Is Customer Service Worth an Annual Fee?

I took Scottrick to lunch when he stopped at SFO on his way to the MegaDO last week. After burger and a beer I — being a good dad who reads his son’s blog — put my Chase Sapphire VISA card on the check. Our waiter returned saying my card had been declined. Major embarrassment. Did I forget a payment? Did Chase hate me? You know the anxious feelings. The only other card in my wallet (I did have a bunch of cash, being old) was another Chase card, their British Airways VISA. That one passed muster and I drove Scottrick back to the airport for his flight to JFK.

Of course he gave me sage advice to phone Chase immediately. (How it changes as we get older: Now he gives advice and I listen.)

I made the call. On the second ring a pleasant woman answered with her full name and the city (in the U.S.) where she was located. With my name and the last four digits of my card she noted a ‘security flag’ on my account. She carefully explained what would happen next: She would put me on hold for one to two minutes; I would hear hold music; She would contact a security agent; The would both come back on the line; She would introduce me to the security agent. Then she asked if I had any more issues she could address.

Let me compare this to my experience at Wells Fargo, which also declined my card recently.

The only reason I have a Chase card is because Scott bugged me to get one. Normally I’m a big WF customer. They store all my savings, a big retirement account, my mortgage, etc. I’ve been a customer since 1976 (really). But when I tried to call them the phone rang forever and I went through a long phone tree beginning with ‘press 1 for English.’ I was summarily transferred to a person who said my card was on some list they got from a retailer of cards that might have been compromised (the same problem Chase had).

My WF card was toast. They would mail me a new card which would arrive in ten days. No amount of protest would sway the indifferent clerk. When I looked up my account it said ‘Lost Card’. I was insulted: I have never lost a card in my life.

You could already tell I was getting a better experience from Chase. When the first agent handed me off to the security agent, she again asked if I had any other issues before disconnecting. The security agent verified I had the card in my possession, verified the most recent three or four charges, and apologized for the inconvenience. She asked where I was (proactively!) and if a new card mailed to my home address would reach me. (It was sent the following day via UPS next day delivery.)

She asked (again proactively) if I had plans to use the card. I told her I was out of town and planned to check into a hotel that evening. Even though they were taking the precaution of sending a new card, she offered to reenable the compromised card!!! She said it would only work for swiped charges (no online or phone charges), only in California, and only until I activated my new card. Amazing! Chase took a risk, albeit a very small and measured risk, to make me less upset about something I didn’t cause.

Of course the new card arrived on time and I’m again accumulating Ultimate Rewards points. I’m more devoted to Chase (and less to Wells Fargo) than ever.

Now, being of similar temperament to Scottrick, I have to suggest what might make it better: A call or text or smoke signal from Chase would have been nice. Being embarrassed in front of a client, or worse (as I was) in front of the younger generation, is never good. Second, I’d like to know who compromised my credit card number. I prefer not to do business with sloppy people and I might (maybe) change my buying habits with that information. If I’m more selective about my vendors, that ultimately helps the card companies avoid compromised cards.

One more unusual thing: I normally cut up old cards and throw them out. The Chase Sapphire Preferred is reportedly made of titanium. I didn’t try to cut it, and I’m sure I could have found a way to destroy it, but with my new card Chase included a reply envelope with instructions to return my old card to them for secure destruction. Maybe they created the problem, but at least they offered to fix it.

Closing note from Scottrick: I first got Dad hooked on Chase when I found out he had well over 200,000 Wells Fargo Rewards points — and they’d been expiring due to inactivity. He still thinks what I do is crazy.

I know that some readers have criticized me for keeping the Chase Sapphire Preferred after the first year because the 7.5% annual dividend on earned points is rarely enough to make up for the $95 annual fee. If Ultimate Rewards points are worth 2 cents each, you’d need to earn over 70,000 points each year to make it worthwhile.

However, if Dad is liking the premium service, there is an even better option. He has been angling to get a true Chip + PIN credit card for a while. Wells Fargo was testing one with select customers but refused to include him in the trial. Another option is the J.P. Morgan Palladium Card, also from Chase. It’s similar to the Sapphire Preferred except the annual fee is $595 and the 2X bonus points only apply to travel only, not dining. There’s also no sign-up bonus, but you can get a 35,000-point bonus each year you spend over $100,000.

