Chase Sees a 35% Jump in New Accounts Thanks in Part to the Sapphire Reserve
Update: Some offers mentioned below are no longer available. View the current offers here.
Travel rewards cards are a great way to get you to that next redemption — be it an award flight in international first class or a luxurious hotel stay — but at the end of the day, they're still part of an issuer's business strategy. Lenders like Bank of America, Citigroup and JPMorgan Chase & Co. aren't just giving you points and annual travel credits out of the goodness of their hearts; these perks are incentives to attract more customers and drive growth.
It looks like this strategy is working, at least when measured by one metric; Chase reportedly saw a 35% increase in new card accounts in the third quarter, and apparently the recently introduced Chase Sapphire Reserve is partially to thank. Since it launched in September, the card's attracted plenty of attention, thanks to benefits like a 100,000-point sign up bonus, a $300 annual travel credit and 3x points on all travel and dining purchases — all of which help justify a $450 annual fee. Chase even ran out of metal cards due to unanticipated demand for the Reserve.
While a 35% bump in new accounts is certainly good news for the lender, the flip side is that JPMorgan Chase & Co. — along with Bank of America and Citigroup — reported that combined income from credit card operations in the third quarter dropped 15% year over year. And, at the same time, expenses in the lenders' consumer-bank units rose 1%, to $15.3 billion.
Since an issuer's ultimate goal is to create revenue, what does this drop in income and increase in expenses mean for travel rewards cardholders? Likely nothing in the short term. The competition for customers in the credit card space is heating up — and Amex has already responded to the Sapphire Reserve's generous benefits by adding a 5x points category for airfare purchases on its premium Platinum Card from American Express. Issuers are jostling each other for your business, and gaining market share is always an important goal.
That said, an issuer's hope is that the cost of offering such generous cardholder perks is offset by customers taking on debt — and some industry analysts worry that the battle for customers' business is eating away at profits. Hopefully Chase and other lenders won't decide to rein in their travel rewards incentives, but there's definitely a limit to their generosity here, and we might just be approaching it with cards like the Reserve and Amex Platinum. Still, no matter what the future brings, it's in your best interest to follow the Ten Travel Rewards Card Commandments by always paying your balance in full and never missing a payment — taking on debt may offset the cost of expensive rewards programs and make offering "free" perks more affordable for lenders, but it's definitely not worth the dings to your financial health.
H/T: Bloomberg
TPG featured card
at Bilt's secure site
Terms & restrictions apply. See rates & fees.
| 1X | Choose to earn up to 1X points on rent and mortgage payments with no transaction fee |
| 2X | Earn 2X points + the option to earn 4% back in Bilt Cash on everyday purchases |
Pros
- Choice to earn up to 1 Bilt Point per dollar spent on rent and mortgage payments
- Elevated everyday earnings with both Bilt Points and the option to earn Bilt Cash
- $400 Bilt Travel Portal hotel credit per year (up to $200 biannually)
- $200 Bilt Cash annually
- Priority Pass membership
- No foreign transaction fees
Cons
- Moderate annual fee
- Designed primarily for members seeking a premium, all-in-one card
- Earn points on housing with no transaction fee
- Choose to earn 4% back in Bilt Cash on everyday spend. Use Bilt Cash to unlock point earnings on rent and mortgage payments with no transaction fee, up to 1X.
- 2X points on everyday spend
- $400 Bilt Travel Hotel credit. Applied twice a year, as $200 statement credits, for qualifying Bilt Travel Portal hotel bookings.
- $200 Bilt Cash (awarded annually). At the end of each calendar year, any Bilt Cash balance over $100 will expire.
- Welcome bonus (subject to approval): 50,000 Bilt Points + Gold Status after spending $4,000 on everyday purchases in the first 90 days + $300 of Bilt Cash.
- Priority Pass ($469/year value). See Guide to Benefits.
- Bilt Point redemptions include airlines, hotels, future rent and mortgage payments, Lyft rides, statement credits, student loan balances, a down payment on a home, and more.