personal experience I have had to use the primary insurance coverage that came with my Marriott Rewards credit card after a rock fell on my rental car while driving in Montenegro. It did take several months after the incident to get the claim approved, but in the end the damage was fully covered under the coverage provided by my credit card.

An additional change to the Sapphire Preferred card’s benefits includes increased Trip Cancellation & Interruption Insurance coverage. The card used to offer up to $5,000, but now the maximum limit is $10,000. This is a nice perk which when under qualifying circumstances can reimburse you for costs of your trip paid with the card.

Neither of these new perks outweigh the loss of the 7% earned points dividend, but at least there were some minor improvements with the lose of a key card benefit.

How Does the Sapphire Preferred Compare to the Arrival Plus Card Now?

Both cards have no foreign transaction fees. Both cards have an EMV chip. A smaller difference is that the Sapphire Preferred is a Visa, whereas the Arrival Plus is a MasterCard. However, a large scale difference with the earning structure of the card is that the Arrival Plus will now easily out earn the Chase Sapphire Preferred. In fact, the Arrival Plus will earn 0.28X more miles on travel purchases and 1X miles more than the Chase Sapphire on everyday non-bonus category purchases.

Why Chase would remove the one feature that made the Sapphire Preferred card’s earnings comparable to the Arrival’s is questionable. Even the Chase Freedom will get you a 10% bonus on your points earned under the Chase Exclusives program if you have a Chase checking account. If the Sapphire Preferred does in fact drop the 7% dividend the Arrival Plus World MasterCard will easily out earn its closest competitor by 0.28 points per dollar spent. Yes it does earn miles that are essentially redeemed as cash back, but the potential difference in earning rates is substantial.

The 7% does not make or break this card, but it sure adds to the equation when you pick and choose your cards to use on a daily basis and for bonus spending categories. At this point if you have not applied by now for the card it may be best to call into ask a rep if the the 7% dividend will be offered for new applications are sit tight until news is released from Chase.

What’s your take? If the 7% dividend disappears on the Chase Sapphire Preferred will you still consider it a top card?

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4 Comments

  • I just got the email announcing the changes. The 7% dividend ends after 12/31/2015. In addition, after 12/31/2015 you no longer get extra points on travel booked through Ultimate Rewards. It’s going to be harder to justify the $95 annual fee. Discover gives 1% back on everything and 5% on travel/dining sometimes. I needed to spend about $8,500 on dining/travel per year on the Chase card to make up for the annual fee. Now it’s going to be more like $10,000. Chase is going to make it an easy decision for me if someone else offers up a juicy sign-up deal next fall before the annual fee hits.

  • I have heard about the upcoming loss of the 7% bonus, but I haven’t heard about the primary rental car insurance. For those of us grandfathered in with the 7% bonus until 2015, does that mean we don’t get that benefit until after we lose the 7% bonus, or does that start now?

    • Tom, I can’t say for certain, but existing card holders should be notified of the new benefit changes within the next couple months.