Chase’s latest offer on the flagship Chase Sapphire Reserve card jumped to a whopping 150,000 points for their $795-annual fee card. Instead of converting the penny-to-points into cash, strategic reward harvesters can parlay their points into $3,000 in flights and hotels when booked through Chase Travel.
Benefits on top of that—with merchant tie-ins—can add another $3,000 in value, bringing the total to $6,000. On the low side, the cardholder gets an ROI on the shiny new card of 88.6% more than the annual fee. That beats a good day on your 401k or other investments.
The tie-ins make sense. The full offer is not filled with benefits everyone can use, but that is probably intentional to maintain its wide appeal. My favorite is the tie-in with Chase’s new credit card business card, formerly from Goldman Sachs.
The Apple Tie-In Is Great, and So are Other Credits
Had the folks at 200 West Street used this Apple benefit as a consumer lever, they might have built a better credit card. The relationship is now in Chase’s hands, and we have high expectations. I can’t wait to see how Chase turns the Apple Card into something everyone uses. That’s another story for another day, and you can bet that Chase will make the most with their new credit card business partner.
Chase added a $288 credit for Apple TV and Apple Music, an excellent benefit for iOS users. Not everyone will use the $120 Peloton credit, but the $300 StubHub credit and, certainly, the $300 Sapphire OpenTable credit have broad appeal. The same applies to $120 in Lyft credits, and $300 in DoorDash, and more.
Well-Qualified Consumers Will Pay High Fees, but They Are Fickle
There’s a personal financial business case for these high fees, particularly if you are on the winning side of the bifurcated K-Curve.
What card programs like Chase Sapphire, American Express Platinum, and Citi Strata need to figure out is the year-2 proposition. Yes, you can bring in a high-FICO-score customer who can do the math and realize the ROI on a $795 investment, but when year two rolls in, the “What are You Doing for Me Now?” becomes a cardholder-attrition driver.
Certainly, some people just like doing business with Amex, Chase, or Citi, but among the three, there are almost 100 different card options.
From Top of Wallet to Household Financial Center
Javelin Strategy & Research sees a shift in the credit card business model, and it is far bigger than expensive cards with an ROI for K-Curve beneficiaries. We’ll be publishing a report, Rewiring of the Credit Card Value Proposition: From Best Card to Best Relationship. It explains how three top bank card issuers, Bank of America, Chase, and Capital One, have enhanced their credit card value proposition from a simple business model that measures interest and non-interest income into ecosystems that drive household deposits and borrowing, create a full-service card function, and inserts itself into the buying decision.
Top-of-wallet is an overused word. What issuers want to be is the household financial center, and credit cards are a conduit.
