JPMorgan Chase is making a significant wager that a comprehensive array of new benefits will maintain the allure of its Sapphire Reserve card among wealthy consumers, even as it raises the annual fee to $795—an increase of 45% from the previous rate. This marks the most substantial fee hike since the card’s inception in 2016.
The update, unveiled on Tuesday, promises over $2,700 in annual benefits for cardholders starting June 23. This package retains many existing perks while introducing new rewards focused on travel and dining expenditures.
Among the highlights is a revamped redemption program that enhances the value of points for select travel services, along with a $500 annual credit that can be applied at an exclusive portfolio of hotels and resorts.
Additionally, cardholders will receive a new $300 dining credit valid at restaurants within the Sapphire Reserve Exclusive Tables network. There will also be credits amounting to $300 for purchases through platforms such as StubHub and Viagogo, along with complimentary subscriptions to Apple TV+ and Apple Music valued at $250 annually.
Customers with annual spending of at least $75,000 will unlock additional benefits, including elite status with Southwest Airlines and the IHG Hotels and Resorts.
Furthermore, a new Sapphire Reserve business card has been introduced with the same $795 fee and similar features as its consumer counterpart, including credits for ZipRecruiter and Google Workspace. This strategic move positions JPMorgan against American Express, which has offered a business variant of its comparable Platinum card for many years.
Upscale ambitions
As the largest bank in the U.S. by assets, JPMorgan revolutionized the credit card sector nearly a decade ago with the Sapphire Reserve. The bank adopted strategies from American Express by integrating travel and dining benefits and subsequently established its own luxurious airport club network.
When the Sapphire Reserve debuted, it offered enticing signing bonuses and credits, making it an almost indispensable option for consumers, compelling other card issuers to enhance their offerings accordingly.
However, as JPMorgan shifts to a more upscale market with the Sapphire Reserve, it faces a potential risk of alienating customers who might consider downgrading to the Sapphire Preferred card or exploring alternatives from American Express or Capital One, according to senior Bankrate analyst Ted Rossman.
“The Sapphire Reserve was initially positioned as a solid option for middle-class consumers, offering luxurious travel experiences at an affordable price,” Rossman noted. “The trend toward more luxurious offerings might make the $800 fees unappealing to some.”
This shift could be intentional, as both American Express and Capital One have had to limit access to airport lounges due to capacity issues, leading some premium cardholders to feel that their cards lack exclusivity.
Whether the Sapphire Reserve justifies its new $795 annual fee hinges on whether customers can leverage enough of the added benefits, Rossman remarked.
Later in the year, American Express plans to introduce enhancements to its Platinum cards, which currently carry a $695 annual fee. Analysts anticipate that Amex will also adjust its fee upward while adding more enticing benefits, according to Rossman.
“These high-fee cards cater to a niche audience, without a doubt,” stated KBW analyst Sanjay Sakhrani.
Nevertheless, both American Express and JPMorgan are operating within a subscription-style business model that elevates the level of perks, creating a strong value proposition for specific customers. “This approach aims to foster ongoing engagement and spending,” Sakhrani explained. “Even at $800 in fees, the breadth of benefits offered by these cards is not easily replicated by other institutions.”
