Crazy Chase Sapphire Reserve Changes Floated

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 [Edit] 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?