last updated 1 March 2019

The best credit card for Americans who travel abroad (or spend abroad) extensively is the Chase Sapphire Reserved Visa card.

I should state up front that JPMorgan Chase Bank (unfortunately) did not pay me or otherwise provide me with any benefits to write that. That is purely my own unsolicited opinion as a Sapphire Reserved cardholder for the past 18 months.

The Sapphire Reserve card, like any travel credit card worth its salt, does not charge any foreign transaction fees and gives you a very good exchange rate. It stands out from the pack, however, in two very important respects: (1) it provides most of the benefits of a travel insurance policy; and (2) it grants you free use of airport lounges all over the world. These benefits more than make up for its hefty $450 annual fee.

$450 Annual Fee?!

Yes, yes, I know. On the surface, $450 is obscene. Until just a couple of years ago, I never even considered getting a credit card with an annual fee. Not when there are so many out there that provide excellent perks without charging any such fee.

If $450 is too much of a hit for you to take on that first monthly bill, consider another Chase card, the Sapphire Preferred Visa card. It provides many of the same benefits as Reserve (but not airport lounge access, and only some of the travel insurance-like benefits) but charges a more reasonable $95 annual fee that is waived the first year. But I still think I can sell you on the Sapphire Reserve card. Read on.

Chase Sapphire Reserve Benefits

No Foreign Transaction Fee

This is (or should be) a standard benefit offered by all travel cards. Neither of the Chase Visa cards I’ve mention charge a foreign transaction fee. Your average non-travel credit card, however, typically charges 3% per transaction for any purchases made overseas. That adds up quickly if you spend a lot of time traveling internationally, or if you charge a lot of foreign expenses to your card.

Reasonable Foreign Exchange Rates

Generally speaking, if you purchase goods or services priced in a foreign currency with a credit card, you get a decent exchange rate. That’s true of the Sapphire Reserve card. I spent about six months overseas in 2018 and used my Sapphire Reserve Visa fairly frequently during that time. Never once did I get gouged on the exchange rate.

To cite a recent example, on 19 February 2019 I charged €97.88 to my Sapphire Reserved Visa for a night in a hotel in Lisbon. That showed up as a $111.18 charge on my credit card statement. Per OANDA, the 19 February exchange rate averaged out to US$1=€0.88378. According to that rate, €97.88 equals $110.75. Assuming the exchange rate at the moment of purchase equalled the average for the day, JPMorgan Chase, or Visa, or both, made $0.43 off me in foreign exchange on that transaction. That’s less than one half of one percent. I can live with that.

Important note: When you’re overseas, if a waiter, merchant, website, or some other seller offers you a choice of charging your card in dollars or the local currency, ALWAYS choose the local currency. If you opt to pay in dollars, you will get ripped off on the exchange rate. If you choose to pay in the local currency, you’ll be charged at your credit card’s exchange rate, which is almost certainly more favorable to you.

$300 Annual Travel Credit

The Chase Sapphire Reserved card has an effective annual fee of $150, not $450. This is because the Reserved card (not the cheaper Sapphire Preferred card) reimburses you for the first $300 of travel-related expenses you charge to the card each year. And I always spend at least $300 on travel every year (usually much more).

Reimbursement of Application Fees for TSA Pre, Global Entry

TSA Pre and Global Entry are US “trusted traveler” programs — applicable to domestic travel and entry to the US from overseas, respectively — that allow travelers who pay a fee and undergo a background check to skip certain security checks and reduce the amount of time spent waiting in lines at the airport. If you charge the application fee for either of these programs to your Sapphire Reserved (not Sapphire Preferred) card, you will be reimbursed up to $100. This benefit can be used once every four years. The TSA application fee is $85 (which must be renewed every five years) and the Global Entry fee is $100. I haven’t taken advantage of this benefit myself, but it is a very nice perk if you’re interested in these programs.

Chase Points

As with many other credit cards, Chase Sapphire Reserved cardholders earn “points” on every purchase. With the Sapphire Reserved card, you earn 3 points per dollar spent on travel and restaurants (including fast food) and 1 point per dollar on everything else. (You earn 2 points per dollar on travel and restaurants with the Sapphire Preferred card). You can redeem points for cash or a statement credit at the rate of 100 points=$1. So, essentially, each point is worth 1¢. Another way of thinking about it is that you get 3% back on travel and 1% back on everything else you buy.

Besides cash back, you can use Chase points to buy gift cards for certain stores or to pay for purchases on Amazon.com. You can also transfer points, on a 1:1 basis, to a number of airline and hotel loyalty programs. But you get the most value out of your points if you spend them on travel via the Chase Ultimate Rewards Program.

The Chase Ultimate Rewards Program

The way Chase Ultimate Rewards works is, instead of booking flights or hotels through travel search sites like Expedia or Orbitz or directly through airline or hotel websites, you book through the Chase website. An Expedia search window pops up within the Chase site and you can search flights and hotels and make reservations just the way you would on Expedia. In theory, anyway.

