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From today, when you apply for the Chase Sapphire Preferred card you will no longer get a 7% dividend on the points you earn each year.
And if you already have the card, this benefit is ending after 2015. So after you’ve completed your spending for 2015, you’ll get your final 7% dividend in early 2016.
But the Chase Sapphire Preferred is also improving 2 of its benefits.
I’ll give you a suggestion to get a 10% dividend on your Chase Ultimate Rewards points instead of the 7% that’s being phased out with the Chase Sapphire Preferred card.
The End of the 7% Dividend, the Start of Enhanced Travel Benefits
Link: Chase Sapphire Preferred
I’m not happy that 2015 will be my last chance to earn an extra 7% on all the Chase Ultimate Rewards points I’ve earned with the Chase Sapphire Preferred card for the year. But card benefits come and go so it’s up to us to adapt to find the best new deal.
So while new applicants to the Chase Sapphire Preferred will not get the 7% dividend and current cardholders will see this perk expire at the end of 2015, there are 2 new benefits being added today. These may not quite make up for losing the 7% dividend, but they are better than nothing!
Note: Chase is rolling out these changes over the next 2 weeks so if you call or visit a branch, folks might not be up-to-date just yet. So please be polite and patient.
Primary Coverage for Auto Rental Collision Damage
When you pay for your rental car with the Chase Sapphire Preferred card, Auto Rental Collision Damage Waiver coverage will now be primary when before it was only secondary. (Secondary coverage means that if you have your own personal or business vehicle insurance, you would have to file a claim with your insurance company first.)
Remember, primary rental car coverage with a credit card only pays for damages to your rental car, NOT damage to the other car, property, or injuries. And liability for personal injuries could cost millions of dollars.
So don’t rely on your credit card’s rental car insurance if you’re not comfortable with the risks. The primary coverage with the Chase Sapphire Preferred card is intended to protect you only against theft and collision damage to your rental car.
I’ve written more about using your credit card for rental car insurance and the difference between primary and secondary rental car coverage.
Trip Cancellation & Interruption Coverage Doubles
Trip Cancellation & Interruption Insurance coverage is increasing to a maximum of $10,000 up from the previous $5,000.
So in certain circumstances such as severe weather or sickness, you can be reimbursed for your pre-paid, non-refundable travel expenses such as airline tickets, hotels, and tours.
Chase is notifying cardholders of these changes from now through September.
“I’m Really Going to Miss My 7% Dividend! What Should I Do Now?”
Link: Chase Freedom
When you have a Chase checking account, you get a 10% bonus on all the Chase Ultimate Rewards points you earn each year with the Chase Freedom card.
I already have both so I’m effectively earning at least 1.1 Chase Ultimate Rewards points on each $1 I spend on the Chase Freedom card. And I earn 5X points when I use my Freedom card on the bonus categories each quarter.
This quarter’s bonus categories are gas stations and Kohl’s where I plan to buy gift cards to other stores and restaurants.
The updates to the Chase Sapphire Preferred card won’t change how I use it until 2016.
But for folks applying now or in the future, if you’re focused on earning Chase Ultimate Rewards points, you may want to use your Chase Sapphire Preferred card for
- Restaurants to get 2X points. But use the Freedom when it has a 5X restaurant quarterly category bonus.
- Travel purchases such as airline tickets, hotels, cruises, rental cars, taxis, etc. because you get 2X points
- Purchases outside of the US because there’s no foreign transaction fee
And use the Chase Freedom card for your other purchases because you’ll get a 10% year-end bonus on all the points you’ve earned with the card when you have a Chase bank account.
Then when you want to move your points to partner airlines or hotel programs, transfer your Freedom points to the Chase Sapphire Preferred.
New applicants to the Chase Sapphire Preferred card will NOT get a 7% dividend on all the points they earn with the card each year. Current cardholders will lose this perk after 2015.
But the Chase Sapphire Preferred has doubled its Trip Cancellation and Interruption Insurance coverage to a maximum of $10,000 and Auto Rental Collision Damage Waiver coverage is now primary instead of secondary.
As an alternative to the 7% dividend that’s being phased out, you might consider opening a Chase checking account to get a 10% bonus on all the Chase Ultimate Rewards points you earn each year with the Chase Freedom card.