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Last Call: Chase Sapphire Reserve Cutting Its Huge Bonus

Credit Cards, Travel Credit Cards
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Last Call: Chase Sapphire Reserve Cutting Its Huge Bonus

The biggest credit card story of 2016 was the introduction of the Chase Sapphire Reserve℠, with its sign-up bonus of 100,000 points and a planeload of other travel benefits. Alas, that mega-bonus was too good to last. As of Jan. 12, 2017, the sign-up bonus will drop to 50,000 points for online applications.

You can still qualify for the bigger bonus if you apply online by Jan. 11, says Ashley Dodd at Chase Card Services. And the 100,000-point bonus offer will be available through March 11, 2017, if you apply in person at a Chase bank branch.

Everything else about the card remains the same. To earn the bonus points, you’ll still need to spend $4,000 within the first three months of card membership. The card’s annual fee is still a healthy $450.

Move is not a surprise

The reduction has been expected, since the bonus on the Chase Sapphire Reserve℠ far outstripped anything offered by other major issuers and produced a wave of applications so large that Chase temporarily ran out of the special metal used to make the card. Chase CEO Jamie Dimon said last month that the overwhelming interest in the card and the sign-up bonuses paid out would likely cut Chase’s profit by $200 million to $300 million in the fourth quarter of 2016.

“The original sign-up bonus helped get the card industry press and market penetration, but at a steep cost,” says Sean McQuay, NerdWallet credit card expert.

What the bonus is worth

Although Chase Ultimate Rewards points are usually worth a penny apiece, Chase Sapphire Reserve℠ cardholders can get 1.5 cents per point when using them to book travel through Chase. That gives the 100,000-point bonus a value of $1,500. With a bonus of 50,000 points, that drops to $750.

Cardholders can also transfer points on a 1:1 basis to several airline and hotel loyalty programs. Depending on the value of a point within those programs, the bonus could be worth even more than when booking through Chase.

The rewards structure on the Chase Sapphire Reserve℠ is unchanged: 3 Ultimate Rewards points per dollar spent on travel and restaurants and 1 point per dollar on all other purchases. The perks are the same, too: Cardholders get an annual credit of $300 for travel expenses, which effectively reduces the annual fee by two-thirds, as well as a credit of up to $100 once every four years for the cost of TSA PreCheck or Global Entry. The card also provides access to more than 900 airport lounges worldwide with its complimentary Priority Pass Select membership.

Like all good travel cards, Chase Sapphire Reserve℠ has no foreign transaction fees.

Reserve vs. Preferred

The impending bonus reduction shrinks the gap between the Chase Sapphire Reserve℠ and its sister card, the Chase Sapphire Preferred® Card, which offers a similar sign-up bonus but comes with a much lower annual fee of $0 for the first year, then $95.

The bonus on the Chase Sapphire Preferred® Card: Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®.

With the Chase Sapphire Preferred® Card, 50,000 Ultimate Rewards points are worth $625 rather than $750 because you get 1.25 cents per point when redeeming for travel through Chase, rather than the 1.5 cents with the Chase Sapphire Reserve℠.

Chase Sapphire Preferred® Card holders get 2 points per dollar spent on travel and restaurants and 1 point per dollar everywhere else. Assuming points are used for travel through Chase, that gives the card an effective rewards rate of 2.5% on travel and dining and 1.25% elsewhere. By comparison, the effective rewards rates on the Chase Sapphire Reserve℠ are 4.5% and 1.5%, respectively.

The Chase Sapphire Preferred® Card also allows for point transfers to hotel and airline partners and charges no foreign transaction fees. However, it does not come with the hundreds of dollars in travel credits or the airport lounge access offered by the Chase Sapphire Reserve℠.

McQuay says he still considers the Chase Sapphire Reserve℠ a better travel card than its competition. But the smaller bonus means it’s no longer a “no-brainer” for regular travelers to get the card. Card shoppers should take into account how likely they are to use the card’s perks and take advantage of its ongoing rewards rates before pulling the trigger, he says.

But that’s after the bonus drops to 50,000 points. The clock is ticking.

Information related to the Chase Sapphire Reserve℠ has been collected by NerdWallet and has not been reviewed or provided by the issuer of this card.

Ellen Cannon is a staff writer at NerdWallet, a personal finance website. Email: ecannon@nerdwallet.com. Twitter: @ellencannon.