Chase Calls Out Credit Card Super Users For $330 Million Charge, Confirms That It’s Good For Business

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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.””

That’s pretty much exactly what I wrote earlier this year based on my past conversations with Chase.

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.

HT: damaxer91

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37 Comments On "Chase Calls Out Credit Card Super Users For $330 Million Charge, Confirms That It’s Good For Business"

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MarkG

With the SPG 3×1 leaving and the new Hyatt card coming…my wallet changed from being 0% Chase to 80% Chase….

chaz

amen!

Rob

Yep, Amex is going to get very hurt by the SPG card going from 3 to 2 points. Spending will evaporate.

J

But isn’t Amex Business Blue Plus card’s 2 MR points > 1 Spg point?

Avrohom

Yes. It there is a 50K cap

Yoni

Agreed!! You have to spend money to make money. Their reward programs have reached a point where consumers are more loyal to Chase than to other Card Companies.

Mountain man

Well it was higher because they shut down so many cards and people had to cash out. That’s why it’s good for business. They started clearing the swamp.

Avi

So basically transfer all points from chase freedom cards etc… over to the cards that transfer to Airlines and hotels now and as soon as more points are earned bc the change can come at any time? Or will they give ample warning?

Shaul

The Amex SPG issue involves Chase as well. I don’t think Chase would have let an Amex earn more points with them. I think Marriott went to Amex with a take it or leave it, since they value the Chase relationship more.

Ash

All true but… they did 8.5 billion In after tax profits this quarter.

reb yid

“Aside from the arrogance of assuming that he knows Chase’s business better than Chase does”
You don’t feel that you frequently tell companies what they should be doing?

Ron

Since they removed price and return protection, Chase is now my last choice in my wallet.

Yossi

I was shut down by chase even though I was Private client and they did not give me an explanation. Give it a bit of time and they’ll start devaluing their points system and start cracking down on anyone earning too much points by “closing them for no reason” and slowly people will move away-that is of course if Amex and Citi and the other relevant banks up their game and put up a real competition. I look foward to seeing chase begin their descend.

Achshell

What was it that you did to wake up the sleeping bear?

CPC shutdown

Without an explanation, I suppose you have an idea what caused them to shut you down. Kindly elaborate.

Rickster

I cant get a Chase Card. The 5/24 rules apply to my application every time. I once had 10 Chase Cards. Now only 1. I’m glad I didn’t cancel my IHG card.

Shmuel

It’s funny how Amex used to be the best card to have and how that has now changed to chase. Let’s hope it lasts!

Mike

Bottom line will they let to transfer from freedom to sapphire ?or they will stop it ?

Ellen felder

Curious to know the same? Should we transfer our points from freedom to preferred ASAP and how do we do do that?

Riley

I’ll take amex return protection, purchase protection, and easy dispute Dept. every single day over Chase’s crappy service

Al

Which costs Chase more: transferring to an airline or hotel partner or redeeming for travel at 1.5 cent per point?

Chaim

Chase has nicely figured out how to minimize the 1.5 points per dollar. Example is a recent hotel that I was about to book on Chase travel. To book direct would’ve cost me 220 a night bookable directly with the hotel or with hotels.com. the best rate I was able to get with Chase however was 260 a night. Plus if I actually go through the hotel direct I get hotel points on the stay besides the points earned on the credit card charge.

Emgee

Don’t forget this works both ways. I’ve seen situations where chase was significantly cheaper than other booking options. I’m pretty sure chase doesn’t add any charges they simply use a travel agency, I believe it’s Expedia.

Meg

Chase has the worse service, for their checking accounts. I seem to only get the Indian customer service reps which have NO customer service skills, rude and inflexible.

pH

If they want my wallet full of Chase cards, they should drop 5/24 policy

Helpurslfbyhlpingothrs

Same.
Halevai..

Jay

If Chase is now so bad without return and price protection, and they have a poor dispute department, who do to go with for these 3 advantages?

SammyTorah

if your right that chase wants the extra spending even tho it costs them points then 100% they should drop the 5/24 rule! and why isnt the return protection (amex has it not chase) a huge diff maker? it can net you hundreds from any store that x take returns!!!

JustWingIt

They dropped the return protection, like they reduced the PP benefits, to save money. Someone decided doesn’t matter if the competition is doing better…

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