Chase said this week it’s going to raise the annual fee on its premium credit card, the Sapphire Reserve card. The fee is going up from $450 to $550.
Chase will keep the Reserve’s $300 travel credit. And it is offering a few new perks, like discounts at the food delivery service DoorDash and a year of cheaper Lyft rides.
Andrew Davidson, at the research firm Comperemedia, said it’s a sign Chase is ratcheting up the competition for young people’s business, “trying to offer a lifestyle and meet the needs of young consumers in how they live their lives today.”
Chase isn’t the only bank appealing to the stereotypical, convenience-driven millennial. American Express’ Platinum card offers $200 in Uber credits. Davidson said nonpremium cards are starting to offer lifestyle benefits, too.
“Wells Fargo offers additional cash back on things like streaming and ridesharing,” Davidson said. “You now have the Apple card as well that offers 3% back at Uber.”
Hiking an annual fee can help a bank recoup some of the costs of rewards programs and signup bonuses, said Matt Schulz at CompareCards.com.
“These rewards aren’t free, and they definitely hit the banks on their bottom line,” Schulz said.
For customers to hold on to these expensive cards, they’ll have to actually want to use those lifestyle services. Michael Smart, 29, got a Chase Sapphire Reserve three years ago. He lives in San Francisco, but he’s a little skeptical about paying another $100 a year for the new benefits.
“DoorDash — I never loved the interface, never loved the app, and now I feel like I need to, like, use this credit. Otherwise, I’m not getting the benefit off the card, and I don’t like feeling that way,” Smart said.
Smart said he’ll hang on to the card for now, but if the rewards don’t seem worth it, he’ll probably downgrade to a cheaper card.