Let me start by saying that there’s absolutely nothing to worry about as of now, and that these are just rumors. However, Doctor of Credit writes about some interesting “ideas” that Chase had in a survey they recently sent out to select card memebrs. It’s normal for credit card companies to do market research, and often nothing comes of it.
In this case it looks like Chase is considering changing the transferability of Ultimate Rewards points a bit. They wanted to know how users feel about the following three options:
- “When you combine the Ultimate Rewards points on eligible Chase Cards they would retain their original redemption value – that is, when transferred the points would retain the redemption value of the product they were initially earned on. For example you would not earn a travel redemption bonus if your transfer from a no fee card to a fee card.”
- “You can only combine Ultimate Reward points between no-annual fee cards or between annual fee cards. You cannot combine Ultimate Rewards points between a no-annual fee card and an annual fee card.”
- “You can combine Ultimate Rewards points on eligible Chase cards at a 3:2 conversion ratio. For example if you would like to transfer 15,000 points from your Freedom Unlimited card to your Sapphire Reserve account, your Sapphire Reserve would be credited with 10,000 points (a 3:2 ratio). The transferred points would be granted the redemption value and options of the account to which they are transferred into.”
Chase’s incredible lineup of points maximizing cards
For some context, here’s the lineup of Chase cards that accrue Ultimate Rewards points, which can be transferred to Chase’s airline and hotel partners:
- The Chase Sapphire Preferred® Card offers 2x points on dining and travel; the card has a $95 annual fee
- The Chase Sapphire Reserve® offers 3x points on dining and travel, plus a $300 annual travel credit; the card has a $550 annual fee
- The Ink Business Preferred® Credit Card offers 3x points on the first $150,000 spent in combined purchases annually on travel, shipping purchases, internet, cable, and phone services, advertising purchases made with social media sites and search engines; the card has a $95 annual fee
What makes this even better is that the following three no annual fee cards earn points that can be converted into Ultimate Rewards points at a 1:1 ratio in conjunction with one of the above cards:
- The Chase Freedom® Card offers 5x points in rotating quarterly categories, on up to $1,500 of spend per quarter; the card has no annual fee
- The Chase Freedom Unlimited® offers 1.5x points on everyday spend; the card has no annual fee
- The Ink Business Cash℠ Credit Card offers 5x points on the first $25,000 spent in combined purchases each anniversary year on cellular phone, landline, internet and cable TV services, plus 2x points on the first $25,000 spend in combined purchases each anniversary year on gas stations and restaurants; the card has no annual fee
This creates a huge points earning opportunity, as long as you have at least one card that accrues Ultimate Rewards points in conjunction with one, two, or even all three, no annual fee cards.
Why this can be costly for Chase
It seems like the above research is specific to those transferring points to the Chase Sapphire Reserve, and then redeeming those points for 1.5 cents each towards the cost of a travel purchase. In other words, those with the Sapphire Reserve are able to earn:
- A return of up to 7.5% in rotating quarterly categories with the Chase Freedom® Card
- A return of up to 7.5% on cellular phone, landline, internet, and cable TV services, and a return of up to 3% on gas stations and restaurants, with the Ink Business Cash℠ Credit Card
- A 2.25% return on everyday spend with the Chase Freedom Unlimited®
If these changes occurred, they would reduce the maximum value you can get out of Chase’s no annual fee cards.
What this doesn’t address, interestingly, is using this method in order to convert points to the Ultimate Rewards airline and hotel partners. There’s a chance that Chase may not be looking at any changes there, as I’d guess that they’re probably paying closer to a penny per point transferred to their airline and hotel partners. Even though the value may be higher to us, it’s not costing them as much.
At this point Chase is just doing research, so I wouldn’t assume that anything is changing. They throw around different concepts all the time to see how consumers would respond, and this is likely just that. So while it’s possible these changes are implemented at some point, I’m not worried.
The most interesting thing here, as far as I’m concerned, is that Chase would restrict transfers in order to prevent people from redeeming points for 1.5 cents each that were accrued through no annual fee cards. They don’t seem as concerned about people converting those points into airline miles or hotel points. Personally that’s how I choose to redeem my Ultimate Rewards points, so that wouldn’t be a deal breaker for me.
What do you make of the concepts that are being considered?