Is the Chase Sapphire Reserve Too Lucrative?
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The Wall Street Journal reported today that senior JPMorgan employees familiar with the Sapphire Reserve have questioned whether the card will make money at all, and if it does, when. In fact, the company is pushing for $200 million in cost cuts for the unit that oversees the card, which will likely come in reduced marketing spend and potentially a lower sign-up bonus in the future. (I definitely don’t foresee it going back to 100,000 anytime soon, so sorry to those who are holding out for a higher offer!)
As of now, it comes with a sign-up bonus of 50,000 points after you spend $4,000 in the first three months, worth $1,100 based on my most recent valuations. Ultimate Rewards points are one of my highest-rated point currencies. Plus, you get the strength of Ultimate Rewards transfer partners, such as Hyatt, United, Southwest, British Airways and more. In my opinion, it’s the best credit card that’s ever been available for American consumers. It also just won the Battle of the Premium Cards.
The test for Chase will be the renewal rates since we’re coming up on the one-year launch. My guess is that a very high majority of people will renew because it’s an absolute no-brainer. Yes, the fee is $450, but you get $300 in automatically reimbursed travel credits, which really brings the fee down to $150 a year for a card that offers best-in-class earning and redeeming and some solid perks — only $55 more than the $95 annual fee on the Chase Sapphire Preferred. With the Reserve, you get:
- 3x points on travel and dining
- 1x points on everything else
- $300 annual travel credit
- $100 fee credit for Global Entry/TSA PreCheck
- A Priority Pass membership
- No foreign transaction fees
If you spend money on travel and dining, the Reserve card is a total no-brainer that has been and will continue to hold a spot at the top of my wallet. And, even given this news, in the long run I think the card will be a major win for Chase, as it lures people in to the premium credit card market who have been hesitant in the past. Plus, Chase has been able to bring in those looking for a mortgage with 100,000 bonus points and banking customers. I do all of my banking with Chase and have done car loans. In general, maximize your rewards, but let’s also be good customers so they keep offering rich rewards.
Do you plan to renew the CSR when it comes around to your first year anniversary?
SIGN-UP BONUS: 50,000 Points
TPG'S BONUS VALUATION*: $1,000
CARD HIGHLIGHTS: 3X points on all travel and dining, $300 annual travel credit, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- $300 Annual Travel Credit as reimbursement for travel purchases charged to your card each account anniversary year
- 3X points on travel immediately after earning your $300 travel credit. 3X points on dining at restaurants & 1 point per $1 spent on all other purchases. $0 foreign transaction fees.
- Get 50% more value when you redeem your points for travel through Chase Ultimate Rewards. For example, 50,000 points are worth $750 toward travel
- 1:1 point transfer to leading airline and hotel loyalty programs
- Access to 1,000+ airport lounges worldwide after an easy, one-time enrollment in Priority Pass™ Select
- Up to $100 application fee credit for Global Entry or TSA Pre✓®
- One Year Complimentary Lyft Pink ($199 minimum value). Complimentary DashPass subscription from DoorDash after activating by 12/31/21.