Rumor: No More 5x on Chase Ink

A rumor regarding the Chase Ink line of cards is circling around, via Doctor of Credit. (If you are not familiar with Chase Ink, scroll to the bottom for a primer).

Rumor: No More 5x

Instead of 5x on office supply stores, the rumor is that Chase will be reducing the multiplier to just 3x across the board. This means you will earn 3x from office supply stores and restaurants (Ink Cash) or hotels (Ink Plus), etc. Chase is also rumored to add additional categories that will be eligible for 3x.

Since this will bring the same multiplier to both categories, Chase will apparently also combine the annual cap, to $100,000 (for the Ink Plus) across both 3x categories.

What’s the Big Deal?

The Ink cards have been sort of a gravy train to a number of users, since you can buy gift cards at Staples, Office Max, etc. and earn 5x Ultimate Rewards points. You can also buy Visa and MasterCard gift cards, and earn 5x on virtually all purchases that way. Under the current scheme, you could earn up to 250,000 Ultimate Rewards points per year from office supply stores.

A reduction from 5x to 3x would be pretty significant, since this means the method of earning 5x everywhere with Visa gift card purchases won’t be as lucrative. Essentially, the difference between 5x and 3x is the profit margin. I can imagine that being a reason for the new multiplier.

This change is rumored to only apply to new card members, but I can foresee the change coming to existing card members down the road.

Under 5X

For example, a $200 Visa Gift Card at Staples comes with a $6.95 purchase fee. With the current scheme:

• You would earn (200 + 6.95) * 5 = 1,035 points
• $6.95 / 1,035 = $0.0067 / point

This means that assuming you could liquidate the Visa gift card at no cost, you’d be “buying” Ultimate Rewards points at 0.67 cents each. That’s not a bad value at all, since you can redeem Ultimate Rewards points for at least 1 cent each (or 1.5 cents if you have the Chase Sapphire Reserve), so you’d be “making money.”

Under 3X

With the rumored scheme:

• You would earn (200 + 6.95) * 3 = 621 points
• $6.95 / 621 = $0.011 / point

Assuming you could liquidate the Visa gift card at no cost, you’d be “buying” Ultimate Rewards points at 1.1 cents each. If you value Ultimate Rewards points at higher than that, you’d still come out ahead. However, the advantage is not as clear, and it’s probably not worth the work you’d have to go through.

Should You Apply Now?

Chase has been clamping down a bit on credit card application, and the Chase Ink line of card does follow the 5/24 guideline. This guideline suggests that those who have opened 5 or more cards in the past 24 months won’t be eligible for the card.

If you are below 5/24 and can take advantage of the 5x, I’d consider prioritizing this card. If you are at or over 5/24, some folks have had success in getting approval, if they are pre-approved in-branch (like the Chase Sapphire Reserve). Those close to a Chase branch could try their luck there.

The Chase Ink Plus card

What’s Chase Ink?

For those unfamiliar, Chase Ink is a brand of Business credit cards, which include the Ink Cash and Ink Plus. These two cards offer very similar benefits, as follows:

• 5% cash back on office supply stores and on cellular phone, landline, internet, and cable TV services
• 2% cash back on restaurant (Ink Cash) or hotels (Ink Plus) and gas station purchases
• 1% cash back on everything else

The Ink Plus carries a $95 annual fee, and comes with a cap of $50,000 (in spending) per category. You also earn cash back as Ultimate Rewards points, meaning you can transfer them to Chase’s airline and hotel partners. The Ink Cash does not have an annual fee, but the cap is $25,000 (in spending) per category. You will also only earn cash back, unless you have another Ultimate Rewards card with Chase, like the Chase Sapphire Reserve or Preferred.