By Jacob Passy
Scott Olson/Getty Images
Chase Sapphire cardholders /zigman2/quotes/205971034/composite JPM +2.41% will be able to use their rewards points to cover purchases like groceries and takeout food thanks to a temporary new feature.
Called “Pay Yourself Back” the new system will allow cardholders to use their rewards points to cover a portion or all of existing purchases at grocery stores, home improvement stores and dining, including restaurants, takeout and eligible delivery services.
The new points program will go into effect May 31 for the Chase Sapphire Preferred and Reserve cards, and the bank plans to extend the feature to other cards in the future. The new system is currently set be available through September 30. “We will be looking to evolve to keep the categories fresh and over time introduce other eligible Chase cards to the feature,” a spokeswoman for Chase told MarketWatch.
To redeem points through this service, Chase cardholders will log into their rewards account and select from eligible transactions within the last 90 days.
‘All of these changes indicate that card issuers don’t expect things to get better very soon.’
Matt Schulz, chief credit analyst at LendingTree
Cardholders will get more value when they redeem points this way versus getting cash back. When converting points to cash back, one point is worth 1 cent. Through Pay Yourself Back, points will be worth 25% more for Sapphire Preferred card holders and 50% more for Sapphire Reserve card holders, Chase said.
Historically, Chase has focused its Sapphire rewards on travel purchases, but like other card issuers, the company has had to shift gears because of the coronavirus pandemic.
“No one signs up for a high-end travel credit card wanting to use those points for groceries, but these are strange, strange times, so a lot of the old conventional wisdom doesn’t apply right now,” said Matt Schulz, chief credit analyst at LendingTree /zigman2/quotes/204207971/composite TREE +2.10% .
But consumers who hold multiple rewards-earning credit cards might see the value of those cards decrease, because many other companies have shifted toward purchases at grocery and home improvement stores.
“There’s a lot of overlap,” said Ted Rossman, industry analyst at CreditCards.com. “If you used to have three different travel cards — maybe a transferable points card like the Sapphire Reserve or Sapphire Preferred, plus an airline card and a hotel card — now you essentially have three grocery cards.”
Many credit card companies have extended the time to earn sign-up bonuses. Other credit cards have also adjusted their perks to better suit what consumers are spending money on during the coronavirus outbreak.
‘If you used to have three different travel cards — maybe a transferable points card like the Sapphire Reserve or Sapphire Preferred, plus an airline card and a hotel card — now you essentially have three grocery cards.’
Ted Rossman, industry analyst at CreditCards.com
Citi Prestige card holders /zigman2/quotes/202292798/delayed AT:CITI +2.33% , for instance, can use the card’s annual $250 travel credit on purchases at supermarkets and restaurants. Capital One /zigman2/quotes/204480509/composite COF +3.04% is now allowing card holders to redeem airline miles for food delivery, takeout, streaming and other services. American Express /zigman2/quotes/203805826/composite AXP +2.24% , meanwhile, has begun offering credits for streaming and wireless services.
“All of these changes indicate that card issuers don’t expect things to get better very soon,“ Schulz said. “Most of these changes probably aren’t permanent, especially the ones made to high-end travel cards, but they’re significant enough that they’re not going to be gone in a month either.”
Consumers in this position may want to re-evaulate which cards they have in their wallets, especially if they have multiple cards that charge annual fees.