JPMorgan Chase is increasing the annual fee for its popular Sapphire Reserve credit card to $550 from $450, the U.S.'s largest bank revealed Wednesday.
The bank is also adding new perks with partners such as food delivery service DoorDash and ride-hailing app Lyft.
The changes fit several industry trends — "raising fees to compensate for lower interest rates, prioritizing ongoing benefits over a one-time bonus and valuing experiences," Ted Rossman, an industry analyst at CreditCards.com, told Banking Dive.
"While a $550 annual fee is steep, this is an extremely popular card, and I think most cardholders will stick with it," he said.
The changes also bring the card closer to its competitor, American Express Platinum, which already charges a $550 annual fee and gives certain dining and ride-share credits, Rossman said.
"Card issuers such as Chase and American Express are in stiff competition to be at the top of affluent cardholders' wallets, and that's a big reason why they're incentivizing habitual spending over one-time bonuses," he said.
American Express made a similar move in 2017, when it raised the fee on its Platinum card to $550 after adding benefits such as a $200 annual Uber credit to its offerings.
Chase's new perks for Sapphire Reserve members include $120 in DoorDash credits and a free year of Lyft Pink, Lyft's new monthly membership program. Members will also receive 10 points per dollar spent with the company.
Chase data shows Sapphire cardholders use ride-hailing services at least once a week, according to Lyft.
"It’s really expensive for banks to provide all of the rewards that come with these cards, and that takes a toll on their bottom line," Matt Schulz, chief industry analyst at CompareCards by LendingTree, told MarketWatch. "I'd expect banks to keep pushing the fees higher and higher until they see just how much the market will bear. I don't think we’ve reached that peak yet."
JPMorgan Chase launched its Sapphire Reserve in 2016 with the goal of attracting premium millennial customers.