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Chase Sapphire Reserve® (See rates and fees)
Chase Sapphire Reserve’s refresh is controversial. It works really well for me, and the old product wasn’t nearly as exciting as it was when it launched a decade ago. Other cards had caught up, and I didn’t really recommend it much anymore. That’s changed with the card’s new value proposition.
There are basically 4 reasons this card hits perfectly for me. And that doesn’t include the highly compelling 125,000 bonus points after you spend $6,000 on purchases in the first 3 months from account opening.
- I didn’t use redemptions through Chase Travel at 1.5 cents per point. I prefer to transfer points to frequent flyer programs and redeem them at even higher value for Hyatt hotels and international business and first class flights.
- I like 4x on direct airline and hotel spend better than 3x on airline, hotela and other travel spend since I don’t book Airbnb much and don’t take cruises. I like the option to earn 8x on airline tickets booked through Chase travel.
- I like the option to redeem points at 2 cents apiece for paid business class travel on Chase’s preferred partners, on specific flights over 1.5 cents apiece on everything – 2 cents is attractive to me, while 1.5x wasn’t. And I really like 2 cent hotel redemptions on The Edit properties, where you still earn hotel points and stay credit and receive elite benefits and bundle that with Edit benefits like free breakfast, upgrades and property credits. You can pair that with the new $250 Edit credits twice annually.
- The coupon book-style credits way more than cover the card’s annual fee for me. And I’m earning the $75,000 spend threshold benefits which are huge for me (Southwest Airlines is the largest in my home market.)
Nonetheless this refresh doesn’t work for everyone. If you used the 1.5x redemptions and lost that, or the bulk of your spend was for cruises and sthort-term rentals then the refresh doesn’t work for you. So it’s controverial.
Frequent Miler wants Chase to bring back:
- 3x earning on all non-airline and hotel travel spend, and
- bring back 1.5 cent redemptions for all bookings through Chase Travel, plus offer 1.75 and 2 cent PointsBoost redemptions.
Those would be nice – they’d give more to consumers, on top of all of the other things that Chase added – but the goal of the refresh was to improve the card’s economics for Chase as well as appealing to customers. It’s worth considering what Chase was trying to do with the refresh.
- Reduce cost of points-earning. Sapphire Reserve now offers 4x on direct air and hotel spend, but eliminates 3x on all other travel – cruises, Airbnb and Vrbo, toll bridges, highways, and parking lots and garages. It would be nice to bring back 3x on all travel, but the goal of the refresh was to improve the economics for Chase! The new version works very well for me – I don’t book cruises, I prefer hotels over Airbnb – but it also works better for Chase overall.
- Reduce cost of points-redemption. 1.5x on all travel was expensive, because it meant they’d have to go out and buy that travel at retail, minus any commission they’d earn on the Chase Travel booking (which in many cases, especially for air, could be quite modest). PointsBoost gives elevated value where Chase has discount deals in place, and the best (2 cent) value where the discounts are greatest.
- Keep customers spending within their ecosystem vs. competitors. Chase Travel is one of the three largest travel booking platforms now. It’s not just a niche online travel agency site, it’s a genuine competitor to Expedia, so they don’t want to offer 3x bonuses on Expedia bookings! They offer ‘vacation homes’ and don’t want to offer 3x bonuses to encourage spending on Airbnb. If you want to book a cruise, they think it should be done through Chase Travel and will offer you 8x as a reward for doing this.
PointsBoost. It’s offering the highest redemption value on Chase partners where there are discount deals and also keeps your spending with partners, which is great for their cobrand relationship as well as cost. The card promotes their lounges, their travel agency (Frosch Travel), their dining experiences.
And they offer a $250 Shops at Chase credit as one of the $75,000 spend benefits. They get their highest-spending customers used to spending at premium merchants through their platform. They are curating their own mall and trying to keep customer spend inside of it.
- Generate fee income. The annual fee increase to $795 from $550 is significant – across probably a couple of million active accounts this is roughly half a billion dollars just from the fee increase.
Chase Sapphire Reserve® was expensive. The economics of the original card weren’t nearly as good for Chase as they’d hoped. They were likely rebating the full value of interchange to the customer, and with the high annual fee they were attracting consumers who were less likely than average to revolve balances so they weren’t generating APR.
They still pitched it as a success – it was a popular card, especially out of the gate where they signed up nearly a million customers in the first year! – and they hoped it would spill over into cross-sales of other banking products like mortgages. But while they ran a big promotion on new mortgages with up to 100,000 Ultimate Rewards points, we haven’t seen anything like that since 2017.
