Earlier this year there were rumors that Chase would crack down on transferring points between cards. I made a post sharing my background from years past speaking with Chase executives and what they told me about people who maximize their rewards with spending strategies.
I wrote how “They said that it’s always been an internal debate about whether they should allow points earned from a Freedom card to be transferred to their transferable cards at the time, which were the Ink Bold and Sapphire Preferred. On the one hand that made the cost of the points even greater as mileage transfers cost Chase more than 1 cent per point. On the other hand, they like it when a customer’s wallet is full of Chase cards and not cards from the competition. Clearly that internal debate still rages on as their rumor has continued to pop up over the years.”
CNBC reports today that Chase took a $330 Million charge for higher than expected point redemptions in the 2nd quarter.
Does that mean that spending strategies like the Quadfecta are doomed?
Well nothing lasts forever, but they quote Marianne Lake, CFO of JPMorgan Chase, as saying “We do pretty regularly review our rewards liability in light of evolving consumer behavior.”
The article continues, “J.P. Morgan’s Lake said that the recent charge, coming from Sapphire and other cards, is a good thing because it shows how engaged users are. The cards division has seen strong loan growth, modest charge-offs and record low attrition rates, she said, alleviating fears from some analysts that customers would stop using the plastic after redeeming the sign-on bonus. Chase’s card customers, especially those picked up in the last couple of years, have strong spending patterns, Lake said. “Engaged customers bring us more spend, they bring us more of their share of wallet.””
One blogger even wrote that Chase ought to stop allowing transfers between cards as it’s simply too lucrative for consumers and costly for Chase. Aside from the arrogance of assuming that he knows Chase’s business better than Chase does, it ignores the loss of business from customers that would flee the Chase ecosystem over such a drastic change.
With the Starwood AMEX being devalued many more customers are going to flock to Chase cards next month.
As Lake said and as I said earlier this year from conversations with other Chase executives, they love it when a customer’s wallet is full of Chase cards and not cards from the competition. That is why Chase is winning the credit card wars and why they would be silly to quit while they’re ahead.