Some radical changes were floated online for the Chase Sapphire Reserve credit card. They are drastic and flatly: crazy.
Higher Fee, More Coupons
In a report from Doctor of Credit, Chase is following the lead of American Express and its Platinum Card by adding more “perks” to its card to justify a higher fee. While this remains an unconfirmed rumor, the Sapphire Reserve was said to face an annual fee increase during COVID but was postponed due to the uncertainty at the time.
According to Doctor Of Credit, here are the proposed adjustments.
- Changes:
- $795 annual fee ($245 increase)
- 10x Chase Travel hotel and cars reduced to 8x
- 5x Chase Travel flights increased to 8x
- 3x Direct flights and hotel increased to 4x
- 3x Other travel reduced to 1x
- New benefits:
- $500 credit via $250/semi-annual (hotel portal run by Chase for select hotels. More info here)
- $300 Dining credit via Sapphire Reserve Tables $150/semi-annual
- $300 StubHub credit via $150/semi-annual
- $300 DoorDash credit via $25/month
- $120 DoorDash membership
- $250 towards Apple TV+ and Apple Music
- $120 Lyft credit via 5% $10/month
- $120 Peloton credit via 10x $10/month
- Received after spending $75,000
- $500 Southwest credit
- Southwest A-List status
- IHG One Rewards Diamond Elite Status
- $250 The Shops credit
On the surface, without attributing variable earning based on spending category, the new changes (assuming that nothing currently in place goes away), the value differential would be $1,765 more than is currently on the card after the increased fee is accounted for.
Why These Changes Are Crazy
The increased annual fee is above the American Express Platinum (for now) and would be the most expensive premium card on the market at the moment. Many who sign up for this card are heavy travelers, so reducing some travel spending category earnings, even though others are increased is an interesting if not unlikely change.
For those spending less than $75,000 on the card, $250 for Chase hotel bookings twice annually is enough to offset the fee (coupled along with the $300 travel credit) but the serious travelers the card is marketed to are less likely to book those stays as they do not earn points or status. Certainly, cardholders can prioritize two nights to back out the cost of the card, but it’s a less than ideal way to earn back the fee every year.
But then there’s a large swath that are specific to the user, and may be quickly dismissed. For example, I don’t have a Peloton and have no interest in signing up for their monthly content. That benefit is worth zero to me. Stubhub twice a year? The $150 bi-annual benefit is great for about one ticket, but I usually buy 2-4 together. Occasionally that’s on Stubhub, but this could mean spending more to justify the fee than buying elsewhere from which I can secure a better price. The Lyft benefit is unclear as reported but as I understand it, the credit would perform as a 5% refund up to $10/month which could only be maximized by spending $2,400/annually on Lyft split perfectly even. I use Uber.
The DoorDash credit could come in handy, but it’s another justification spend. I would be using it (and paying its higher prices than if buying directly from the restaurant itself) reluctantly and like AMEX’s Platinum Uber credit – if you don’t use it every month, you lose it.
Apple TV and Apple Music could deliver value back, it’s unclear if this would apply to broader charges bundled under Apple plans.
Very few of these apply to either premium travelers or customers. They aren’t on brand for the card or the perceived cardholder. The changes would be counter to the customer base that the card is intended to attract. Chase had lost millions promoting the card initially, thus the increased fee and expanded partnerships.
“While most credit cards of this type offset those point bonuses to customers with annual fees, and the new Chase card is no exception, it seems that in this case the card has been so popular that it has cost the company hundreds of millions of dollars. Chase in factultimately cut the original Chase Sapphire Reserve bonus to 50,000 points on January 11 (for online customers) and March 12 (for those who applied at a retail bank).” – Investopedia
So if Dimon’s initial remarks hold true, the company paid out excessively for added benefits to the card (at the lower initial annual fee of $450), has since added benefits and slightly increased the fee, but now add substantially more benefits that presumably would compound the loss if the card is a runaway success in its next iteration.
And for consumers, Chase had lowered its sign-up bonus for the card, increased the fees, and drove more of the intended benefits to their internal travel agency in the last bump. That aligns with the customers it was intended to attract but with these changes, it appears the bank is actively targeting those looking for coupons.
Further perpetuating this misalignment are the benefits above the $75,000 annual spending threshold. IHG One Rewards Diamond status offers material benefits to guests at IHG, but Southwest has not traditionally attracted high end clients for personal trips. Business, yes, but this is a personal card. Reaching the level requires spending $6,250/month on average on a credit card alone for personal expenses. This is a limited group, and those that are part of this economic sector are unlikely to be incentivized by a $500 credit to Southwest or entry-level status.
