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Chase Sapphire Reserve Popularity
The Chase Sapphire Reserve craziness has sort of died down, but in some ways the damage of the CSR frenzy will be around for awhile. Last week some people who were approved for the card started to receive it in regular envelopes instead of the very nice box that early recipients were given. Now, it seems that they have even run out of metal cards too!
According to Ben Steverman’s article in Bloomberg (for full disclosure I was quoted in it) the bank approved “tens of thousands” of applications in the first two days after release and actually ran out of physical cards.
Chase approved “tens of thousands of applications” in the first two days, said spokeswoman Lauren Francis; the majority of the cards are going to millennials. And the bank didn’t have enough of the special cards—made with a proprietary mix of embedded metals—to meet the demand, so for the time being, it’s sending out regular plastic versions.
This is quite interesting to me and definitely proves that the demand for Sapphire Reserve was far greater than Chase executives thought. Which brings up an interesting question. Was this demand driven by large groups like Reddit or did mainstream customers get in on the fun as well? I’m not sure, but I would guess it is a combination of both.
I have mentioned before that the card got a huge media push, largely because of the generous bonus and benefits. The card was talked about outside of the points/miles circles and the value proposition was so good, that it wasn’t hard for savvy customers, many of whom already have a Sapphire Preferred, to figure out this was a good deal.
The Long Term Implications
While running out of cards is only a temporary problem for the bank, perhaps the bigger issue is the sheer number of Ultimate Rewards points they have handed out. If we assume they approved 20,000 applications in two days, that means they put out $20,000,000 in points if you take their cash value. That will take awhile to recoup no doubt.
So the final question has to be what will be the long term implications of this? Well, I am still not sure a devaluation of Ultimate Rewards is imminent like some people, but I suppose it is a possibility.
I think it is more likely that we will see:
- A significantly decreased bonus on CSR & possibly more– The offer is too rich and Chase will adjust it to equalize the market. Could we also see this have an effect on other Chase bonuses? Did marketing blow through their entire budget? There was speculation that this is why Citi removed some of their ThankYou bonuses. Time will tell.
- More stringent guidelines for approval – Chase will want to restrict who gets this card even further to make sure it is profitable in the long term. Banks don’t normally make back their money until well into the cardmember relationship, so they will want to approve people who will keep this card and who will use it.
- Removal of benefits – I think there is a possibility that some of the generous benefits may be removed or devalued. This won’t happen for awhile, since Chase will need to give customers notice before making these changes and they have marketed many of these benefits as part of the launch.
Did you receive a plastic card? What do you think will happen given this card’s up front cost to Chase and overall popularity? Is an Ultimate Rewards devaluation imminent? Let us know in the comments!
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