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Is It Time for the Chase Sapphire Reserve to Step up Its Game?

Oct. 24, 2018
6 min read
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The Chase Sapphire Reserve wasn't the first ultra-premium travel rewards card on the market, but it absolutely changed the game when it launched in 2016. The response to this card — which debuted with a 100,000-point sign-up bonus (which has since been changed to 50,000 points), 3x points on travel and dining, a $300 annual travel credit and a host of over perks — was overwhelmingly positive. So positive, in fact, that Chase ran out of the metal used to make the cards and was forced to ship temporary plastic ones.

We've Come a Long Way

For a moment it seemed like a new king had been born and nothing would ever be the same again, with people calling the Sapphire Reserve the single best credit card ever. And then the responses started to pour in. First, it was Amex adding a 5x bonus category for airfare purchased directly with the airline to the Platinum Card® from American Express, as well as a $200 annual Uber credit. Then the issuer gave the upper-middle tier American Express® Gold Card an enticing overhaul, adding 4x points at US restaurants and supermarkets (up to $25,000; then 1x) (terms apply) and a $120 annual dining credit valid at select partners.

If you were a loyal Chase fan, as many of us are (myself included), it was easy enough to poke holes in the competitors and say that the bonuses categories on both the Gold and Platinum cards are relatively limited. 4x points on the Gold card is only valid within the US, and the supermarket category is capped at $25,000 in spending a year. The Platinum card is even worse, with its 5x points only available on flights booked directly with the airline, or flights or pre-paid hotels booked through Amex Travel. Compare this to Chase's broad definition of "travel," which includes standard things like airfare and hotels but also limousines, campgrounds, tolls, parking garages, and many more.

Then the Other Shoe Dropped

For the last several months, the Citi Prestige application page has been wiped from the internet. This usually means one of two things: either the card is gone, never to be seen again, or some change are in the works. In this case it was the latter, with Citi announcing this week that beginning in January the Prestige will offer 5x points on airfare and dining, and 3x on cruises. The annual fee will be raised to $495, and the incredible 4th Night Free benefit will be capped at two uses a year (starting in September 2019), but it's clear that Citi was feeling the squeeze on its most premium card and decided to update it accordingly.

This now leaves us with a multi-horse race for the most valuable bonus categories, although the winner is pretty clear.

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Below, I've included both the number of points earned per dollar spent and the percentage of return based on TPG's valuations.

Bonus RateCiti PrestigeAmex PlatinumAmex GoldChase Sapphire Reserve 
5xDining and airfare (8.5%)Airfare booked directly with the airline and airfare and prepaid hotels booked with Amex Travel (9.5%)N/AN/A
4xN/AN/AUS restaurants and US supermarkets up to $25,000 a year (then 1x) (7.6%)N/A
3xHotels and cruise lines (5.1%)N/AAirfare purchased directly with the airline or from Amex Travel (5.7%)Travel and dining (6%)
1xAll non-bonus spending (1.7%)All non-bonus spending (1.9%)All non-bonus spending (1.9%)All non-bonus spending (2%)

The bonus categories on the Chase Sapphire Reserve now lag woefully behind the competition. Whether you're using a one-card or multi-card strategy, it's easy to beat the 3x on travel and dining and the 6% return that amounts to. So the obvious question is, will Chase beef up the Sapphire Reserve in some way?

If It Ain't Broke, PLEASE Don't Fix It!

The Citi Prestige is the latest premium card to get improved bonus categories, but also some "devaluations."

While I wouldn't mind seeing a 4x or even 5x category on the Chase Sapphire Reserve, I'm going to take an unpopular view and say that I really don't want Chase touching this card at all. While the changes to the Amex Gold were almost universally positive, look at what happened to the Citi Prestige: a $45 a year increase in the annual fee, no more 25% bonus when redeeming for airfare through the Citi portal and, worst of all, a cap on the 4th Night Free perk.

I think Citi wildly miscalculated what made the Prestige so successful. I'll give you a hint: It wasn't ThankYou points and their mediocre selection of transfer partners. It was the uncapped 4th Night Free benefit and the outsized value it offered. TPG was able to get over $1,000 back on a single stay using this benefit! Part of award travel is learning to roll with the punches, but if you gave me a choice, I would not have traded that perk for an increased return on dining and travel.

If you're still holding out hope that changes to the Sapphire Reserve would resemble those made to the Amex Gold — nearly all give and no take — I hate to burst your bubble, but that just doesn't seem likely. The Sapphire Reserve was an expensive gamble for Chase, and while it still believes in the long-term return on this investment, it also spent a cool $330 million on points redemptions in the second quarter of 2018. This comes less than a year after Chase cut $200 million from the department overseeing the Reserve in an attempt to make it more profitable. Simply put, I don't see any way that Chase "gives" us anything here without "taking" in return, likely in the form of a higher annual fee.

Bottom Line

The Sapphire Reserve is one of my favorite (and most used) credit cards, but I'm of course still excited to see other products from Citi and Amex becoming more rewarding and competitive. Competition is always good for the consumer, but we also have to be realistic with our expectations. In many ways I'd argue that the Citi Prestige is less valuable after the changes that were recently announced, and there's no reason for Chase to be too reactionary. At the end of the day, Ultimate Rewards is one of the most valuable points programs on the planet, and the ecosystem Chase has created will continue to attract and retain customers.