Chase Sapphire Reserve Card is Changing the Definition of a Year for its Travel Credits

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Mid-last week I was speaking at industry conference Card Forum and caught up with a senior vice president at US bank. We got to chatting about the new Altitude Reserve card, US Bank’s entry into the premium card space.

I told him I was impressed by their move to contain costs while offering a premium product, citing the Priority Pass Select card that comes with 4 visits per year not unlimited visits like so many other premium cards offer and also their $325 travel credit which is based on cardmember year rather than calendar year (meaning cardholders couldn’t “double dip” on the credit in their first year).

The biggest benefit of the card in my view is triple points on mobile payments, I thought that could get expensive and we chatted about the controls they have in place. He did note though that it’s something they’ve budgeted to get more expensive. When a cardmember sees their annual fee and asks themselves is this card going to get more or less valuable in the coming year increased availability of mobile payments makes the answer more valuable.

I’ve never really understood why banks offer their travel credits on a calendar year basis but annual fees are on a cardmember year. If you sign up for a card now, you get the travel credit in the back half of 2017 and again at the beginning of 2018 all for one annual fee. In other words, the travel credit can be larger than the fee itself.

The Citi Prestige Card has a $250 airline travel credit. Buy a ticket, trigger the credit. The card’s annual fee is $450. So you can come out ahead in the first year, signup bonus and all the other benefits of this premium card aside.

The Platinum Card by American Express offers $200 airline fee credits. Those aren’t supposed to work on airline tickets, but I’ve always personally had success with $100 American Airlines e-gift cards (I select American as my airline of choice for the benefit). That almost pays for the $450 annual fee, and the card is how I get my Hilton Gold status and Centurion lounge access.

The Chase Sapphire Reserve Card is a $450 annual fee card that comes with a $300 travel credit. Its credit is especially broad, working on all things that code as travel such as airline tickets, hotel stays, or even Uber. The fee credit has been calendar year (all the statements which close in a given year) which meant you could double dip the credit.

That’s changing (HT: Doctor of Credit)

Here’s the verbiage from the Chase website:

$300 Annual Travel Credit: A statement credit will automatically be applied to your account when your card is used for purchases in the travel category, up to an annual maximum accumulation of $300. Annual means the year beginning with your account open date through the first statement date after your account open date anniversary, and the 12 monthly billing cycles after that each year. (For applications submitted before May 21, 2017, annual means the year beginning with your account open date through the first December statement date of that same year, and the 12 billing cycles starting after your December statement date through the following December statement date each year.) Call the number on the back of your card to see when you are eligible for your next $300 Annual Travel Credit.

Key takeaways:

  • The fee credit will be changing to cardmember year
  • Applications submitted before May 21 still get the ‘old method’ in year one

Nothing has yet changed for existing cardmembers although of course it’s only possible to ‘double dip’ in year one anyway.

One of the things the card has had going for it is this travel credit, that year one double dip made it an easy sell for many to swallow the $450 annual fee. I find that many readers get started with the Chase Sapphire Preferred Card since that has a $0 annual fee the first year, then $95 (‘try before you buy’).

The $450 fee is meant to be a barrier to signing up for a premium card. They kind of cardmembers they want for the card, with heavy spend, are the ones who aren’t going to think too hard about a $450 fee. Folks who have to think carefully about the financial decision, perhaps because they aren’t spending as much, aren’t the target market for the card (even if frequent flyer enthusiasts make great use of it).

Sapphire Reserve no longer offers a 100,000 point signup bonus. Now they’re scaling back a bit more on the cost side of the equation. This idea comes just after US Bank implemented a similar approach, though it’s not clear if Chase’s plans predated knowledge of US Bank’s strategy.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. The double dip never made any sense from a business standpoint so it is not surprising to see this “feature” disappear. What I find more troubling is your endorsement of the US Bank strategy to limiting priority pass benefits on its premium card. This would be a major takeaway for those who don’t hold other cards that provide PP membership and is especially problematic for those of us who travel extensively with families. My guess is that the number of CC holders who even hit 4 PP Select club visits is a tiny fraction of the total, and thus the cost of the more generous program is small. Particularly for folks like me and you who have multiple cards that come with PP access.

  2. This an other pages on this site are impossible to scroll at times due to the “sticky” video ad in the right rail. As a loyal reader, I hope you’ll fix this bug soon. Using desktop Chrome 58 on mac ios 10.12.

  3. Unless paid back in benefits, the target market for cards with a $450 AF is “rich idiots.” All credit cards allow people to buy things, so some banks’ target market is people with more money than brains who can be suckered into paying $450 a year for a “status symbol.”

  4. @b1 – You’re exactly right, but some of these cards do provide the benefits. There are other cards for ‘idiots’ who are looking for a status symbol.

