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There are two types of people who use rewards credit cards: those who would never pay an annual fee, and those willing to pay one if the rewards are worth it.
Of course, the cards that require an annual fee are usually going to provide more rewards than the ones that don’t. For example, the Chase Sapphire and Sapphire Preferred cards are very similar, but the standard Sapphire has no annual fee while the Preferred version costs $95 per year.
Let’s take a look at the standard Sapphire card, for those who want to earn some rewards without having to pay any annual fees.
- Earn Ultimate Rewards points. Earn 1 point per dollar spent on most purchases, and 2 points per dollar spent on dining.
- Receive a sign-up bonus. Earn 10,000 Ultimate Rewards points when you spend $500 in the first three months after your account is opened. That’s worth $100 in rewards.
- Redeem points for rewards. Each Ultimate Rewards point is worth 1 cent toward gift cards, travel rewards, cash back, or a statement credit.
- No annual fee. But there is a foreign transaction fee of 3 percent on all charges processed outside the United States.
- Points are worth less than Sapphire Preferred points. If you have Chase’s Sapphire Preferred card, you can redeem Ultimate Rewards points for hotel points or airline miles. This card doesn’t have that option.
- No promotional financing offer. Many cards offer zero-percent APR on balance transfers or new purchases, but this card doesn’t.
- Fewer travel promotions. The Sapphire Preferred offers double points on travel, and points redeemed for travel are worth 33 percent more than the standard card.
- High interest rate. The standard interest rate is 15.24 percent. This is higher than the cards with the lowest interest rates. If you have credit card debt, you shouldn’t be concerned with rewards cards that have higher interest rates.
Get it if: You want to earn rewards but you don’t want to pay an annual fee.
Forget it if: You carry debt or you don’t spend enough to justify the higher rewards for the Preferred card.