From the very start we saw cost cuts to Sapphire Reserve. It was took expensive, so they limited Priority Pass guest access and then they limited non-lounge visits like restaurant credits. They switched the travel credit from calendar year to cardmember year (to prevent customers from double dipping in their first cardmember year). They stopped awarding points on the travel spend that was rebated with this credit.
This refresh was meant to turn around the card’s economics, to direct spend within Chase’s ecosystem, and to generate new excitement for a product that had become fairly stale and that faced new competition from other issuers. And it seemed to do that!
I think the American Express card refresh that came a couple of months ago hurt them because Platinum came with so many credits that it seemed to offer even better value. The Amex dining credit is so much easier to use, across such a broader array of restaurants!
But here’s the thing – Platinum is a great card for benefits, where you can generate several orders of magnitude more back than the card’s annual fee if you jump through your hoops (while Chase Sapphire Reserve® easily pays for itself, it’s not at several multiples of the annual fee). But outside of direct airfare purchases, it is simply not a rewarding card for spending – while Sapphire Reserve is. You can earn 8x on airline tickets even when booking them through Chase travel. You earn 4x on direct air and hotel purchases – which makes it more rewarding than any hotel card. And you still get 3x at restaurants.
Sapphire Reserve works uniquely well for me because I can generate $75,000 on the card and do it in bonus spend categories, and unlock Southwest A-List and IHG Diamond status, plus a $500 Southwest credit and $250 Shops at Chase credit on top of the rest of rewards. That doesn’t work as well for everyone.
The thing to understand here, though, is that simply restoring some of the things that Chase took away fundamentally is at odds with what Chase was trying to achieve with the card refresh. What they did here was intentional, and not just a misread of consumers.
Frequent Miler suggests you get the sought-after economics by converting Chase’s $300 travel credit to a $300 Chase Travel credit, because of breakage. That would be even better than breakage, since it would keep the spend in their ecosystem and earn commission (still de minimis with most airline ticket purchases). Assume they generate $60 savings, though, that’s not going to pay for 1.5 cent redemptions on all travel, for 3x earn on short-term rentals, crusies and online travel agency purchases, and keep customers on Chase Travel instead of Airbnb and Expedia for their spend.
Perhaps Chase should have tweaked the $300 travel credit anyway, in line with the rest of their priorities. But if they’d done so we’d be complaining about making that credit harder to use.
Since the original launch of the card, Chase became huge as a standalone online travel agency, they purchased a premium travel agency and dining and lifestyle properties, and began curating an online mall. Their flagship card now aligns with these priorities, cuts costs in both earning and redemption, and works to keep cardmember spend inside their ecosystem – all in a way that appeals to their highest spending customers.
It’s always possible to ‘fix’ a card by giving more to the consumer, but this was overall a money-losing product for Chase when you factor the cost of acquiring customers. They weren’t generating enough net revenue from customers to cover the cost of initial bonuses. In the grand scheme of things, J.P. Morgan Chase’s total revenue was $169.42 billion in 2024. It’s a rounding error. But they were trying to make this flagship product profitable, and 3x earn and 1.5x redemptions on all travel make it not profitable.
It did not work for us so I downgraded to preferred. The points boost for international was only on flights that cost 2000 to 3000 more than other J offerings out of AUS. For instance UA AUS to FRA was $8000 and LH was $5000 non stop. So that was a no go. I am thinking about the Wells Fargo card however.
The big flaw with Chases strategy of pushing things to their portal bookings w the increased multipliers, points boost, and cash incentives is that using their portal is often fatally flawed.
For hotels, the bookings are treated as a typical third party afterthought where you generally get lousy rooms and are more likely to be walked, or the properties with bonuses like the edit are priced severely over direct booking through the hotel themselves, eliminating any points boost advantage. Even regular hotels are overpriced most of the time vs direct, and that’s before accounting for the loss of status perks or elite night credits.
Airlines are even worse because of the extremely restrictive change and cancellation policies, which essentially return air travel to over 10 years ago when it was difficult to cancel or change flights. The credits you get are only usable through chase, you lose any residual value if you change a flight to a cheaper flight, and all sorts of other difficulties dealing with flight time changes and such. And that’s before we get into the dreadful customer service, where even canceling a fully refundable flight often involves staying on hold for an hour while their agents can’t figure out what they’re doing.