It’s crazy because of just how counter it is to Chase’s stated goals, and the few benefits received for the highest annual fee on the market. For comparison, the American Express Platinum comes with Gold status (mid-tier) at Hilton, and at Marriott (level two of five.) The AMEX Platinum also comes with CLEAR (more useful by the day as it continues to expand), among other travel benefits.
Easy Downgrade Option
The Chase Sapphire Preferred has always provided more value than the annual fee (though I suspect the fee is about to increase as well.) While there’s no annual travel credit like the big brother, Sapphire Reserve, the annual fee is currently under $100 and includes primary rental car coverage.
While those who downgrade will lose Chase Sapphire lounge access too – easily one of the finest perks of the current iteration – cardholders with other premium products that include Priority Pass Select still have a visit annually, regardless of holding any Chase products.
CONCLUSION
When compared with other premium cards on the market, it’s hard to justify the increased annual fee. But more than that, it’s hard to understand Chase’s direction if these changes come to fruition. If the perks and success of the card cost them so much money, why double down? If Chase is chasing premium travelers, why not put key travel benefits into play?
What do you think? Would you cancel or keep the card based on these changes? If you don’t have it, would these motivate you to add it to your wallet?
The article misses the big downgrade here: 3x points on “other travel” going to 1x. That’s a massive points earner for many with this card and downgrading that will actually have a dramatic negative impact on how much money I spend on this card versus other cards. No one is spending $75k on this card to get benefits with Southwest – what a complete joke. I’ll still keep the card for the fantastic lounges and because the coupon book will pay for the cost of the card, but this rumor has me looking a lot more seriously at the Strata Premier, for instance. Suddenly the Citi Strata Premier/DoubleCash combo looks a lot more compelling than Reserve/Freedom, and could be even more compelling depending on whether Citi/AA will reach some arrangement with ThankYou points transferring to AA.
@Peter – I mentioned the reduced spending categories in the paragraph immediately following the bullet points and again in the one following it.
“On the surface, without attributing variable earning based on spending category, the new changes (assuming that nothing currently in place goes away), the value differential would be $1,765 more than is currently on the card after the increased fee is accounted for.”
“Many who sign up for this card are heavy travelers, so reducing some travel spending category earnings, even though others are increased is an interesting if not unlikely change.”
I didn’t run analysis on it because I think the card becomes less valuable without it anyway and determining a good average for monthly travel spend would be a challenge. How much do cardholders spend on travel annually? $20,000? $30,000? $10,000? And then, of course, how much of that is general travel spend but not direct with a hotel chain or airline, not on the portal, etc.
And let’s just pretend for a moment that we assign a number of $15,000 that are not part of those categories at all – that’s 45,000 UR points dropping to 15,000 and then we have to attribute a value to 30,000 points which we could probably settle on at 1.5¢ for obvious reasons. So we achieve a value of $450 in lost rewards as part of these changes, but that just piles on a card that I no longer feel delivers the value of its annual fee anyway, so with all of the caveats, guessing, and personal use applications, I don’t see that it adds to the change analysis in a material way.
However, for those on the edge of this delivering value (maybe they already spend $10+/month on Peloton, and $20/month on Apple – perhaps this is a more meaningful consideration. But the numbers still have to be assigned on an individual basis.
Thanks for the thoughtful reply, Kyle. My hastily articulated point was that I think the 3x bonus spend on virtually all travel is worth a lot more here than ~$450. YTD I am already over 30k points on that category alone, and I don’t think that’s atypical for the type of consumer Chase is targeting with this card. Probably get 100k points from the category a year – between subway, trains, hotels, airbnb/vrbo – it really all adds up for someone who doesn’t really play the SUB/sign-up bonus game (perhaps like Billy Bob I should).
Obviously we are all earning points because we think they have a value of greater than 1.5 cents, although I’ll admit that on occasion a redemption through the portal at that rate makes sense, and I value the flexibility Chase provides here. But the vast majority of the time users do not want to engage with the chase travel portal for their travel bookings and want to book direct and still earn 3x points (like Lea). Obviously all of these changes are meant to drive revenue through the portal and you can bet they will emphasize the pay with points ability – good for Chase but bad for consumers. And if that is the direction all of this is going anyway, for me, I’m going to see the value in directing my spend away from my Chase cards because between Citi/CapitalOne there are now some better points earning opportunities through spending than Amex and, if these changes are true, Chase. Same thing happened years ago – Amex turned Plat into a coupon book and CSR was simple and had powerful bonuses so, like Jan presumably, shifted the majority of my CC spending to Chase.
