Credit Cards

Why Faster Ultimate Reward Redemptions, May Lead To Faster Devaluation

ultimate reward
Written by Dustin

With articles mentioning Chase “losing” $330 million in revenue to people redeeming rewards faster than expected, I think this will accelerate talks of Ultimate Reward changes.

The last week, there were a few articles that came out talking about super savvy credit card users redeeming rewards faster than expected. While I think it was pretty great to see people using their rewards, I think the redeeming of Ultimate Reward faster, may lead to a faster devaluation of Ultimate Rewards.

Why Faster Ultimate Reward Redemptions, May Lead To Faster Devaluation

Great for Customers:

When I initially read customers redeemed their Ultimate Rewards and Chase took $330 million from Chase’s revenue, it made me happy. More and more people are entering the credit card game to try to either earn money on their daily spend or to earn travel rewards.

Even if they aren’t redeeming for super luxurious cabins, just the fact people are traveling and saving money to do it, is what I like to see. It’s no secret I prefer more trips over fewer more fancy trips. However you redeem your points, saving money is saving money.

I think being able to take advantage of the banks to see the world for less is fantastic. Or if you don’t prefer travel and just like earning cash back, well earning cash on all your purchases is pretty great too.

Do I really care Chase “lost” $330 million? Absolutely not!

They made record profits, but I think even with record profits this does bring some concern for redemptions.

Good for Banks:

I chalk up the $330 million loss in revenue as a “cost of doing business.” Chase has very valuable rewards and have done a great job making credit cards everyone wants. There’s a reason many people adjust their credit card strategies around Chase credit cards.

Chase knows how valuable their Ultimate Reward points are. That is why people keep those credit cards toward the front of their wallets.

We should also be honest here. While many people attempt to win the credit card game, many people lose and pay interest. This is really what the banks want, right? Interest rates on these cards are killer and this is even better than the interchange fees they would receive.


While we can all fist bump and high five each other over redeeming our rewards, programs/banks like make money. While Chase made a lot of money, they always want to make more of it.

When the Chase Sapphire Reverse launched, Chase mentioned it “cost” them $200 million. Add this piece onto it and I think you could say in the last 2 years, savvy reward earners “took” over half a billion in revenue from Chase. Maybe I’m looking at this piece incorrectly, but that is how I view it.

To help combat this, Chase has made some slight changes to the benefits of the Chase Sapphire Reserve and other their other cards. Even with those changes, the core of the product of Ultimate Rewards has really stayed the same. My concern is Chase is going to make adjustments to their Ultimate Reward Program to increase their profits.

Remember the Rumors?

It wasn’t too long ago we were talking about the potential rumors of Chase making changes to the Ultimate Reward program. There were a few thoughts, I read, going on at the time:

  • Reduce intra-card transfer rates
  • Cash back cards, not to move to premium cards
  • End point pooling

We haven’t seen these rumors re-appear in the last couple of months, but I do think we will hear more about these rumors by the end of the year.

I think the rumors calmed down after Chase instead reduced a few benefits which seems like it saved a future devaluation. I haven’t been on that bandwagon, nor do I think Chase is done.

My Thoughts:

I actually like reading about people using their points to make travel happen. While, I don’t feel bad for banks in general, because they make plenty of money. I do realize banks run a business and while Chase made record profits, and I’d be a betting person to say they would like to break this record too.

Unfortunately, I do think this will come at some expense of their reward program. By reducing cost in some form or fashion will help improve their bottom line.

That doesn’t mean I think Chase completely changes their program, but I think there will be some changes that hurt the super-users. For the regular person, they won’t care or realize the changes. I really believe Chase is looking to cater to the normal person who uses their rewards for more than just travel, or don’t care if they redeem their points for travel at a less than optimal value. If Chase were to push out a few people maximizing every points I don’t think they will mind.

Chase has been really tactical in reducing churns and unprofitable customers over the last few years. I’d have to believe not all of these “super-users” are churners, but they could be seen as unprofitable.

What I think Chase does:

In a perfect world, Chase would continue to “lose” money on their reward program to keep customers happy and their credit cards in the front of people’s wallets. It’d be great to see Chase keep the program the same to stay ahead of their competition. Unfortunately, companies are always looking to improve their bottom line.

If Chase were to not allow cash back cards to move their points to the premium Chase cards, that would make the largest impact, but it would also upset many people. This would also make their Chase Freedom Unlimited card irrelevant since 2% cash back is really the lowest amount of cash back you should be earning.

The Chase Freedom would be worth keeping if this happened since it is still 5% cash back. It would definitely lose some allure though.

I view this option as the most extreme and really don’t see this happening. If Chase were to do this, I think they would see many cancelled cards. One of the great features of Ultimate Rewards is to move points from one card to another.

Removing pooling of points would hurt a little, but in reality this isn’t as big of a deal as people might make it. We already have this issue with American Express, but there are ways to move your points to an authorized users frequent flyer program. This is more of an inconvenience, since you would be able to still move points to loyalty programs.

The option I think is the most realistic is changing the transfer ratio from cash back cards to the premium credit cards. This would make Chase’s cash back cards, a little less valuable for the traveling folks, but still give you the option to move your points over for a travel redemption.

If the transfer ratio was a 3:2, for example this would convert 15,000 Ultimate Reward points from their cash back cards to 10,000 Premium Ultimate Reward Points. You would definitely have to crunch some numbers to see if moving the points to a premium card would be worth it.

For most coach travelers, moving point wouldn’t be worth it. For the business class/first class traveler this could still be worth it, but now you’d need even more points to book that luxury cabin. This also would couple with the fact the 5/24 rule will eventually roll out to all the Chase cards.

That would mean you would have to earn points with the rotation you have, instead of relying on a bonus from Chase.


I could be very wrong here, but I think changes are coming by the end of this year to the Ultimate Reward program.

A few (negative) adjustments would reduce the super-user field and potentially help improve Chase’s bottom line.

Do you think there are changes coming to the Ultimate Reward Program, or am I just over-reacting?

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About the author


After completing 6 years of pharmacy school, I finally had the time to travel. I started investigating ways to travel for less and when I redeemed my first award flight for my honeymoon, I knew I was hooked! Fast forward a couple of years and places I had never dreamed of visiting like Budapest, Honolulu, Bermuda and many other places where all within my reach, and for little to no money out of my pocket. Now, I have collected well over a million points and miles, and try to help people travel for less on their wallet.


  • I wouldn’t doubt us seeing the yearly fees of the premium cards going up. The AMEX Platinum got a $100 a year increase, so it’s not out of the question for the SR to follow.

    I don’t see them flat out removing the points “Pooling” feature… BUT

    I could see
    – Them dropping the value of the actual points (maybe a 5 to 10% devaluation)
    – Possibly charging to transfer from a lower card to a premium card; either as a points fee (20%; transfer 10,000 points, you get 8,000 in the destination account)
    – An upfront cash fee for the transfer

  • Imagine the unfunded liability of all those UR points out there! Chase estimates redemptions in its budget forecast. $300,000 more UR points were redeemed than they forecast. At the same time, their liability was reduced by $300,000 more than they forecast. They didn’t “lose” any money, they just shifted the “cost” to an earlier period.

  • Chase says they are making good interest income off ancillary loans from cc customers. Gotta believe that’s sufficient enough for now without cutting off the hand.