Is Chase Losing Money On The Sapphire Reserve?

Is Chase Losing Money On The Sapphire Reserve?

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Last August Chase introduced the Sapphire Reserve, which has been immensely popular with consumers.

It’s no surprise. When the card was first introduced it had a 100,000 point sign-up bonus upon completing minimum spend (the bonus is now 50,000 points upon completing minimum spend), and it comes with a slew of perks. These include triple points on dining and travel, a $300 annual travel credit that automatically applies towards any travel purchases, a Priority Pass membership with unlimited guesting privileges, and much more.

The card is working great for consumers, but how is it working for Chase? Well, while it’s very popular, it looks like they’re having trouble making money with the card, per a story that the Wall Street Journal is running today. According to this story:

  • Chase is pushing for $200 million in cost cuts in the unit that oversees the card
  • Chase exceeded their 12-month sales target on the card within two weeks of when it was introduced
  • Chase’s second quarter credit card income fell 15% compared to last year, with the number of new card openings falling 22%
  • While Chase expenses the customer acquisition costs over the first 12 months, it typically takes seven years before they make money on a customer
  • According to a source, renewal rates for premium credit cards are 60-90%, which is a pretty broad range, and we’ll see what it looks like for the Reserve, given that the card is coming up on its one year anniversary
  • Fewer cardmembers than expected have been financing charges, which is a way that issuers make a lot of their money
  • Cardmembers have been using the dining and travel bonus categories more than expected, where they can earn triple points, and presumably it’s an area where Chase loses money
  • Chase’s hope is that cardmembers with this card engage with them more in other ways, through mortgages, banking, etc.

Individually I don’t think any of these points are especially surprising, but it’s a good overall reminder of how this is very much a “long game” for card issuers.

Essentially the Chase Sapphire Reserve costs consumers $150 “out of pocket” per year (there’s a $450 annual fee, but I imagine almost everyone benefits from the $300 travel credit, since it’s automatic). For that you’re earning triple points on dining and travel, getting a Priority Pass membership, etc.

Furthermore, when Chase was offering a 100,000 point sign-up bonus, that was worth ~$1,500 in travel. If the real “out of pocket” on this card is $150 per year, that means it takes 10 years of those fees to cover the acquisition cost. I imagine Chase’s margins are smaller than that, when you factor in the Priority Pass membership, travel protection, purchase protection, etc. So then the math boils down to the following:

  • How much are cardmembers financing charges (which is a huge source of income)?
  • How much are cardmembers spending in non-bonused categories (they’re making money on every transaction there)?
  • How much are cardmembers spending on dining and travel (presumably they’re losing money on each transaction there, since they’re offering the equivalent of ~4.5% rewards)?

So it’s going to be interesting to see how this card, and perhaps the “premium” millennial market, evolves. The Sapphire Reserve has done an amazing job getting millennials into the premium card market, but how long will it take for that to pay off for Chase?

(Tip of the hat to View from the Wing)

Conversations (38)
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  1. raksiam Diamond

    I guess the problem for Chase is that if they devalue the benefits more people will dump the card and they'll never recoup those costs that are already spent.

    This whole "valuation" argument is as old as the hobby. And frankly not one I worry about. Alls I know is, my points have given me some amazing trips in F and C over the last decade that I would never have been able to afford otherwise.

  2. Gary Guest

    A) People seem to have pointed out that award space is rarely available last minute, and needs to be booked way in advance. The reality is that the opposite is usually true.
    B) People seem incredulous at the concept of 5+ CPP. I can say I get that regularly on domestic economy fares, say nothing of international business or first.
    C) Anybody that has high airline spend and uses the CSR instead of...

    A) People seem to have pointed out that award space is rarely available last minute, and needs to be booked way in advance. The reality is that the opposite is usually true.
    B) People seem incredulous at the concept of 5+ CPP. I can say I get that regularly on domestic economy fares, say nothing of international business or first.
    C) Anybody that has high airline spend and uses the CSR instead of the amex platinum is missing out on a lot of points.
    (As far as appealing to savvy consumers compete with the CSR, amex knocked it out of the park with the 5x airline category on the personal plat card plus 50% back on the business plat card. The problem was that non savvy consumers appreciate the simplicity of the CSR benefits more, and they couldn't afford effectively giving heavy airfare spenders 10% back.)