Bottom line – these changes are a huge opportunity for Citi and CapitalOne to begin to chip away at Amex/Chase if they use it wisely – first big test will be to see what AA and Citi cook up.
None of this means I’m giving up the CSR. I simply value the lounges too much – they are that good. If anything I would cancel my Amex Plat – happier to fly AA or United out of LGA for CSR lounge and when I am there can use CSR lounge in JFK T4 versus sky clubs. I’m flying delta out of T4 next month and will first look to CSR lounge over sky clubs and can get into both. And notably absent from CSR changes was the Amex Plat restricting access to guests absent $75k/year spend or whatever it is. 100% value the ability for my wife and I to both have the card / auth user and get the family into CSR lounges when traveling with the kids. So while I’ll keep the card and go through the coupon book hoops to recapture the annual fee, I will likely dramatically shift my spending away from Chase if these changes come to pass.
I find it odd that Dimon is looking at doing this at a time of immense economic uncertainty. His own bank is advising the public that a recession is imminent, not the best time to jack up the price on your expensive card by 50%.
I had been considering this card in the near future as Chase continues to build out more lounges but the value proposition with the potential changes makes the Reserve much less desirable.
It’s obvious, right? Classic enshittification. Chase has been very successful with this card at capturing a big share of what I think was their target demo- rich millennials. Now that they have that market share, the next phase starts where they monetize it.
Longtime CSP cardholder here, and considered upgrading to a CSR several times in the past mainly for its Priority Pass benefit after AMEX Hilton took that benefit away. If these changes go ahead then I definitely will no longer consider the CSR card for the future and keep my CSP.
Take up on all the new benefits won’t hurt Chase because they are promo. benefits financed by the merchants, not by chase.
Chase isn’t paying for your Lyft benefit, Lyft is… Lyft is happy to discount $200 of Lyft rides by $10, assuming tbey don’t screw yoh and quote higher rates when using your Reserve card. Same with Peloton… it’s just a promo rate, not financed by Chase. And doordash and Stubhub.
And Chase Travel Portal is a scam. Nothing about booking through there is a benefit.
Anyone ordering DoorDash deserves to be F’d in the first place. Homeless living in their cars with pets, junkies and criminals coming to your house and in some cases getting gate codes are some of the issues. When you hire anyone without an interview, this is what you get. Regardless of packaging , your food risks traveling in the filthy cars of these degenerates. At least with Uber and Lyft the cars are mostly clean or they would get reported.
As for saying you only use Uber, why am I not shocked? Most of us are smart or frugal enough to check both for prices as the fees vary between each for the same ride. I know, pocket change to a rich fancy lad like yourself. Silly me.
@Dave Edwards – When are you going to start publishing your blog? We could all learn so much.
Because I’d be cancelled quickly by the Cucks. The world doesn’t want honestly, especially about the shady stuff that is required in your industry. Face it, even if you are honest, the others like TPG destroyed the industry’s credibility.
Besides kickbacks, “gifts” and outright bribes were never my thing. I know, we all justify it for “our family”.
I downgraded the Sapphire Preferred last year after having it 4 years with the idea of applying this year for the Reserve. Then the 100K Preferred offer came and I couldn’t give that up. My plan was to upgrade to the CSR after a year but these changes would preclude that. I have plenty of coupon book Amex cards, including the Platinum. And I have the Cit Strata Premier and Venture X. A $795 junked up Reserve card would no longer be on the horizon for me and would be totally unnecessary. My home airport is JFK with plenty of other lounge options, including the airline I fly regularly (Delta). And they are soon to have a Capital One lounge.
The main reason I still have the card is the 3x on other travel as I use it to pay for my ski trips bought directly from my ski club’s tour operator. Even with the additional credit card fee they charge I still come out ahead putting on my CSR. If that goes away I have no reason to keep it as I don’t travel that frequently.
If they go ahead with this, I’ll drop this card faster than Max Verstappen. There’s a reason I have this, and the Venture X, and not the Amex Platinum: simplicity.
Hard to keep track of quarterly this and monthly that on all these couponbooks. I have no qualms at all going forward with my own strategy: extract from these banks the SUB and whatever I can get for the first year, preferably with the annual fee waived, and then dump the card without a second thought unless a good retention offer is in the works.
This is just part of the taking-things-away trend that we are seeing across the economy. Good value is now hard to come by as what used to be free or cheap is now priced out of reach or not worth it. By devaluing its Reserve card, Chase will be harming its current cardholders and giving little in return. Why don’t they just raise the price, own up to it, and admit they’re doing it because they’re greedy?