Could Chase Add Restrictions On Combining Ultimate Rewards Points Across Cards?

Filed Under: Chase, Credit Cards
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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:

  1. “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.”
  2. “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.”
  3. “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:

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.

Bottom line

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.

In the meantime, I’ll continue to use my Chase Freedom® CardChase Freedom Unlimited®, and Ink Business Cash℠ Credit Card, as I did before, to accelerate the points I earn.

What do you make of the concepts that are being considered?

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  1. That would only be a marketing suicide for Chase having already the nonsense 5/24 rule. btw totally unrelated but did you know redeeming United Miles on standard awards earn elite miles and base miles on singapore krisflyer. You have to change your frequent flyer info to Singapore Krisflyer on the United itinerary after you book the award ticket !!

  2. This discussion assumes that one always receives $0.015 per point in value at the Chase Travel Portal which is not alway true. Adjustments to signup bonuses, point earning categories, point redemption values, point transfer options, and annual fees all allow Chase, AMEX, and Citibank many opportunities to drive their credit card profits while limiting transparency since most consumers are unable or unwilling to do the time consuming algebra necessary to determine their net rate of return. Point devaluations – many without much warning – erode trust and the value proposition such that US airline loyalty programs are largely a joke for most customers except very frequent international premium class travelers.

    What is amazing is the availability of transparent no annual fee cash back cards with solid daily use value propositions such as the AMEX Blue Cash, Citibank Double Cash, and the Citibank Costco cards (I use them all). The AMEX Starwood personal and Chase Sapphire Reserve both have a place in my wallet now but the next year will determine if they stay.

  3. Sooo….just transfer all of your points now to your CSR account, JIC? As long as you’re keeping that card, I don’t see the harm. Or am I missing something?

  4. Yikes. So what this means is i should apply for the CSP now and move my points from the Freedom and Freedom Unlimited while I can? I really want the CSR buy I cant justify it right now with my budget so its the CSP right now that im looking at.

  5. Option #1 wouldn’t be too bad, although I wouldn’t like it. I never have used the 1.5 cent travel option, but it’s nice to know it’s there. Options 2 and 3 would be terrible as they would as a side effect remove the ability to transfer points from the Freedoms to the travel partners. For me at least, that would mean not using them ever again.

  6. If one of the more drastic options happened, I wouldn’t cancel my no-annual fee Chase cards since I have nothing to gain from doing so. But I WOULD stop using them completely. They’d be essentially worthless to me if I couldn’t transfer the points to my CSR account. Not the end of the world personally, but seems like it would be a pretty dumb move on Chase’s part.

  7. I never bothered consolidating points from my Freedom to my CSP until l needed them . After see Dr’s post yesterday, l transferred all and will do so every month, just in case.

  8. I get that it doesn’t seem that they’re aiming at partner transfers, but how do you effectively separate the two? It seems to me like partner transfers would be a casualty of this unless they built functionality for you to indicate upon the transfer that you were not going to use them for 1.5c toward the cost of travel. So you’d have a pot of points you can only use for partner transfers? Doesn’t make sense to me that they’d add that.

  9. Of course you’re not worried. You earn $ from cc signups. Points are a minuscule fraction of your “free” travel budget.

  10. This would be a total game changer for me. Right now I’m quite happy combining the Freedom Unlimited with the CSR, but a change like this might make me drop them both.

  11. Where there is smoke, there’s fire. The Ultimate Rewards program has always been a lot more lucrative than Membership Rewards and ThankYou points, and given the popularity of the new cards and the explosion of interest in the points/miles game, devaluation of transferable currencies was only a matter of time. The only way Chase could feasably maximize profit and minimize outlays with current cardholders is to close off applications like Diner’s Club did.

  12. Lucky: Doesn’t the The Ink Business Cash℠ Credit Card offer 5x points for office supply store purchases, also? That’s the main reason it’s in my wallet . . .

  13. BTW – I’m with most of the others – not a deal breaker, but a potential real devaluation and annoyance for me as I’ve spent the last 4 months building my Chase card portfolio to maximize points. Oh well, diversify, diversify, diversify. Working on the AMEX card portfolio now, with Citi after that . . . Any specific suggestions on Citi cards to hold (given you just did a post on AMEX cards you hold and value most)?

  14. I just took the survey as well. Honestly I think the program is great as-is, but I don’t own any no-fee Chase credit cards so it doesn’t matter to me. As long as I can transfer between my SP and SR I don’t care.

  15. The problem is that then the Reserve cards, Chase’s alternative to the Platinum AmEx card would not be so competitive.

  16. Maybe so many people are gaming the system (getting a card for the bonus and then cancelling it before the second annual fee is due) that the big issuers are getting wise.

    Sites like this are great but do not kill the goose that lays the golden eggs

  17. @Debit…can you expand on your latter point re. KrisFlyer and a UAL award tix? I have an upcoming saver award trip to Europe and am a Singapore Gold member (along with United). Any negative to changing the FF# for travel vs. keeping with UAL as booked? Thanks, Matt

  18. I’m about to get the Freedom Unlimited (almost out of 5/24) to move my general spending away from my SPG Amex.

    If the transferability of the UR points from my Freedom to my CSR were to be devalued, Chase can say goodbye to a lot of my business. I’m sure I wouldn’t be the only one.

  19. @ Matthewsf – This seems to work only on Standard Award Tickets that is coded like YN in economy or JN in Business/First. Krisflyer is recognising this as Y or J ticket when you update the Frequent Flier on the united award ticket to Krisflyer. Therefore you are earning elite miles and base miles as well. Your saver award is most likely XN so it won’t earn any miles.

    On an 170K United miles Standard award – YN ticket from say EWR-SFO-HKG-SIN round trip ticket you will earn around 22K Kris Flyer elite and base miles, but its not a great rate but rather something to know if you still are redeeming a standard award on united.

  20. This would effectively take away the main benefit of having the Reserve card over the Sapphire card. Most of my Chase points come from the two no-fee cards (not counting sign-up bonuses). Without the minimum 1.5 travel redemption I would switch back to Preferred and only transfer from the no-fee cards for partner awards.

  21. Of all I believe that 3rd is the most preferred. In that way I can use my Freedom for all the 5% Bonus Categories and CSR for everything else charged on Chase Cards. In that way I would get Approx. 5000 points per quarter for spending $1500 which is slightly over 3%. Freedom Unlimited will be useless though. Luckily I don’t have that card as of now.

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