is increasing the annual fee on its popular Sapphire Reserve card, intensifying the ongoing competition with American Express’ Platinum card.
Starting later this month, people who sign up for the Sapphire Reserve credit card will be charged an annual fee of $550, which is $100 higher than the previous fee, according to a company document. Existing card holders who renew their cards through April will still pay the lower fee, after which point they will also be charged the $550 amount per year, credit-card website The Points Guy reported.
The card carries a variable interest rate, which ranges between 17.74% to 25.74% based on the prime rate and a card holder’s creditworthiness.
Price hikes on annual fees have become more common for rewards credit cards, and some industry experts expect that trend to continue. “It’s really expensive for banks to provide all of the rewards that come with these cards, and that takes a toll on their bottom line,” said Matt Schulz, chief industry analyst at LendingTree
subsidiary CompareCards. “I’d expect banks to keep pushing the fees higher and higher until they see just how much the market will bear. I don’t think we’ve reached that peak yet.”
Chase did not immediately respond to a request for comment regarding the change.
The fee hike comes almost two years after American Express
increased the annual fee for the Platinum card to $550. The two cards compete for similar consumers, providing rewards for travel expenses and credit towards things like TSA Precheck or Global Entry status.
Those perks are likely to keep the Sapphire card competitive despite its higher cost. “While a $550 annual fee is steep, this is an extremely popular card, and I think most cardholders will stick with it,” said Ted Rossman, industry analyst at CreditCards.com.
In addition to the higher annual fee, Chase has planned more changes for the Sapphire Reserve and other credit cards it offers.
The bank has partnered with Lyft to offer rideshare benefits to card holders. People who have the Sapphire Reserve card will receive 10x points on all rides they take with Lyft
They also will receive a complimentary year of Lyt’s membership program, Lyft Pink. The membership program provides them 15% off car rides, complimentary bike and scooter rides, priority airport pickups and other benefits.
As part of the partnership, people with other Chase credit cards, including the Sapphire Preferred, Ink and Freedom cards, will receive either 5% or 5x points back on Lyft rides.
This partnership appears geared to compete yet again with the Platinum card, which provides members with up to $200 in credits for Uber
The 10x points on Lyft rides is one of the highest reward rates in the credit-card industry for rideshares. Comparatively, the Uber Visa Card
only offers 5% on Uber rides and the U.S. Bank Cash+ Visa Signature card
offers 5% back on ground transportation. Additionally, the Wells Fargo Propel American Express card
offers 3x points on rideshare purchases.
Additionally, Chase has inked a deal with food-delivery service DoorDash to offer benefits to its card holders. People with the Chase Sapphire Reserve and Preferred cards will get a complimentary DashPass membership, which offers free delivery fees and reduced service fees on orders of $12 or more from DoorDash restaurants, for one year.
And Chase Freedom, Freedom Unlimited, Freedom Student and Slate card holders will get a complimentary DashPass subscription for three months, followed by a 50% discount price at the current rate for nine months thereafter. Card holders need to activate their subscription by Dec. 31, 2021.
For Sapphire Reserve card holders, Schulz recommended reviewing the new annual fee versus the new and existing benefits that come with the card to determine whether the added cost is justified. “This increase can be a great excuse to re-examine your spending,” he said. “The best cards give the best rewards for things that you spend the most on, and if you haven’t changed cards in a few years, it’s very possible that your card may not fit your lifestyle anymore.”
Shares of JPMorgan Chase & Co. are up 21.6% over the last three months. Comparatively, the Dow Jones Industrial Average
and the S&P 500
are up 9.1% and 11.4% respectively over that same time.