I have an Expedia account, and I compared the flights and hotels I could book there to the flights and hotels I could book through Chase Ultimate Rewards. I found that the selection and price of flights available on Ultimate Rewards were identical to those on Expedia. See below.

The selection of hotels on Ultimate Rewards, however, differs from Expedia, as do the prices.

So, I use Chase Ultimate Rewards to book flights without hesitation. (Except that I do sometimes also conduct separate searches on the sites of discount airlines that are excluded from Expedia — and thus Ultimate Rewards — search results. These include Southwest and Allegiant in the US and Ryanair, easyJet, Eurowings, and Wizz Air in Europe.) But so far, I haven’t used it to make hotel reservations. I usually stay in Airbnb apartments anyway, which can’t be booked through Ultimate Rewards.

You pay for purchases on Ultimate Rewards using either your points or your Chase card, or both. If you’re using the Sapphire Reserved card, it’s a great place to redeem points, because they’re worth 50% extra on Ultimate Rewards. (You get 25% extra with the Sapphire Preferred card.) For example, if you have 20,000 points saved up, these are worth $200 if you cash them in. But if you use them on Ultimate Rewards, you can buy $300 worth of airfare with those same 20,000 points. I spend all of my points this way.

Travel Insurance Benefits

If you pay all of your travel expenses with the Chase Sapphire Reserved Visa, you effectively enjoy most or all of the benefits of a typical travel insurance policy without paying for one. This is what you get:

Trip cancellation coverage. If you have to cancel or cut short a trip due to illness, injury, inclement weather, or some such (not just because you changed your mind), Chase will reimburse you up to $10,000 per person and $20,000 per trip for pre-paid, non-refundable expenses like flight and hotel reservations. The Sapphire Preferred card also provides this benefit.

Medevac coverage. If you or an immediate family member become seriously ill while overseas and need an emergency evacuation back to the States, the card covers these medical and transportation expenses up to $100,000. The Sapphire Preferred card does not provide this benefit.

Auto rental collision insurance waiver. If you charge your rental car to your Sapphire Reserved card and decline the rental company’s insurance, you get primary collision and theft coverage up to $75,000. The Sapphire Preferred card provides coverage only up to the actual cash value of the vehicle.

Trip delay reimbursement. If your travel is delayed by 12 hours or more or requires an unexpected overnight stay, you and your family are covered for unreimbursed expenses such as meals and lodging, up to $500 per ticket. The Sapphire Preferred card also provides this benefit.

Lost luggage reimbursement. If the airline loses checked or carry-on bags belonging to you or your immediate family, you’re covered up to $3,000 per passenger. The Sapphire Preferred card does not provide this benefit. Instead, it offers reimbursement for expenses incurred during a 6-hour or longer baggage delay, such as for replacement clothes and toiletries, up to $100 per day for up to five days.

The only hole in the Sapphire Reserved card’s coverage is its lack of primary or secondary health insurance for health problems that don’t require a medical evacuation. Most US health insurance plans provide zero coverage overseas, so this is something you should strongly consider buying separately if you’ll be traveling overseas.

Complimentary Airport Lounge Access

I’ve saved the best for last. Words can barely express how much I love airport lounges. They have vastly improved my quality of life while traveling.

Every holder of the Chase Sapphire Reserved card (but not the Sapphire Preferred card) can sign up for free via Chase’s website for a Priority Pass card. A Priority Pass grants free access to airport lounges all over the world. If you’re traveling to a large- or medium-sized airport anywhere in the world, it’s highly probable that it has at least one Priority Pass lounge. The Priority Pass website lists all of the lounges and their locations, hours, and rules.

To gain access to the lounge, you have to show your Priority Pass card and boarding pass to the receptionist up front. And you’re in!

Lounges vary considerably in terms of what they offer. There’s almost always alcohol, of which I am a fan. Some lounges only offer beer and wine, but most of the ones I’ve visited feature a small selection of liquor and mixers for cocktails as well, and a few, such as Baltimore (BWI) and Boston (BOS), have a full bar and a bartender. And there’s always a good selection of non-alcoholic liquids available as well.

Some lounges only provide packaged snack foods, but most feature a selection of hot entrees, appetizers, maybe some soup, and desserts. So forget about buying overpriced food and drinks in the airport restaurants with the plebeians — enter the lounge and eat and drink for free to your heart’s content! And if your flight’s delayed, well, the silver lining is, you have that much more time to booze it up!

Now there are rules, of course. You can’t just waltz into your local airport’s lounge and hang out. You need to have a boarding pass for an upcoming flight. Some lounges limit your stay to three hours. Others limit your alcohol intake to three drinks. Many have a dress code, but in my experience this is never enforced. Usually the lounge is located after security, so you have to factor in time to get through that, and sometimes the lounge is located far from your departure gate, so you risk missing your flight if you linger too long.

Rules and limits aside, the benefits — which also include free wi-fi that’s almost always faster and more reliable than out in the public areas of the airport — of lounge access really add up if you a lot of flying. Of all the Chase Sapphire Reserved benefits, this one might well be the most valuable one for me.