It's official: The Chase Sapphire Reserve has gone viral.

JPMorgan Chase, which launched the credit card just a few weeks ago, told Bloomberg it approved "tens of thousands" of applications in the first two days--despite the fact that it carries ... wait for it ... a $450 annual fee.

But what's really interesting about this story is who wants these cards. According to Chase spokeswoman Lauren Francis, the majority of cards are going to Millennials.

Say what? The same Millennials who are (supposedly) much less interested in credit cards than their older counterparts? Just last month, The New York Times reported that Millennials "aren't pulling out the plastic" like previous generations, under the headline "How Millennials Became Spooked by Credit Cards."

Take a closer look. The Times continues:

Data from the Federal Reserve indicates that the percentage of Americans under 35 who hold credit card debt has fallen to its lowest level since 1989, when the Fed began collecting data in a standardized way, according to an analysis by The New York Times.

The problem is, this data doesn't talk about Millennials' possession of credit cards, but only about how much debt they carry.

It's the perks, man

But if the younger generation doesn't want credit cards for debt management, why do they want them?

Put simply, for the perks.

For example, I know Millennials who use their credit cards for every single purchase--and pay off their account balance in full every month. They do this solely to rack up points and earn free rewards. (My younger brother, for example, built an entire wardrobe from Old Navy through rewards certificates.)

The Chase Sapphire Reserve Card is further proof of this. Despite the hefty fee, the card offers the following benefits. (Special shout out to The Points Guy for breaking this all down for us.)

  • 100,000 Chase Ultimate Rewards points (with a minimum of $4,000 spend on the card within the initial three months). Points can be transferred to various partners, including multiple airlines and hotels (estimated value: at least $1,500).
  • 3 points per dollar on all travel and dining, worldwide (including money spent on Uber and Airbnb).
  • Automatic $300 annual rebate for travel expenses.
  • Priority Pass Select, allowing access to over 900 travel lounges around the world.
  • $100 Global Entry credit every five years.
  • Enhanced travel protections under the Visa Infinite program.
  • No foreign transaction fees.

Just a little understanding of the Millennial mindset gives insight into why the credit card blew up on the internet (with one thread discussing the card on Reddit attracting 10,000 comments). So many Millennials love to travel. And they love finding bargains even more.

Looking back at those figures from the Fed, there's a lesson to be learned. The data may have been right, but the conclusion was wrong:

Millennials don't dislike credit cards.

They just dislike credit card debt.

Published on: Sep 14, 2016
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