    By the way, the traditional model of calculating redemption value is what you would have paid for the ticket you flew. Maybe you wouldn't pay $12,000 instead of $1350 in economy, but if you were offered to upgrade to that same first class for $1,800 maybe you would've taken it.

  3. Martin Guest

    js/rcb,

    The fact that you get, say, a flight that would cost $10K if you bought it the day before, doesn't mean that your award was worth $10K. Even those of us who can easily afford $10K for a flight often choose not to, since the money is better spent elsewhere e.g. hotels, meals or maybe a new car or appliance, or an investment.

    And in fact awards are rarely available for travel in the...

    js/rcb,

    The fact that you get, say, a flight that would cost $10K if you bought it the day before, doesn't mean that your award was worth $10K. Even those of us who can easily afford $10K for a flight often choose not to, since the money is better spent elsewhere e.g. hotels, meals or maybe a new car or appliance, or an investment.

    And in fact awards are rarely available for travel in the near future that you have to take and would pay top dollar for. The best award deals are booked several months ahead, and are usually discretionary - not mandatory.

    That said, as an example, I recently had to spend 12 nights in Europe, and knew which hotel I wanted. The cash cost was $1,500. But I used the 100,000 CSR points I had got as a sign-on bonus and, booking through Chase, for 50% on top.

    So that is $1,500 cash-equivalent for 100,000 points, or 1.5 cents each.

    Maybe I could have gotten 2p or more on an award to somewhere that I didn't have to go, further in the future, but then it's not really cash-equivalent. In fact I'd have to spend more for all the other expenses of that trip.

    All that said, 100,000 points was too generous, for the issuer, even at "only" the $1,500 cash equivalence, especially when you add the $300 travel credit

  4. Corey Sacken Guest

    Annual caps wills help too. Some people spend 100k on travel/dining which ends up being costly.

    Would hate to see them take away benefits. May keep it but I already dropped citi prestige. I never stay in hotels (Airbnb always) so it's worthless.

  5. Kevin Guest

    Chase will sooner or later devalue the 1.5c per point to 1.35c or something similar.
    Existing cardholders will probably get six months notice.

  6. Justin Guest

    The benefits like purchase protection, delay protection, etc are administered by Visa (which itself earns a commission concurrent with Chase for every purchase). Are you sure Chase pays anything to offer the services?

  7. SightseeMC Guest

    tda: I think you're close, but then you're in economic theory land and not reality. I'm not trying disparage, just making the point that the redemption *is* the value. You might sell your points for $5K instead of the 1st class suite, but nobody is offering you that, and you can't sell them anyway (well, without incredible risk). If Chase said "you can use 100K points for a one-way ticket or $5K", you're correct. Instead,...

    tda: I think you're close, but then you're in economic theory land and not reality. I'm not trying disparage, just making the point that the redemption *is* the value. You might sell your points for $5K instead of the 1st class suite, but nobody is offering you that, and you can't sell them anyway (well, without incredible risk). If Chase said "you can use 100K points for a one-way ticket or $5K", you're correct. Instead, the choices are $1000, $1500 flexible travel, or up to, say, $10,000 in less flexible travel. You're correct that minimaxing is how to view general value, but not if the actual goods/services are non-transferable or non-fungible. And not if the choices do not exist.

    So whether or not you'd pay cash for an Astin Martin, a winning raffle ticket for an Astin Martin (and only an Astin Martin, and only for you or a friend) is worth an Astin Martin, and not a Subaru and $50,000.

  8. Tom Guest

    A better question is whether anyone who reads this blog and regularly signs up for credit cards is profitable to banks. I have a feeling we are almost all money losers to them. They just haven't figured out how to filter us out yet. Chase's 5/24 rule got close.

