December 8, 2016
Chase Sapphire Reserve Costing Bank up to $300 Million
Straight to the Point
The Chase Sapphire Reserve is expected to cost Chase between $200-$300 million in lost profits in the fourth quarter of 2016 alone.
Chase Sapphire Reserve
This past summer, Chase launched the Sapphire Reserve to much fanfare and wide adoption among the travel community and millennials. Since then, it remains my favorite credit card and top recommendation for travelers seeking to use points for free premium travel. You can find my full Chase Sapphire Reserve review here. The main highlights of this card include:
- 100,000 point sign up bonus (worth a conservative $1,500)
- Annual $300 travel credit
- 3X points per dollar on travel and dining
- No foreign transaction fees
- Priority Pass lounge network membership
- Global Entry credit ($100 value)
Impact on Chase
Per a recent Bloomberg article, the Sapphire Reserve has been a huge success with consumers and is expected to cost JP Morgan Chase $200-$300 million in the fourth quarter. If you add up the $1,500 sign up bonus, the $300 travel credit, and deduct the $450 annual fee, Chase is spending at least $1,350 on each customer it signs up with the card. The card was such a success when it first launched that the bank temporarily ran out of the metal is uses to manufacture these cards (yes the Reserve is a metal credit card)! Chase managed to pull off such a successful launch with very little spending on initial marketing. The huge 100,000 sign up bonus and all the other perks were enough to grab the attention of the credit card market. In light of consumers’ positive reaction, Chase has also announced that it will be introducing several additional premium cards. We don’t have any details or dates beyond that yet but it sounds promising.
Given how much money Chase is investing in the sign-up bonus for this card to attract customers, I wouldn’t expect the 100,000 point sign up bonus to last forever. Banks often introduce large bonuses to make a splash in the market and grab attention, then scale back to a more reasonable amount. Bottom line, if you’re considering this card I wouldn’t wait too long as we never know how long these lucrative sign-up bonuses will last.