The Chase Sapphire Reserve Credit Card: Why This Is Going To End Badly!

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UPDATE: The offers mentioned in this post have now expired

If you’re at all interested in miles & points you couldn’t have missed all the noise and excitement surrounding the launch of Chase’s new high-cost/high-value credit card (Chase Sapphire Reserve) a couple of weeks ago. To a degree the excitement has been completely justified as the card comes with a great 100,000 point sign-up bonus (after $4,000 spend in the first 3 months) (OFFER EXPIRED) and offers a few tempting benefits too….but I’m not sure everyone is seeing the full picture.

The excitement generated around the Chase Sapphire Reserve Card (CSR) appears to have resulted in an unprecedented number of applications since the card’s launch – so much so that even Chase has been caught off guard and unprepared for the demand.

There have been reports of over 100,000 applications in the first week of the CSR being available (I can’t find the link so you’ll just have to take my word that it has been discussed) and, if you think that’s an exaggeration, then the fact that Chase is having to send out plastic versions of the card because they’ve run out of the metal that it should be made from, tends to give a bit of credence to those reports.

a close up of a credit card

Great, so a lot of people are jumping on the CSR bandwagon, nothing wrong with that right?

Not quite.

Loyalty points (in this case Chase Ultimate Rewards points) are a currency and Chase is printing their currency like there’s no tomorrow. You only have to look at examples of countries that have done the same with their currencies (e.g. Zimbabwe) to see what the end result is – hyperinflation.

If we assume that, in the first two weeks of the CSR being available, Chase has approved 100,000 cards (not an unreasonable assumption considering the stories we’ve been hearing) then that’s potentially 10,000,000,000 (ten billion) new Ultimate Rewards points that could be out on the open market if the card holders meet their sign-up spend requirements. Ten billion!

Now, I realise that there are probably a few billion Ultimate Rewards (UR) points out in circulation already but the addition of another ten billion is not good news for those of us with large UR balances that we’re looking to spend.

These are Chase Ultimate Rewards’ primary travel transfer partners…..


….and I suspect that, out of those, United Airlines and Hyatt Gold Passport are the main destinations for Chase UR points as that’s where the better value tends to be found.

Can you imagine what will happen to award availability if ten billion UR points find their way across to United and Hyatt!?

Let’s not fool ourselves into believing that a lot of these points will go unredeemed and so won’t affect the loyalty environment too much – that is very unlikely to be the case.

We’re not talking about points slowly generated over time by someone with no real interest in miles & points – we’rtalkingng about a sudden and massive influx of points earned by those who applied for the CSR specifically for the sign-up bonus. These points will be used.

People are signing up for the CSR to make the most of the 100,000 bonus and they almost certainly have plans to use them towards aspirational stays and premium cabin travel. And who can blame them? There are some great redemptions to be had.

The sign-up bonus is enough for…..

  • At least 3 nights at any Park Hyatt in the world
  • 4 nights at the Park Hyatt Maldives

park-hyatt-maldivesPark Hyatt Maldives  (Image: Hyatt)

Andaz 5th Avenue New York ReviewAndaz 5th Avenue New York

Andaz West HollywoodAndaz West Hollywood

  • 2 x round trip Business Class flights anywhere in the Mainland U.S., Alaska & Canada
  • 4 x round trip Economy Class flights anywhere in the Mainland U.S., Alaska & Canada
  • 1 x round trip Business Class flight between the Mainland U.S., Alaska & Canada and Mexico (plus 40,000 change)
  • 1 x round trip Business Class flight between the Mainland U.S., Alaska & Canada and Central America (plus 40,000 change)
  • 1 x round trip Business Class flight between the Mainland U.S., Alaska & Canada and the Caribbean (plus 40,000 change)
  • 1 x round trip Business Class flight between the Mainland U.S., Alaska & Canada and Northern South America (plus 35,000 change)

….and will get you most of the way to round trip travel in United’s new Polaris Business Class (once it has been released in December)…..


….as well as a whole lot more (depending on what your travel profile looks like and your travel requirement are).

100,000 Ultimate Rewards points can be put to very, very good use.

A Devaluation Somewhere Is Almost Inevitable

This many newly minted Ultimate Rewards points is not going to be good news for the long-term….especially not as I expect these to be points that are redeemed rather than ones that just sit in an account not doing very much.

I don’t think Chase will be changing its redemption rates any time soon but, if as I suspect, loyalty systems like Hyatt Gold Passport start to see a big spike in redemptions then they may well take action.

Hyatt points are reasonably easy to collect even if you don’t stay at Hyatt properties too often and the top-level properties only cost 30,000 points/night. Compare that to Marriott (another Chase transfer partner) where a top property costs 45,000 points/night and you start to see just how good a redemption Hyatt’s can be….and the Hyatts are often better properties.

park-hyatt-ritz-carlton-abu-dhabiI’d choose the Park Hyatt Abu Dhabi (left) over the Ritz-Carlton Abu Dhabi every time

I can definitely see Hyatt redressing that imbalance (to some degree) sooner rather than later if they see redemption rates spiking (which they will).

Award Availability Is Going To Get Tighter

Even if you don’t believe that the sudden injection of 10 billion Chase UR points will lead to a devaluation, hopefully you’ll agree that this isn’t going to do anything positive for award availability.

I’m already having trouble trying to find 3-4 award nights in a row at the Andaz West Hollywood and, not only is that’s for next July (so about 11 months out!), but it’s also before most of the sign-up bonuses from the CSR have been earned.

What are things going to be like when the new batch of UR points hits the market?

Bottom Line

Bear in mind that I’ve only been considering the number of credit card acceptances that I think have taken place in the first two weeks of the CSR being available….I’m not even beginning to consider how many more points will be minted while the 100,000 bonus hangs around (which some are predicting will be into 2017!)

I can’t see any way that this many UR points can be introduced into the system without there being some serious knock-on effects for award availability (short-term issue) and for redemption rates (long-term issue).

The problem is that the new minted UR points will be used up within a couple of years but their effect will be a lot longer lasting than that. Loyalty systems almost never roll back devaluations so, years after people have had the enjoyment of this points bonanza and probably forgotten most of what they did with them, a lot of us will still be paying the price in inflated redemption rates.

My advice: enjoy the UR points while you can and, if you have large balances with loyalty systems UR points transfer into (especially Hyatt) I would consider using them sooner rather than later because, in 6 months time, they may not get you the trip they can get you right now.

Featured image: Emory Photo via Flickr