  9. ADP Guest

    @Lucky - thanks for your response. I think one element often missed from the talk about the rebate is the opportunity cost factor: $300 is not small change for the median millennial employee, even in NYC who earns $40,000 before taxes (I pulled this from a Business Insider article). Using the CSR's $450 fee, even excluding the $300 it would still take $5,000-$15,000 in additional annual spend just to recover the annual fee assuming that...

    @Lucky - thanks for your response. I think one element often missed from the talk about the rebate is the opportunity cost factor: $300 is not small change for the median millennial employee, even in NYC who earns $40,000 before taxes (I pulled this from a Business Insider article). Using the CSR's $450 fee, even excluding the $300 it would still take $5,000-$15,000 in additional annual spend just to recover the annual fee assuming that the median millennial is not able to "fully utilize" the additional benefits of the CSR - and that doesn't include the fact that a no annual fee card can at the very least return 1% and oftentimes more.

    Ultimately I think Chase has released an unsustainable product offering and completely understand why anyone would feast when the feasting's good.

  10. tda Guest

    @Brian Kusler has the right idea on gauging the value of points, which is honestly quite subjective. While the retail price of your redemption, had you paid cash, puts a high-end cap on the value, for most people who redeem for "aspirational" travel, that number is far higher than the true value.

    A better gauge is to ask yourself, how much you'd have to be paid in cash to turn over your points and...

    @Brian Kusler has the right idea on gauging the value of points, which is honestly quite subjective. While the retail price of your redemption, had you paid cash, puts a high-end cap on the value, for most people who redeem for "aspirational" travel, that number is far higher than the true value.

    A better gauge is to ask yourself, how much you'd have to be paid in cash to turn over your points and forego your planned redemption. If you'd gladly take $5k cash for your points instead of redeming them to fly first class , then he flight redemption obviously isn't worth $10k to you.

  11. Kevin Guest

    Let's not forget that those of us who signed up in 2016 got a "calendar year" travel credit.....so my first $450 card fee got me 2x$300 travel rebates. I'm keeping the card for at least another year, so my next card fee minus next year's travel credit will break me even for 2016-2018 annual fees. I will have accumulated over 300,000 UR by that time.

  12. Ben Guest

    I think the area the card is lacking is its Customer Service. If they improve the customer service, they can attract people from all age range especially baby boomers.

    If they desire people to use the card for mortgages, banking, etc., they should provide point-incentives.

  13. Brett Allen Guest

    @ Lucky
    $450 fee with $300 travel credit nets to $150. But many people don't think about it that way, they hear $450 and say nope. And many of those would be good customers, since they aren't min/maxing their credit card spend.

    I suppose it breaks down like this. Some people who would have paid $150 for the card won't pay $450 even with the travel credit. Some people will pay the $450 and...

    @ Lucky
    $450 fee with $300 travel credit nets to $150. But many people don't think about it that way, they hear $450 and say nope. And many of those would be good customers, since they aren't min/maxing their credit card spend.

    I suppose it breaks down like this. Some people who would have paid $150 for the card won't pay $450 even with the travel credit. Some people will pay the $450 and not spend any or all of the $300 credit. And some people sign up for the card because of the $300 credit, which is advertised, and have fallen for the card before they find out about the fee.

    I do wonder if one of the banks will try a premium card with a lower annual fee and skip the fee rebate game. I think a card with all the benefits of the CSR except the travel credit @150 annual fee would appeal to a significant segment of the market.

    Personally I put a quite a bit of spend on my CSR...probably $3500-5000 per month. But as a weekly business traveler it's largely in 3x categories. It is the card I use for any spending that doesn't fit into a categories for one of my other cards though. I was going to try to see what percentage of my spend was 1% category over the past few months but Chase's website seems to be down today.

  14. ADP Guest

    I applaud Ben and others like him for their work and harbor no ill will for their affiliate marketing, but the hard facts remain that premium luxury cards are not realistic for most of the population of demographics aside from purchasing throughput.

    The MEDIAN household across all age brackets generates roughly $56,516.00 a year in income BEFORE taxes (I pulled this 2015 data from the St. Louis Fed). How can the median household, let...