Im not anti portal booking in principal like many are in the travel points world, because for my less flexible use cases where I cannot often use totally random travel days to chase outsized premium cabin releases portals provide another means of use, regardless of maximizing CPP value . But if Chase is going to shift their priorities to push people into the portal, the portal has to be an actual usable system, not with massive limitations that make booking through it extremely fraught with problems.
I’ve said before, it’s like ‘Dr. Strangelove, or How I Learned to Stop Worrying and Love the (CSR).’
Initially, I was pretty miff’d about the loss of the generous, broad 3x Travel category; then, recently, I paid some non-category, non-co-brand hotel spend, receiving the 4x, instead of the previous 3x or new 1x, and I was pleasantly surprised. Sure, this won’t help for rental cars or cruises (down to 1x), but it’s not all bad.
I’m still not ‘sold’ on the $75K benefits; though, I may end up spending more than that anyway, by default, so, I’ll ‘take it’ but I wouldn’t go out of my way to spend that on the card for $500 at SWA.
All that said, fine, Chase, I’ll keep the CSR. Now, could ya please get rid of 5/24, and just let us churn some more! Bah.
Thanks for this analysis, Gary. I pretty much agree with your thoughts on how we got to the revamp, although I personally reach a different conclusion, because JPM is losing the market perception war. The biggest question is what JPM’s goals are – making money on the CSR or continuing to have the CSR create positive associations with its brand.
As you noted, CSR can lose money and it’s perhaps a rounding error. JPM is the largest bank in the US by far. It has 4.5t of assets and its market cap has more than doubled over the last three years and it’s approaching 900b. Amex is the ~15th largest bank in the US and has a market cap of ~250b. By publicly traded market cap JPM is the 13th largest company in the world, Amex is 56th. Of course, in general, JPM likes having its products make money!
A decade ago, JPM got a little sick of all of its HNWI customers being so loyal to Amex for premium credit cards. Premium credit cards are a strange space. They don’t make a ton of money in interest for the bank because premium customers tend to pay off their cards in full, although the balances can still be securitized and help to shore up the higher end of the underlying collateral base of the bank’s credit card ABS offerings (Chase issued $1.5b of such notes in July). But the cards do tend to have a halo effect for the brand of the bank itself and can help with both customer retention as well as drive customers to the bank’s other financial products and wealth management services.
So, JPM launched the CSR with varying goals, but one of its biggest goals was to secure its own base of HNWI customers. The problem was, as you correctly note, that they accidentally designed a card with mass market appeal and from day 1 the card was taken up by a broader consumer market than they expected. And because of the sign up bonuses and structure of the card, it became a loss leader for JPM, perhaps breaking even from time to time. And it probably didn’t expect having to build out lounges to compete with Amex! That’s additional, very real, added cost of the CSR program.
While JPM can tolerate having a loss leader, what it would really like is to sell more financial products and wealth management services to its HNWIs. The real problem that JPM is having with the revamp right now is that it not only pissed off the broader community that held the card, it also pissed off its HNWIs that took on the CSR originally as a KISS (keep it simple stupid) card with a high fee. The whole premise was “this is a travel card, you earn 3x on travel, the first $300 of any travel is on us, pay us a fee, and when you go to redeem your points if you don’t want to deal with transferring them to foreign airlines, just redeem with us for 1.5cpp and you’ll feel like you got an OK deal.” Now… what is the pitch? Buy this card for this book of pretty annoying / hard to use coupons so you can still access our handful of lounges?
I realize you argue that the value is there! Maybe it is for some. But the perception of value surely is not. I personally disagree that the value is either there or, even worse, worth it, and for many of us, it either is not, or it now feels very hard to extract the value. Plus, JPM took something that was a simple, daily driver of everyday card spend (tap in/out on the subway for 3x points!) and made it more, well, niche. 4x direct hotels is perhaps nice (although I personally don’t care about booking direct, and can do better with Rakuten not a driver of daily spend.
And it also associated its premium brand with… Southwest! Why on earth would it do that. Southwest’s brand perception over the last 12 months is charitably in the toilet. It is not a premium airline, and premium CSR customers generally have no interest in being on a Southwest plane. But when JPM employs more folks in TX than NY, perhaps that starts to impact JPM’s thinking.
Anyway, folks like Amex took notice that JPM shot itself in the foot and decided to rub salt in the huge perception wound that JPM opened up. Amex looks like the hero riding in on a white horse and likely secured loyalty from its HNWI customer base for years to come.
