Home Credit Cards Reward Redemptions Cost JP Morgan Chase $330 Million

Reward Redemptions Cost JP Morgan Chase $330 Million

Savvy credit card users are maximizing their Chase reward points

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JP Morgan Chase announced an $8.32 billion profit in its second-quarter earnings call on Friday, July 14, 2018. But it’s not the record profit that has everyone in the credit card world talking.

For us, the big news of the earnings call was the $330 million loss incurred from customers redeeming their credit card points. It seems the bank had underestimated how fast and how well savvy credit card users would maximize their points.

It’s a bit surprising that JP Morgan Chase didn’t anticipate this, given it was just in the third quarter of 2016 when the launch of the Chase Sapphire Reserve℠ cost the bank an unexpected $300 million. This 2016 loss was mainly attributed to the higher-than-expected response to the card’s generous 100,000 Ultimate Rewards® points sign-up bonus, plus customers taking full advantage of triple points earned under dining and travel categories and a $300 annual travel credit.

While JP Morgan Chase has since slashed its sign-up bonus to 50,000 Ultimate Rewards points for the Chase Sapphire Reserve, it has retained the triple points earning structure for dining and travel as well as the $300 annual credit. In addition, it has upped the sign-up bonus for the Chase Sapphire Preferred® to as high as 80,000 Ultimate Rewards points in recent months.

Last year, several other premium credit cards took a cue from Chase’s 2016 losses and ended their massive sign-up bonuses in favor of pushing enhanced benefits for long-term cardholders.

Citi Prestige® Card, which offered a 75,000 ThankYou® point sign-up bonus in 2017, has not provided a sign-up bonus to date in 2018. Luxury cards—Mastercard® Black Card™, Mastercard® Gold Card™, and Mastercard® Titanium Card™—ended their sign-up bonuses in 2016. And The Platinum Card® from American Express lowered its sign-up bonus in 2018 (and increased its annual fee to $550).

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Award-winning travel writer and economist Paul Rubio is a credit card enthusiast, whose sophisticated use of points and rewards has helped him travel to 132 countries for free. Paul is a Harvard graduate with a master’s degree in public administration and a master’s degree in economics. He also holds a bachelor’s degree from Boston University with a double major in economics and environmental policy and a minor in conservation biology. He attended both undergraduate and graduate schools on full scholarships. Paul worked in the field of wildlife conservation before embracing his writing talents full-time in 2008. Since then, he has won more than two dozen national awards for his exemplary work in travel journalism. The prolific writer contributes to a number of top-tier international, national, and regional publications including Condé Nast Traveler, Florida Design, Fodors.com, Palm Beach Illustrated, and Robb Report.