    I applaud Ben and others like him for their work and harbor no ill will for their affiliate marketing, but the hard facts remain that premium luxury cards are not realistic for most of the population of demographics aside from purchasing throughput.

    The MEDIAN household across all age brackets generates roughly $56,516.00 a year in income BEFORE taxes (I pulled this 2015 data from the St. Louis Fed). How can the median household, let alone the median millennial, afford an expense that by itself consumes nearly 0.8% of their gross median income?

    1. lucky OMAAT

      @ ADP -- I see where you're coming from, but I don't think that's a fair characterization. You're getting a $300 travel credit. I would guess that even the median household in the US spends $300 combined on Uber, subways, parking, hotels, flights, etc. I realize this varies by city -- I imagine in NYC almost everyone does, for example. So I don't think it's fair to say that this card is really costing most...

      @ ADP -- I see where you're coming from, but I don't think that's a fair characterization. You're getting a $300 travel credit. I would guess that even the median household in the US spends $300 combined on Uber, subways, parking, hotels, flights, etc. I realize this varies by city -- I imagine in NYC almost everyone does, for example. So I don't think it's fair to say that this card is really costing most people $450 per year. That's a fee you're paying upfront, but you're getting two thirds of that back in the form of a credit.

  15. Eric Guest

    Steven M wrote: "Separately can we please comment on the fact that Chase.com along with Citi are the two absolutely worst of the worst websites to do e-banking with?? I don’t care if you’re on mobile or desktop or app —- they are like dinosaurs in the online banking world."

    Are you serious? Chase's website and iPhone app are astonishingly good, truly state-of-the-art, from handling multiple accounts to redeeming rewards. I can't vouch for Citi...

    Steven M wrote: "Separately can we please comment on the fact that Chase.com along with Citi are the two absolutely worst of the worst websites to do e-banking with?? I don’t care if you’re on mobile or desktop or app —- they are like dinosaurs in the online banking world."

    Are you serious? Chase's website and iPhone app are astonishingly good, truly state-of-the-art, from handling multiple accounts to redeeming rewards. I can't vouch for Citi as I don't use them, but Chase's consumer digital portfolio is unmatched. And to be clear, I don't work for them, never have, just a satisfied customer who works in the ecommerce industry.

    (P.S. I will allow that Chase's iPad app has gone way too long without a refresh.)

  16. Chris Guest

    @Lu I'm not following the difference between "list price" and "purchase price" in the context of airline tickets. When is one different from the other?

  17. Jo Guest

    The first and only card I didn't get approved for. CSP. I'm no AOR doer either. Oh well. I kept my Amex Plat despite the lowered benefits in the lounges. I got authorized users and have since been in some great lounges overseas. PP lounges vary from AWESOME to pretty lame.

  18. Lu Guest

    @Chris I think the question were not on retail price but list price. You rarely buy ticket with list price unless it is last minute but then you most likely won't get point redemption either.

    The original question was how that guy get 5 cents per point. If he didn't use list price instead purchase price, I don't know how he can consistently get that kind of value.

  19. Dmodemd Guest

    Y'all need to think to the future. It's a given it is unsustainable. Benefits will be reduced and/or UR will start devaluation. Spend it soon!

  20. JS Guest

    @atxtravel maybe no one you know, but plenty of people can and do pay those prices for J/F fares. I try to redeem for probably around 3/4 of the J flights I take, for those that I don't have the points for, I pay out of pocket.

  21. Anthony Diamond

    Dining is the big one - young people that live in cities can rack up A LOT of dining charges in a month / year. Especially with the spread of services like Venmo, picking up restaurant and bar tabs is much easier. This is why historically dining bonuses haven't been that large (it's generally been gas, groceries, etc).

  22. UnitedEF Guest

    Just because you can't afford a $250k Aston Martin doesn't mean that's not worth $250k. People pay for those $10k F and $8k C fares I know because I helped my friends dad book a few of those.

    Premium millennials lol you mean the ones that have $100k college debt wrapped around the neck and are begging for student loan forgiveness? I had dinner with a few of these millennials and they are trying...