  5. “I’ve never really understood why banks offer their travel credits on a calendar year basis but annual fees are on a cardmember year” – Actually, this made a huge amount of sense for the customer. Let’s say there’s a credit card benefit that you don’t want to waste but don’t need for a while. Remembering all of your annual benefits that expire at different times of year can be complex and annoying for lots of people. If the benefit runs concurrent with the calendar year, it’s much easier to realize that the deadline is approaching, and it’s a good idea to use your benefit soon. The banks sticking with a calendar year were showing good customer service, and by rescinding this policy are showing poorer customer service. An additional show of good service was allowing the benefit for the incomplete first year. As to the annual fee, it’s considerably less likely that the bank will somehow forget to charge you the annual fee than you forgetting to maximize your benefits, so the banks couldn’t care less which month or season the annual fee comes due.

  6. Under key takeaways you say the fee credit will be changing to calendar year. Isn’t it exactly the opposite?

  7. I’m disappointed. You’re impressed they’re controlling costs by limiting the Priority Pass access to four times? I would never be interested in a premium card with that kind of limit. You’re inspired by their limiting use of the travel credit to once rather than twice?

    Those are precisely the reasons I haven’t given a thought to getting this new product. I’m buying $7,000 worth of air tickets tomorrow with my AMEX Platinum. I like premium cards that have benefits that make a person want to get, use, and keep them, not ones that try to enter into the space with second rate products with high price tags that offer little motivation to have them. I guess I’m a dinosaur, but I don’t care at all about mobile payments.

  8. I wouldn’t be surprised if American Express is the next company to limit the number of Priority Pass visits per year. American Express seems to be at the bottom when it comes to premium cards. Aside from the Centurion Lounges, I don’t see any other reason someone would want a Platinum Card. Since they removed the 50% rebate on airfare purchases, I see no benefit to having a Platinum card over a Sapphire Reserve or Citi Prestige. That being said, this change to the Sapphire Reserve is no big deal to someone holding the card for long term benefits. Gamers are hurt by it, but long term Sapphire Reserve cardholders are not hurt at all by it. This change is nothing compared to American Express devaluing their rebate from 50% to 35%. It’s actually a very smart move by Chase.

  9. “I told him I was impressed by their move to contain costs while offering a premium product, citing the Priority Pass Select card that comes with 4 visits per year not unlimited visits like so many other premium cards offer” – Glad you were impressed by that. Even on a single trip I can end up visiting four different PP lounges, especially in Asia where you often need to fly to move around due to terrain.

  10. @DaveS – I am not inspired by it, I thought they were a bit more business savvy than some competitors, they get the headline benefit without the big cost. I think they key benefit to the card is 3x on mobile payments but they appear to be shutting down people buying gift cards…

  11. The CSR’s $300 travel credit as initially structured was too “lucrative” to be sustainable (sort of like how HGP’s benefits and promos were always too “lucrative” to be sustainable, so they got scaled back or pulled altogether).

    Initially, the travel credit, C, for X annual fees paid was given by the following equation:

    B = $450 * X – (X+1) * $300, so that

    for X = 0 (before the first AF was due)
    C = – $300 (one could get up to $300 extra in one’s account if one spent a lot on travel).

    for X = 1 (after paying the first AF on the first year anniversary of the card, one made money!!!)
    B = -$150

    for X = 2 (after paying the 2nd AF, effectively no AF!)
    C = $0

    for X = 3+ (after paying the 3rd AF and thereafter)
    C = +$150

    Translation: EFFECTIVELY, one did not pay any AF the first two years after getting the CSR. Chase either knew it or they just realized it after people like me pointed it out in this space on this blog or others.

    ————————————-

    After the change

    C = $450X – $300X so that

    for all X

    C = $150.

    What this means is that there is no longer an ~2-year AF ‘holiday”. One pays $150 within a year of getting the card and thereafter, which makes more business sense.

    It may also mean that Chase is about to let bloggers have the signup link for the CSR…

    The change does not affect the millions who already have the card, however 🙂

  12. Minor typo.

    That’s

    C = $450 * X – (X+1) * $300
    rather than
    B = $450 * X – (X+1) * $300

  13. @B1

    $200 airline credit. $100 Global Entry rebate. Free breakfast at FHR properties.

    All makes this card with an actual cost at or near $0.00. And all the rest of the perks are still available.

    Who’s the idiot?

  14. As a frequent lounge goer, I think it’s more about limiting Priority Pass to ALL premium/premiere cards. They’re WAY too crowded (I know, I know…I’ve complained about this in the past). But if US Bank does it, then maybe Chase will follow. I agree with Gary.

  15. My wife signed up for the Reserve the day it came out and received her travel credit for 2016. She has yet to use this year’s credit. Does she now have a deadline to use it? We just had a baby this week and are not traveling for a little while…

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