What do you think? Is it worth it to fork over $95, or even $595, for better customer service? If you’re the kind of guy like my dad who hates wasting his time and prefers the simplicity of a single card, there is a good case to be made for paying an annual fee even if he doesn’t earn that back in monetary rewards every year.

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  • http://thegirlandglobe.com/ Becky

    I pay for service all the time – whether that’s a better gratuity at a restaurant, specifically choosing stores that may have higher prices because it’s an easier experience, or choosing Delta even if the rewards aren’t as valuable. Why should credit cards be any different?

    • othermike27

      +1

      But good service can be a surprise: when I called to activate my CSP earlier this year, I was expecting the usual automated sequence or at least a phone tree to a live person. So, I was finishing lunch when I called. When an actual live human answered, darn near choked on the banana trying to respond to him.

      The race to lowest cost often overlooks the convenience and service that many of us still value – things that have costs associated with them.

  • Lynn

    I had a similar experience with the Sapphire – but they called us first and we received the cards the next day! Contrast that to my Club Carlson from USBank, which was declined at a local Target (losing the 5 points/$ on over $100 of purchases). I called them when I got home and they informed me, after switching me around to at least 3 reps, that my card had been compromised and they’d send out a new one. Which I would receive in 10-13 days. And no response when I complained about losing the points on a purchase I couldn’t complete. I don’t use the card that often, so if I hadn’t tried to use it for a month, would I have ever been contacted by USBank?
    My husband’s Ink and my MileagePlus cards have also been hacked in the past, and Chase called us before we got declined somewhere. With my MP card, they called to verify some suspicious charges – which I hadn’t made. So I’m totally thrilled with Chase’s level of customer service. Not so much with USBank.
    So we’ll keep paying the $95/year for the Sapphire (and paying for other Chase cards, too!).

    • SamL

      I also had trouble with a USBank Club Carlson card. I was making a purchase of around $500 toward minimum spend, so I called and when I finally got an agent, they went through a long process to verify that I was who I said I was and that I was in possession of the card. Then the rep said I was good to go–to try the purchase again. So I did and it was declined a second time. I was livid and incredibly embarrassed. I called again, waited again and told them what I had just been through. The rep had to alert the security department to watch for my charge, so they could make sure it went through. It was a major pain. Based on that experience, I won’t be making a USBank card one of my carry-at-all-times cards.

      Chase is awesome. They always take care of any problems I have. Amex is accommodating, but, I have found Chase to be more helpful. I generally have a Chase and Amex card in my wallet at all times.

  • Alex

    Yesterday, my friend and I both forgot to retrieve our cards from the ATM machine (it was one of those machines that does not give your card back until the very end – and by then we had already walked away upon getting the receipt). We both called our respective banks at the same time, and the contrast could not be any clearer. I use First Republic, and was connected immediately to an agent, the agent canceled the card offered to send a new debit card). My friend used Wells Fargo, was put on hold (I was off the phone before she even got off hold), got transferred between the credit card and debit card departments. They canceled her card, but said that she would need to go to an actual branch to order a new card because the debit department did not have her account number (couldn’t they have looked it up?!?!?!). Anyhow, I love First Republic. They are a great bank and have great customer service.

    • Scottrick

      In defense of WF, I had a similar situation happen recently. Fortunately I was at a branch and was able to go inside to fix the situation in person. After checking my ID they created a temporary card that I could use until a replacement one arrived, but I agree that their customer service over the phone is not very helpful.

  • Alan

    So I’d chip+PIN a premium option in the US? Here in the UK all credit/debit/charge cards come with it by default!

    Agree excellent CS there by Chase though!

    • Dad

      Chip and pin is rare in the US. My Chase British Airways card has it which is an attractive ‘benefit’.

      • Garry Margolis

        I have chip cards from Diners Club and Chase BA. I don’t use the Diners Club card overseas because it charges international transaction fees. The Chase BA card, unlike the Diners and overseas-issued chip cards, does not require a PIN. It has an embedded PIN, so signatures are required, just as with other non-chip cards, so it’s no more secure than a standard, non-chip card.