    Just because you can't afford a $250k Aston Martin doesn't mean that's not worth $250k. People pay for those $10k F and $8k C fares I know because I helped my friends dad book a few of those.

    Premium millennials lol you mean the ones that have $100k college debt wrapped around the neck and are begging for student loan forgiveness? I had dinner with a few of these millennials and they are trying to stretch out the 100k bonus as far as possible which means their UR points replenishment rate is not very high. Spend on the card enough to get the bonus and than book Y awards to Asia on a 14+ hour flight. They looked at me like I was crazy for booking my family of three in F and J to Asia round trip 2 times a year on miles and points and that they couldn't justify spending that many points to fly lol. The renewal rate is going to be very low on this product. People that can afford a $450 annual which is what one monthly student loan payment don't carry balances. That's the first rule of the rewards / mileage game if you have to carry a balance perhaps you would be more comfortable with a no annual fee cash back card. It's going to take a long time to get their money back from my 100k signup bonus. At 2.5% merchant discount rate with a $1,500 cash value that's $60k worth of spend. The annual fee probably barely covers the cost of priority pass, and the card's other benefits.

  23. Brian Kusler Guest

    re: Peter and Atxtravel...

    I use a spreadsheet to track my redemptions. I track both CPM "high" (calculated against what that exact flight would have cost) as well as CPM "low" (calculated against the cost of the flight I would have taken if I'd had to pay in dollars).

    So yes, I would have purchased the Asiana one-stop Business flight for $2200 but instead I flew there in ANA F which was pricing...

    re: Peter and Atxtravel...

    I use a spreadsheet to track my redemptions. I track both CPM "high" (calculated against what that exact flight would have cost) as well as CPM "low" (calculated against the cost of the flight I would have taken if I'd had to pay in dollars).

    So yes, I would have purchased the Asiana one-stop Business flight for $2200 but instead I flew there in ANA F which was pricing out at $13,000 when I was shopping. Flying the latter was absolutely worth more on all fronts than the former, but it's really hard to pick a number between the two as the actual "value", so I just keep both there.

  24. Chris Guest

    @tda I understand what he was getting at but I still disagree. I very very rarely pay for business/first class, so does that mean when I do redeem points for a first class ticket that I should value my redemption at what the economy ticket price was?

  25. Peter B Member

    @tda I have to agree with Chris's point. Even though I would never pay $19K for a CX first class ticket from JFK to HKG, it does not mean I'm not getting $19K worth of value from the points. That's the cost of that particular flight I wanna take and the points are replacing that cash value. This is why I never follow these "valuations" that are posted about MR, UR and TY points. The...

    @tda I have to agree with Chris's point. Even though I would never pay $19K for a CX first class ticket from JFK to HKG, it does not mean I'm not getting $19K worth of value from the points. That's the cost of that particular flight I wanna take and the points are replacing that cash value. This is why I never follow these "valuations" that are posted about MR, UR and TY points. The points to me are worth whatever the cash value is of what I end up redeeming them for. Redeeming points for something that I can regularly afford is not maximizing the value I get out of them.

  26. Matt Guest

    Honestly, the sign-up bonus was a bit over the top and a huge risk for Chase. I think they could've gotten away with a much lower sign-up bonus, and many of us would've still signed up for it for the 3x on dining and travel alone.

    This article concerns me that there will be a devaluation of some sort coming within the next several months, either with the card's benefits or in the way...

    Honestly, the sign-up bonus was a bit over the top and a huge risk for Chase. I think they could've gotten away with a much lower sign-up bonus, and many of us would've still signed up for it for the 3x on dining and travel alone.

    This article concerns me that there will be a devaluation of some sort coming within the next several months, either with the card's benefits or in the way we can use Ultimate Rewards points. Just recently, there was on article on here about people receiving surveys about transferability of UR points between cards.
    - I could see the transferability from the Freedom cards going away or rate going to less than 1:1
    - Either dining or travel going to 2x, maybe we'd get to choose one 3x category
    - Reduced travel credit
    - Annual fee increase
    None of these would be welcome by consumers, and I assume some of us would complain to high heavens about any devaluation and threaten to "take business elsewhere", but Chase will make the changes necessary to make money off this card. And I bet the value proposition will still be there for many of us even with reduced benefits, so we'll just accept the changes.

