Don’t Downgrade Your Chase Sapphire Reserve. Not Yet, Anyway.

By | August 22, 2017

One year ago, Chase introduced the Sapphire Reserve to it’s stable of credit cards. It carries a hefty $450 annual fee, but it also offers a myriad of travel benefits that offset that fee. These include an annual $300 travel credit, complimentary Priority Pass airport lounge access, and Global Entry/TSA Pre✓ credit.

If you applied for the Sapphire Reserve when it first came out, you are facing a decision as the $450 annual fee charges to your account. Many of you will keep the card citing it’s premium features. Some of you will make the mistake of canceling. Others plan to downgrade (the official term is product change) to a no-annual-fee Chase card like Freedom or Freedom Unlimited.

If you intend to cancel your Sapphire Reserve entirely, I suggest you reconsider. The strategy I lay out below won’t work if you cancel. Downgrading to a free card is a better option for a number of reasons. And you can always cancel the free card later if you insist.

If you’re thinking of downgrading now, to avoid paying the annual fee, DON’T. Not yet, anyway. I’ll explain why, but first some background.

Chase Annual Fee Refund Policy

The first requirement of this exercise is to understand that Chase has two different annual fee refund policies. One for when you cancel your card and a far more generous one for when you request a product change to a different Chase card.

Chase’s policy for cancellations: Once the annual fee hits your account, you have 30 days to cancel for a full refund. After 30 days, no refunds–period. This new, tighter policy went into effect in 2016.

Chase’s policy for product changes: Once the annual fee hits your account, you have 60 days to downgrade to a no-annual-fee card and get a full refund. However after 60 days,  a pro-rated portion of the fee will still be refunded to you. Unlike their cancellation policy, this was left unchanged in 2016 and remains the policy today.

For example: If you downgrade your Sapphire Reserve 6 months (half a year) after your annual fee, Chase will refund $225 (half of $450) of that fee to you as a statement credit–automatically. On the other hand, if you cancel after 6 months, you get nothing! Product Changing is better than Canceling!

Sapphire Reserve Annual Travel Credit

The second piece piece this puzzle is the annual $300 Travel Credit, which is easily the most lucrative benefit of the Chase Sapphire Reserve card. With this simple-to-use benefit, a credit is automatically applied to your first $300 in travel expenditures each year. If you applied for the card before May 21, 2017, your $300 resets in December. Any travel charges that post AFTER your December statement date will count towards next year’s credit.

NOTE: If you applied for Sapphire Reserve on or after May 21, 2017, then your travel credit resets around your approval anniversary.

So, When Should You Downgrade Sapphire Reserve?

Now that you understand Chase’s annual fee refund policies and the travel credit, we can move on with an example.

Let’s say your annual fee is scheduled to hit your account on October 1, 2017. If you’re still reading, this will be true for many of you. Let’s also say that your statements post on the 10th of each month. Therefore, your 2018 travel credit becomes available on December 11, 2017.

If you downgrade as soon as the annual fee posts in October, the charge will be fully refunded and you won’t have to pay it. But what if you go ahead and pay the $450 annual fee when it’s due, and wait to downgrade until the end of December?  You’ll have a window of opportunity to use your 2018 travel credit AND still get a large pro-rated portion of the annual fee that you paid refunded to you.

Lets do the math. You pay $450 on October 1 and downgrade by the end of December. This means you use only 3 months worth of your annual fee (October, November, December). That’s 25% of the year. The unused 75% of the annual fee that you already paid will be refunded to you–that’s $337.50. You’re net dollars out of pocket for the Annual Fee is only $112.50 ($450 – $337.50).

However, recall that your travel credit resets on December 11. With a little planning, you can get your entire $300 2018 credit before you downgrade your card at the end of December, 2017. For waiting, and ultimately paying only a portion of your annual fee, you get the FULL 2018 travel credit! That $300 credit only cost you $112.50 AND you enjoyed the benefits of the card for 3 additional months!

For those of you who’s annual fees post September 1, if you downgrade by the end of December, you’ll get 2/3 of your annual fee ($300) refunded. You’ll get the full 2018 travel credit and 4 extra months of card benefits for only $150!

Bottom Line

If you can quickly monetize your entire 2018 travel credit before the end of December 2017, it makes sense to hold off on downgrading Sapphire Reserve until then. The $300 credit you receive will more than offset the pro-rated portion of the annual fee that you pay.

If you like the information in this article, please consider supporting this blog by shopping with my Amazon Referral link.

29 thoughts on “Don’t Downgrade Your Chase Sapphire Reserve. Not Yet, Anyway.

  1. Traveler

    Hi Yak,
    Thanks for the article. I was approved for the card in August 2016. Got the credit for both 2016-17. My annual fee hit on Sept. 1st 2017. My December statement date is around the 12th of Dec. If I understand this correctly, will my travel credit reset then?
    If so, I may pay the AF and then downgrade after the 2018 credit hits.

    Reply
    1. Yak Post author

      @Traveler, the answer is yes to both questions. Any travel charges that POST after your December statement will appear on your January 2018 statement. This means they are eligible for your 2018 travel credit. If you can monetize the entire $300 and downgrade before the end of December, you should be refunded 2/3 of the annual fee that you pay now. The only risk is that Chase changes their AF refund policy between now and then. Highly doubtful IMO.