    • Scottrick

      As my dad said, it isn’t necessarily premium, just extremely rare because none of our point-of-sale machines can read them. Most cards that have a chip still require a signature.

  • Guest

    My Chase British Airways card has chip and pin. I haven’t been outside the US since I got it, but I expect it to make travelling much easier.

  • Michael

    I personally use the non-preferred Chase Sapphire card, which doesn’t have the annual fee. It doesn’t have all of the benefits that the preferred card does (UR points yes, annual dividend no) but still has the great customer service over the phone. I suspect that it is the exact same phone bank that the preferred card people get sent to.

    So that is certainly an option for people who like Chase Sapphire service, but who are opposed to paying annual fees.

  • BatSheva

    For sure Customer Service is worth paying for but AMEX beats them all. AMEX service is really second to none. I agree that CHASE service is good but AMEX really has the edge. Some examples: I had my AMEX card declined in the UK on a UK telephone transaction for a $1500 transaction for “unusual pattern of spending” reasons. I used another card and then complained to AMEX that I lost the MR points. I was credited with them immediately plus another 500 for the trouble of having to call them. Years ago I flew from Tel Aviv to Paris noticing as I checked in that I had forgotten my AMEX card. I called AMEX and had a new card waiting for me at their Paris office when I arrived. Luckily it was a few minutes from my hotel. Usual disclaimers: I have no relationship with AMEX other than as a debtor! I also have several CHASE cards that I keep for their service benefits like no foreign service fees and the BA VISA chip but if the chips are down I would prefer to have a problem with AMEX..

  • UAPhil

    I’ve had both Amex and Citi proactively contact me (by phone and EMAIL) when they’ve detected questionable charges. (Interestingly, purchasing 2 train tickets from Paris to Munich in 2011 triggered fraud alerts on both cards. More recently, Amex rejected a $43.00 Greyhound bus charge until I called in. Guess they don’t expect their First World customers to be riding the bus, even when it makes sense.) :-)

  • Michael

    Don’t forget to figure the lack of foreign transaction fees when calculating whether the CSP card is worth the $95 per year. (The fact that your dad wants a PIN + chip card made me assume he must be spending some time outside the USA.)

  • http://www.streetsmarttraveler.com/ Marcus

    Yikes, sorry about your Dad getting embarrassed. That sucks. I’ve had Chase proactively call me about one of my cards being compromised.

    To be on the safe side, I hung up and called back on an official fraud hotline for my bank. I’ve heard that scammers will call you up with alarming warnings to panic you into revealing your personal details. So it’s best to hang up and call the bank yourself. The rep confirmed that my account had been compromised, and reviewed the most recent charges. I told her which purchases were mine and which ones weren’t. They ended up closing the account and sending me a new card by express mail. Very fast and efficient.

    Still, I was baffled how someone could “steal” my credit card when I still had it in my wallet. Huh?

    That experience spurred me to look in-depth at the world of underground credit card fraud. Read a bunch of articles on this topic. One of the best pieces was in Wired magazine called, “One Hacker’s Audacious Plan to Rule the Black Market in Stolen Credit Cards.” Through telling that one hacker’s story, you learn a lot about how that industry operates.

    I’ve also made a video on YouTube where I shared my experience. It’s titled “What Is Identity Theft? Credit Card Fraud.”

    If it makes your Dad feel better, sometimes hackers get your credit card info by hacking into a bank or the computers of a retail store chain, not through your own carelessness. There was another fascinating article in the New York Times called, “The Great Cyberheist.” In that story, the hackers broke into the computers of T.J. Maxx to grab the credit card details and manufacture cloned cards.

  • Jason

    Sapphire Preferred service is great, even compared to other Chase products. I guess I had gotten a bit spoiled and was surprised when I called Chase about my Ink Plus card and had to go through a menu!

  • Dan

    I was just in SanFran for a quick weekend out of Seattle. Check in to the hotel only to find my Alaska Visa declined. WTF? I hand over the AMEX and head to the room. After about 45 minutes and a scolding by the BoA security team for not calling them, my Visa card was again active. Really, I travel 600 miles and they shut down the card? Agree, a text message or email would have been nice that they were shutting the card down. The hotel was about the 5 charge of the day in the area. Embarrassing and a hassle.