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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 Chase Sapphire Preferred® Card. 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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With the SPG 3×1 leaving and the new Hyatt card coming…my wallet changed from being 0% Chase to 80% Chase….
amen!
Yep, Amex is going to get very hurt by the SPG card going from 3 to 2 points. Spending will evaporate.
But isn’t Amex Business Blue Plus card’s 2 MR points > 1 Spg point?
Yes. It there is a 50K cap
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.
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.
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?
https://www.dansdeals.com/credit-cards/ultimate-rewards-transfer-changes-hurt-rumor-mill-7-years-consolidate-points-every-month/
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.
Yet another way that shows how Chase is winning.
All true but… they did 8.5 billion In after tax profits this quarter.
Exactly right, they’re winning despite the higher charge.
“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?
A company like El Al may not realize the opportunity they have with Matmid to make large profits with a US credit card. Ignored opportunities are common among all companies, even my own.
Chase knows about this issue and they know the exact numbers. I would never presume to tell them otherwise about an issue that they have studied for nearly a decade now.
Since they removed price and return protection, Chase is now my last choice in my wallet.
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.
What was it that you did to wake up the sleeping bear?
Without an explanation, I suppose you have an idea what caused them to shut you down. Kindly elaborate.
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.
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!
Bottom line will they let to transfer from freedom to sapphire ?or they will stop it ?
Curious to know the same? Should we transfer our points from freedom to preferred ASAP and how do we do do that?
I’ll take amex return protection, purchase protection, and easy dispute Dept. every single day over Chase’s crappy service
Which costs Chase more: transferring to an airline or hotel partner or redeeming for travel at 1.5 cent per point?
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.
Better off transferring to airline miles/hotel points in most cases anyway. But airfare at 1.5 cents comes in handy every now and then.
For me, points at 50% back, and even now at 35% back has always been worth it for me. But we’re talking about flights in economy that are cheap, I. E. NYC-Miami.
I have been saving up to fly my family of 5 from JFK to TLV next summer. I’ll have well over 300K UR points by then. What would be better than 1.5 cents? Thanks for the help!
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.
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.
If they want my wallet full of Chase cards, they should drop 5/24 policy
Same.
Halevai..
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?
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!!!
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…
https://www.reuters.com/article/us-american-express-results/american-express-quarterly-profit-rises-21-percent-idUSKBN1K82RG