  27. rcb Gold

    atxtravel: I'm sorry you can't afford to pay outright for business/first travel, but some of us can and do. Frequently. I got an $11,000 Etihad/Qatar flight last year for 140,000 miles, so 7.8 cents apiece. Going to Asia in November on an $8,000 ticket for only 132,5000 miles, so 6 cents apiece.

    If you aren't getting these deals too then you aren't paying attention to this blog.

  28. Sasha Guest

    The customers base that Chase developed from CSR is huge. That actually allows Chase to have more bargaining power to reduce the cost from supply side, work on a cheaper rate in negotiating with United, Hyatt and others. Budget cut doesn't necessarily means cutting from customers side

  29. Rob Member

    You're forgetting a major factor in the "math"...charge off rates.

  30. Boco Member

    I think Chase made a mistake when they decided to charge a $450 annual fee (although in actuality it's $150), which scared away those customers who would be most likely to carry a balance. If you think about it, someone who doesn't have the income to pay their credit cards in full wouldn't have much interest in springing for a card that has such a high annual fee. Only those who are smart enough to...

    I think Chase made a mistake when they decided to charge a $450 annual fee (although in actuality it's $150), which scared away those customers who would be most likely to carry a balance. If you think about it, someone who doesn't have the income to pay their credit cards in full wouldn't have much interest in springing for a card that has such a high annual fee. Only those who are smart enough to do the math and have enough money to afford the card end up applying.

    It's looks like Chase will ultimately be forced to roll back the card's benefits, unless they find a clever way to squeeze out more money from the users. But they created a monster, of sorts, customers who have come to expect a great deal.

    If I were Chase I'd consider adding a feature that sells business class fares at a discount, partner up with airlines that have difficulties selling all their J space, and take a cut of the profits. But then again that's not really Chase's space, being a travel agent.

  31. tda Guest

    @RCB - The value you get out of the points is not the same as the cost to Chase. Even if you were to get 5 cents in value out of each point by transferring to a partner, I assure you Chase is paying a small fraction of that for the points.

    @Chris - atxtravel's point is that most people redeeming points for a first/business class seat that retails for $10k would not have otherwise...

    @RCB - The value you get out of the points is not the same as the cost to Chase. Even if you were to get 5 cents in value out of each point by transferring to a partner, I assure you Chase is paying a small fraction of that for the points.

    @Chris - atxtravel's point is that most people redeeming points for a first/business class seat that retails for $10k would not have otherwise purchased the ticket for that price, even if they were financially able to do so. Instead, they would probably make different travel arrangements (whether date, destination, class of service, etc.). This would indicate that the true value to the consumer is less than the list price fare.

  32. Chris Guest

    @atxtravel how else would you travel that specific segment if you don't pay list price? I've never heard of airlines negotiating ticket prices.

    Just because you may not pay that price doesn't mean you're not getting that relative value via redeeming the segment for points...

  33. Matt New Member

    It's a great deal for the consumer. I've racked up quite a UR balance, haven't financed a dime and am likely a net loss - I've also not given serious thought to Chase's other products. It's time to chip into that balance but a quick question before I do: if you pay with UR points, do you still reap all of the FF benefits with the airline? I imagine it's a yes since Chase probably "cuts a check" for the fare. Thanks.

  34. atxtravel Guest

    RCB: please give us examples of redemptions where you got 5 cents a mile. And please don't quote list prices for United/ANA/Eva or Korean biz/first class. No one ever pays those and you wouldn't either.

    I'd say with the United / Singapore devaluations and garbage service having to connect on United domestically, the value of UR points has definitely taken a hit. Southwest may be the one last reliable redemption if you fly them often...

    RCB: please give us examples of redemptions where you got 5 cents a mile. And please don't quote list prices for United/ANA/Eva or Korean biz/first class. No one ever pays those and you wouldn't either.

