Apparently a lot of millenials are (I was at a checkout counter recently at the supermarket and heard this from the employee about how they were seeing a trend of these credit cards being used!)

From Marketplace.org:

The Chase Sapphire Reserve card was so popular out of the gate, that the company ran out of the metal alloy used to make the cards. People are even uploading unboxing videos to YouTube. The cards have become a viral phenomenon of sorts, thanks in part to effusive praise from travel sites and bloggers.

So, what’s going on? Well, for one, Chase has a pretty attractive sign-on bonus — 100,000 points worth up to $1,500 in free travel, a benefit really popular among young people who tend to favor experiential purchases over status.

Good question for students:

So, what’s the catch with this offer?

My simplistic response: So, it’s the old marketing strategy of acquiring customers with “too good to be true” offers. We (credit card company speaking) give you $1,500 in upfront benefits and you pay us $450…per year. In about three years, you have paid us fees almost equivalent to the upfront benefits we gave you (oh and don’t forget we make money in other ways too).

Let your students do a little work to go beyond my simplistic answer:

Review the following three resources (two videos and an article) and identify the annual benefits that come from this card. Do you think it is a good deal?

• Value-Seekers Warm to a $450 Annual Credit Card Fee (NY Times)
• Cult of Chase Sapphire: Credit-Card Churners Have a New Love (Bloomberg Video)
• The Points Guy Reviews this card (4:49 video on YouTube)

Check out the latest NGPF unit on Managing Your Credit!

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.