Folks like C1 also took notice. They’ve been soft launching their 100k points / $10k spend by direct mail to HNWIs over the last month or two, and now that offer is public. They are about to open the LGA landing and once they do they will have lounges in the same spaces as Chase in NYC (LGA TB and JFK T4). And their card is a KISS card – $395, $300 credit, 10k points every year, and 2x on all purchases. Sounds… pretty good, right?
Folks like BofA don’t care – they are happy to make money off of their bread and butter non-premium credit card customers and feel like with Merrill they have all of the premium customer halo effect they need with 401k’s, etc.
Folks like Citi tried to do it on the cheap – offering their HNWIs a free year / $145 off the Elite, created a weekend dining category, didn’t want to spend the money on its own lounge program so got 4 passes from AA (and negotiated with them presumably to “go first” even though the cheaper Globe gets you the same 4 passes and was launched second), wasn’t trying too hard and didn’t get much out of it (in fact, given the mortifying WSJ article, the Elite probably caused more brand damage than it helped lift up brand perception).
JPM and its management tried to fix a problem with this revamp (the “original sin” of the launch itself) but, in doing so, created a bigger problem – a negative impact on its overall brand. JPM can add a one time only $250 hotel coupon that’s good for 11 months in 2026 all it wants to try to “fix things”, but its problem with the CSR is now structural having taken away the simplicity that its HNWI’s valued. That negatively impacts perception and brand value. JPM needs to decide whether having a loss leader continues to be worth it so that its customers don’t have the perception of a bank just taking advantage of them. And they have to make that decision even if there are a bunch of “upper middle class freeloaders” that will also take advantage of the CSR.
At some point, this is all much more about brand value than it is anything else, and that might drive the types of changes that FM suggests. Of course, given its size, JPM is uniquely situated to ride out the perception “storm”, but I am sure that management is carefully monitoring the impact that this is having across all of its business lines. More to follow for sure.
Did you get the bonus? I thought you got a bonus previously on CSP.
You miss FM’s primary argument – we know what Chase WANTED to do, but it doesn’t seem to be working. They had to increase the initial signup bonus once already, and are now going to introduce a targeted 200,000 bonus in branch. They already introduced several improvements to the benefits they announced at launch. Their initial assumption that consumers would flock to a coupon book full of hard to use merchant offers and less rewarding benefits was just wrong, and they now need to either make concessions or accept being an ultra premium card that only appeals to a subset of the consumers they were hoping to reach. So yeah… they were hoping to make the economics better for themselves, but they’re going to have to do things they didn’t want to do if they want to be competitive in this space.
TLDR: Chase needs to be able to make a profit on their credit cards.
Thank you! It seems like every commenter across the internet thinks that these harder to use perks = bad for Chase, and I vividly remember several commenters saying that “heads will roll at Chase because of this”. This card was very intentionally restructured to be better for Chase precisely because the old card was too easy to get outsized value and made for poor economics for Chase. They have swung the pendulum hard to the other side and now they have to do more fine-tuning to find that balance, but at least this time around they’re not bleeding money.
@Peter — I remain a big fan of your analysis as well.
No doubt, JPM is doing just fine ($4.5T assets, near $900B market cap, …’oh no, what will they do, can they even pay the bills for that new skyscraper off Park Ave.’), regardless of the CSR.
I doubt truly HNWI even care much about any of this anyway. The biggest ‘whiners’ are folks like us who took great-advantage of the original-sin ‘loss-leader’ aspects of the original card. While we all may prefer KISS, the true winners adapt to such changes, find new angles, or ditch.
Ultimately, these debates feel a bit like ‘Coke v. Pepsi’… they aren’t that different, and we have our preferences, but, like, anyone really gonna go to ‘generic’ store-brand colas?
Very insightful discussion as always. @1990, your thoughtful and elevated ‘Coke vs Pepsi’ metaphor pretty much sums it up!
@ Gary — Other than promoting the card here, I don’t see how the reasons you state to be compelling for you. Given that you primarily stay at Hyatt and undoubtedly have a Hyatt card or two, I don’t see you gaining much from the increase in hotels from 3x to 4x. Given that you have a Plat AMEX, I imagine your airfare spend is put on that for 5x rather than 4x. Do you seriously put $75,000 on this card each year just to earn a measly $500 Southwest voucher??? The 2 cpp redemptions sound great, but are they really that good for you when you primarily stay with Hyatt (should get ~2 cpp booking directly) and fly business class (should get way more than 2 cpp booking directly)?
Maybe Chase is better off with the new product, but the vast majority of cardholders are not. This card is good for one thing — the SUB. If you already have it, it is fine for the all the junk benefits until renrewal, and then this goes to the trash pile.