      Reply
  2. at

    i just called chase and they said they added a provision that said if you use any part of the travel credit, your refund of annual fee is offset by what you used plus the months you kept the card. i don’t want to chance paying the prorated portion plus the offset of the credit.

    Reply
    1. Yak Post author

      @at, there’s always the risk that the rules change. I’m not sure what to make of what that csr told you–it wouldn’t be the first time they spread mis-information. Time will tell.

      Reply
    2. James Lee

      provision where? There is no mention of such a change in the T&Cs of the credit card agreement.

      Reply
    3. ed

      My wife also said she knew of this. I have a feeling, some will get the travel credit, then cancel hoping for the prorated amount and then will find the travel credit deducted from the prorated amount. Could be a timing issue (travel credit in the same month you cancel). Either way, banks read blogs and learn, so don’t count on anything as iron clad or you could be disappointed. I’m one of those who will be keeping this card because I see further value in it even though the fee is high.

      Reply
  3. Betsy

    Can you downgrade to a fee card like the CSPreferred and get these benefits too, or only the Freedom type no-fee cards?

    Reply
  4. JW

    Great post! Thank you.

    If I change the payment due date to the 1st of the month, will that make the December statement close date to sometime around 12/5? I would like to make the December statement close date as early in the month as possible.

    I seem to recall that Chase usually takes about 5 days to complete the downgrade. Or maybe that was Citi? If Chase does take 5 days, it would be better not to wait until the last minute.

    Reply
    1. Yak Post author

      @JW, yeah in your example it would be either the 4th or 5th. Not a bad idea to change the date.

      Reply
  5. Joe

    Great advice!
    Stupid question time, would downgrading/ product changing to another card count against the 5/24 rule?

    Reply
    1. Yak Post author

      @Joe, not with Chase. It’s the same account after you product change.

      Reply
      1. JW

        If I product change CSR to Freedom, would I be able to apply for a new Freedom a few months later and still earn the sign up bonus? In other words, will holding a Freedom prevent me from getting the same card again?

        Reply
        1. Yak Post author

          @JW, holding a Freedom would prevent you from being approved for a new Freedom. Product change to something else before you’re ready to apply. Or apply for the Freedom now, while you still have CSR. You CAN product change your CSR to a 2nd freedom.

          Reply
  6. Nathan

    More stupid questions:
    1) could you downgrade your CSR to a freedom or freedom unlimited if you already have both of those cards?
    2) if so, can you downgrade the CSR to a freedom or freedom unlimited AND upgrade your freedom or freedom unlimited to a CSR card?

    Reply
    1. Yak Post author

      @Nathan
      1) You can downgrade to a 2nd Freedom card which is beneficial if you max out the 5x categories. There’s not really a benefit to having multiple Freedom Unlimiteds.
      2) You can do this if you’ve had the card that you’re UPGRADING for > 1 year. I’m not sure what is gained from this strategy however.

      Reply
  7. Naghan

    @yak
    I was thinking the benefit might be 2 chances at the $300 credit.
    If you use the $300 travel credit, then downgrade for a refund you’d get the refund of $337. And then upgrade a different card to the CSR you might be able to get another $300 travel credit.

    Reply
  8. Nun

    >”Once the annual fee hits your account, you have 30 days to cancel for a full refund.
    >After 30 days, no refunds–period. This new, tighter policy went into effect in 2016.”

    I was told 30 days from statement print date for Chase Ink Bold, not 30 days from the fee posting. I would think CSR is the same.

    Reply
    1. Yak Post author

      @Nun, I’ve seen reports of others being told the same thing for various Chase cards and I agree that it *should* be true. I’ve also seen enough data points where this isn’t always true. Here’s a recent one:

      https://www.flyertalk.com/forum/28954082-post439.html

      There’s enough doubt in my mind that I’ll continue to recommend 30 days from AF posting.

      Reply
  9. Dave

    I signed up sometime late into November 2016. Based on your post, I could use the 300 2018 travel credit in December of this year and then downgrade in January 2018. Then I would get the whole 450 fee back? Is that correct? Have there been any updates to the terms?

    Reply
    1. Yak Post author

      @Dave, that sounds correct. You probably won’t see your 2nd AF until December 1 so you can downgrade in late January.

      Reply
  10. airgypsy

    HI Yak. I don’t have any of the Freedom cards yet. Does it make sense to downgrade my CSR to no-fee Sapphire, instead of the Freedom (so I can get the Freedom sign up bonus later)? I already have Ink Prfe to transfer out points. Thanks!

    Reply
    1. Yak Post author

      @airgypsy, the no-fee Sapphire would work, particularly if you plan to apply for the Freedom cards later.

      Reply
  11. Kevin

    What happens if you downgrade (PC) the Reserve during the 60 day window after having used the $300 travel credit? Would you be up $300 from the credit AND still get the full $450 refund? or would they cancel the $300 credit during that grace window?

    Reply
    1. Yak Post author

      @Kevin, the premise of this post is to use the $300 credit AND get a full or mostly full $450 annual fee refund. The only way it won’t work is if Chase changes its policy.

      Reply

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