Chase Is Offering 100,000 Credit-Card Rewards Points for New Mortgage Customers

REUTERS/Dylan Martinez

This has to be one of the most expensive ways to pick up some credit-card points.

Chase announced Monday it is offering 100,000 Chase Ultimate Rewards points to its customers who have Sapphire, Sapphire Preferred or Sapphire Reserve credit cards — if they open a mortgage with Chase. The offer will be available through August 6 to customers who had any Chase Sapphire card as of May 7.

Chase’s credit cards have been popular in recent months, particularly the Sapphire Reserve card, which debuted in 2016 and initially offered a 100,000-point sign-up bonus, which was later reduced to 50,000 points. Credit card experts estimate some 900,000 people signed up for that card between September 2016 and November 2016. (Chase has declined to confirm that number.)

As a result, J.P. Morgan chief executive Jamie Dimon said in December the Chase Sapphire Reserve credit card reduced the bank’s profit by $200 million in the fourth quarter, to $300 million. Now, Chase is attempting to capitalize on the young consumers it captured with that card.

Half of Chase Sapphire customers are millennials, who may be looking to buy their first home soon, said Pam Codispoti, the president of Chase Branded Cards, in a statement. And customers under age 35 made up 36% of Chase’s mortgage originations in 2016, up from 20% in 2015, a spokeswoman for the bank said.

Offers like this one may encourage customers who signed up for their cards to develop “a relationship” with Chase instead of using the card for its sign-up bonus and then abandoning it, a company spokeswoman said.

Chase’s Ultimate Rewards points are worth about 2.1 cents each, according to sites that track point values, including the loyalty rewards site The Points Guy. The 100,000-point sign-up bonus would be worth about $2,000, and customers can redeem those points for rewards including flights, hotel stays and cash back.

The current APR for a Chase 30-year fixed rate mortgage is 4.073%, compared with 4.168% at Bank of America, 4.186% at Wells Fargo and 4.072% at U.S. Bank, according to the banks’ websites.

The banks may also charge additional lending fees, known as “points.”

Also, other lenders including smaller banks and credit unions may have better rates.

Several websites including the personal-finance company Bankrate allow consumers to compare rates online.

That said, it’s unlikely customers will sign up for mortgages just to get those points. Indeed, failing to shop around for a mortgage in order to pick up credit-card points is a bad idea, said Rachel Podnos, an attorney and financial planner based in Washington, D.C. “It’s absolutely insane to make miles a consideration in any major life purchase decision,” she said.

Anyone shopping for a mortgage should first find out how much house they can afford, Podnos said. A consumer’s total debt payments, including student loans, car loans and mortgages, should ideally not equal more than 36% of annual income, or lower for those who find debt stressful, she added.

Then, consumers should compare several mortgage offers before choosing the one with the lowest interest rate and best terms possible, she said. Choosing a mortgage with even a slightly higher interest rate could cost thousands of dollars over one’s lifetime, wiping out any benefits from an initial sign-up bonus, she said. “A mortgage is probably the biggest purchase most people will make in their lifetime.”

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