JPMorgan Raises Stakes in Card Wars With 100,000-Mile Offer for Customers
JPMorgan Raises Stakes in Card Wars With 100,000-Mile Offer
Nov. 5 (Bloomberg) -- JPMorgan Chase & Co., the biggest credit-card lender, and British Airways Plc will offer new customers 100,000 airline miles as the battle for affluent spenders intensifies. The miles, worth a round-trip transatlantic flight, will go to people who spend $2,000 on the co-branded British Airways Signature Visa cards within the first three months, according to a statement. Credit- card issuers including American Express Co. have sweetened their rewards programs, even after lenders said that federal regulations enacted in May could squeeze profit, increase costs and prompt them to scale back incentives. “That’s probably the best introductory offer that I’m aware of,” Bill Hardekopf, chief executive officer of LowCards.com, said about the Chase promotion. Hardekopf’s Birmingham, Alabama-based firm evaluates about 1,000 credit cards. He hasn’t seen complete terms from JPMorgan, which may dilute the value of the offer, Hardekopf said. Customers who spend at least $30,000 in the first year will receive a matching travel voucher for a companion and card holders will earn 1.25 miles for each dollar spent, a 25 percent increase, according to the statement. There’s a $75 annual fee. The promotion is scheduled to start tomorrow for U.S. British Airways Executive Club members and Nov. 16 for nonmembers. “Our customers told us they want more value from their credit cards and we believe this offer provides tremendous rewards for the dollars our card members already spend,” Tony Glover, general manager at Chase Card Services, said in the statement. “The timing of these enhancements is optimal for holiday spending.” Rewards War The rewards war heated up in August when JPMorgan targeted households with incomes exceeding $120,000 by rolling out Chase Sapphire, which has no pre-set spending limit and offers one point for every dollar spent. AmEx, which dominates the market for affluent customers, introduced on Oct. 8 the Premier Rewards Gold Card with triple points on airfare purchases, double points on gasoline and groceries and one point for all other spending. The card also has 15,000 bonus points for purchases topping $30,000 in a calendar year. The $175 annual fee is waived for the first year. American Express is removing the 60,000-mile cap on its Delta SkyMiles Card, effective in February, and offers up to 4 points for every dollar spent at 200 online retailers, said spokeswoman Desiree Fish. A credit-card mile or point typically is worth about 1 cent, Hardekopf said. Perks Survive The added benefits differ from some industry predictions that new federal curbs on credit-card practices would mean fewer perks for customers. Five days after President Barack Obama signed the Credit Card Accountability Responsibility and Disclosure Act in May, Discover Financial Services Chief Executive Officer David Nelms said he expected “that some of these new changes will cause competitors to continue to pull back even more in rewards.” Nelms, whose firm pioneered cash rebates on card purchases, said Riverwoods, Illinois-based Discover will continue to emphasize rewards because it’s part of the card’s brand identity and spurs customer usage and loyalty. The card law, which takes effect in stages, includes limits on interest-rate increases and a requirement that banks apply payments to higher-rate balances first. The U.S. House voted yesterday to impose the remaining provisions immediately instead of next year. Lawmakers including Representative Barney Frank, chairman of the House Financial Services Committee, said lenders have taken advantage of the delay by raising rates and fees.