    I'd say with the United / Singapore devaluations and garbage service having to connect on United domestically, the value of UR points has definitely taken a hit. Southwest may be the one last reliable redemption if you fly them often and have companion pass.

    And yes, CHase will lose money on this card, they signed up a bunch of travel hackers (many beginners via the blogs), while the clueless public whom they really want is still clueless and uses debit cards.

  35. RCB Gold

    When I redeem my miles I get at least 5 cents per mile, so in that circumstance I get at least 5% back on every purchase, and 15% back on travel purchases. This card is very lucrative for me and I can see how it can be costly for Chase.

  36. David - The City Miler Guest

    "Cardmembers have been using the dining and travel bonus categories more than expected, where they can earn triple points, and presumably it’s an area where Chase loses money"

    Unsurprising, considering that Chase's entire marketing strategy was using earned media and writings in blogs like this, where readers (i.e. Chase's new cardholders) are people who tend to maximize spending categories, and generally pay balances in full. Chase was banking on interest to expand beyond that group,...

    "Cardmembers have been using the dining and travel bonus categories more than expected, where they can earn triple points, and presumably it’s an area where Chase loses money"

    Unsurprising, considering that Chase's entire marketing strategy was using earned media and writings in blogs like this, where readers (i.e. Chase's new cardholders) are people who tend to maximize spending categories, and generally pay balances in full. Chase was banking on interest to expand beyond that group, which generally takes longer.

  37. Raksiam Diamond

    Do you think we'll see them adjust the perks to make the card less valuable?

Featured Comments Most helpful comments ( as chosen by the OMAAT community ).

The comments on this page have not been provided, reviewed, approved or otherwise endorsed by any advertiser, and it is not an advertiser's responsibility to ensure posts and/or questions are answered.

raksiam Diamond

I guess the problem for Chase is that if they devalue the benefits more people will dump the card and they'll never recoup those costs that are already spent. This whole "valuation" argument is as old as the hobby. And frankly not one I worry about. Alls I know is, my points have given me some amazing trips in F and C over the last decade that I would never have been able to afford otherwise.

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Gary Guest

A) People seem to have pointed out that award space is rarely available last minute, and needs to be booked way in advance. The reality is that the opposite is usually true. B) People seem incredulous at the concept of 5+ CPP. I can say I get that regularly on domestic economy fares, say nothing of international business or first. C) Anybody that has high airline spend and uses the CSR instead of the amex platinum is missing out on a lot of points. (As far as appealing to savvy consumers compete with the CSR, amex knocked it out of the park with the 5x airline category on the personal plat card plus 50% back on the business plat card. The problem was that non savvy consumers appreciate the simplicity of the CSR benefits more, and they couldn't afford effectively giving heavy airfare spenders 10% back.) By the way, the traditional model of calculating redemption value is what you would have paid for the ticket you flew. Maybe you wouldn't pay $12,000 instead of $1350 in economy, but if you were offered to upgrade to that same first class for $1,800 maybe you would've taken it.

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Martin Guest

js/rcb, The fact that you get, say, a flight that would cost $10K if you bought it the day before, doesn't mean that your award was worth $10K. Even those of us who can easily afford $10K for a flight often choose not to, since the money is better spent elsewhere e.g. hotels, meals or maybe a new car or appliance, or an investment. And in fact awards are rarely available for travel in the near future that you have to take and would pay top dollar for. The best award deals are booked several months ahead, and are usually discretionary - not mandatory. That said, as an example, I recently had to spend 12 nights in Europe, and knew which hotel I wanted. The cash cost was $1,500. But I used the 100,000 CSR points I had got as a sign-on bonus and, booking through Chase, for 50% on top. So that is $1,500 cash-equivalent for 100,000 points, or 1.5 cents each. Maybe I could have gotten 2p or more on an award to somewhere that I didn't have to go, further in the future, but then it's not really cash-equivalent. In fact I'd have to spend more for all the other expenses of that trip. All that said, 100,000 points was too generous, for the issuer, even at "only" the $1,500 cash equivalence, especially when you add the $300 travel credit

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