We’ll take Chase bonus points for $330 million, please…
“Build it, and they will come”. The sage advice offered by Kevin Costner in Field of Dreams has been a key tenet of the Chase travel rewards credit card brand, bringing in customers in record numbers, all hoping to maximize their rewards via the lucrative lifestyle rewards schemes Chase has built. In a recent earnings call, J.P. Morgan Chase stated that they may however, have built a more lucrative scheme than they ever anticipated, and it’s eating into profits…
In a Friday earnings call to investors, J.P. Morgan Chase announced a stunning $8.32 billion in profits for the quarter, with one notable factor preventing the number from going even higher: savvy travelers. With offers such as 3x points on travel and dining, and the help of *cough* a few good travel blogs, cardholders are wising up to the world of points and miles maximization, perhaps more quickly than Chase ever could’ve fathomed – and it’s costing them money.
According to reports, Chase’s liability for points and spending bonuses, notably in the dining category, cost the bank an additional $330 million in profits, which of course the bank noted as a loss, rather than a blip in the $8.32 billion quarterly gains. The report signals two main factors: one, customers are spending a lot, and earning wisely – and two, people are burning points at faster rates than expected. When a customer redeems points for hotels, flights or converting points to another loyalty program, it costs the bank actual money.
Using points programs such as Chase Ultimate Rewards, Amex Membership Rewards or Citi Thank You is one of the best ways to protect your points investment. These programs allow you to move points to a variety of loyalty programs, and therefore avoid being tied up in a devaluation if a hotel or airline decides to raise rates. At the same time, there’s never been a more important time to earn and burn. Consumers are clearly earning points with record speed, thanks to category bonuses, and spending points strategically, at the first opportunity. We’re happy to help.
Fascinating stuff, right?
HT: View From The Wing.
Just because people redeemed their points does not make them savvy. Please dont publish such rubbish. The only thing that happened here is that more points were redeemed in general than anticipated so chase had to adjust their accounting as such. They had an unprecedented amount of points issued thanks to CSR 100k bonus so this cost is simply a marketing one. The card has become quite profitable. This is not news.
Who took the jam out of your donut?