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The Chase Sapphire Reserve Card exploded onto the scene in fall 2016. It quickly became the ‘it’ card with fast earning of valuable points and strong benefits. In that time other issuers have responded with their own improvements and I’ve argued that the card has become somewhat passé. Yet in my view it likely hasn’t been profitable.
Chase is rumored to be making several changes to Sapphire Reserve. I first wrote about three changes that are making the rounds. There are two more additional changes that are being reported.
Sapphire Reserve Is Probably Not A Money Maker
Cardmembers had very strong credit and high annual incomes (as well as significant net worth) and so may not have been especially likely to revolve their balances. As a result Chase would have been relying largely on interchange (merchant swipe fees) to fund benefits. It was rumored that Chase’s models suggested it would take over 6 years to earn back the initial bonus on early customers. That’s never a great position to be in.
Chase filed multiple 8-Ks with the SEC taking charges for unexpectedly large reward costs on the card. And they switched narratives to suggest the product would become profitable via cross-selling (Sapphire Banking, investment accounts, mortgages).
Meanwhile they worked to cut costs on the card, aligning the annual travel credit with the annual fee (so cardmembers couldn’t use the travel credit twice their first year), limiting Priority Pass benefits to two guests (rather than unlimited), and no longer giving points for spend that’s rebated via the annual travel credit.
Rumored New Benefits And Higher Annual Fee
Now Doctor of Credit is reporting on rumors of (3) changes to the card that may be coming:
- Increased annual fee from $450 to $550
- DoorDash benefit presumably what’s already live on the DoorDash site although perhaps an annual DoorDash credit also
- Lyft Pink membership good for 15% off rides and priority airport pickups
To be clear, information about the product’s changes aren’t coming to me from Chase and I have no independent confirmation of them – however DoorDash’s site is making benefits available to Chase Ultimate Rewards card cardholders and a higher annual fee has been rumored for some time.
Update: According to Dan’s Deals Chase will offer a $60 annual DoorDash credit starting January 12 (“You have until 12/31/20 to finish the $60 of spending credit and you’ll get another $60 of spending credit in 2021”) and the card will earn 10 points per dollar with Lyft through March 31, 2022 (which stacks with Hilton and Delta earning).
If True These Changes Would Improve The Card’s Economics For Chase
I assume that DoorDash is largely funding the new benefit (which is available to other Chase cards at lesser value) and likely the same with Lyft. The increased annual fee would be another move to shore up the economics of the card. Doctor of Credit suggests the higher annual fee will apply to new cardmembers starting January 12, and that the Lyft benefit will go into effect at that time.