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Credit card super-users take a $330 million bite out of JP Morgan’s revenue
CNBC ^ | 07/13/18 | Hugh Son

Posted on 07/18/2018 1:18:05 PM PDT by Simon Green

Savvy credit-card users have forced J.P. Morgan Chase to pony up more in rewards payments than the bank originally projected.

Buried in an otherwise positive second-quarter earnings report Friday, in which the bank announced a record $8.32 billion profit, was the admission that credit-card customers were redeeming points faster than anticipated, resulting in a $330 million charge.

“This is maybe larger than we have seen over the course of the last several years,” said Marianne Lake, the chief financial officer, during a conference call with reporters. “We do pretty regularly review our rewards liability in light of evolving consumer behavior.”

Credit-card issuers scrambling to sign coveted high-spenders have sparked a rewards war in recent years. J.P. Morgan ratcheted up the competition in 2016 with its Sapphire Reserve card, which came with lavish perks including a 100,000-point signing bonus and triple rewards for travel and dining. The initial run of that card sapped quarterly profit by as much as $300 million, the bank said in December 2016.

The bank’s recent charge may indicate that consumers are simply getting smarter with rewards programs, according to Bankrate.com chief financial analyst Greg McBride. In online forums devoted to credit-card usage, consumers boast about using spreadsheets and smartphone apps to stay on top of their credit.

“There’s a subset of savvy credit-card users who are diligent about maximizing their usage to capture the biggest benefit they can,” McBride said.

These consumers, he said, only use the cards in categories that pay the richest points. For instance, they would whip out a Sapphire card for dining and travel but switch to Chase’s Freedom card to pay for purchases in the rotating category that’s rewarded most, such as gas stations and drug stores.

(Excerpt) Read more at cnbc.com ...


TOPICS: Business/Economy; Travel
KEYWORDS:
I have a Chase Sapphire Reserve card myself. Costs $450 a year, and it's worth every penny.
1 posted on 07/18/2018 1:18:05 PM PDT by Simon Green
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To: Simon Green
the bank announced a record $8.32 billion profit

That's a lot of profit. Wonder what their return on sales is?

2 posted on 07/18/2018 1:21:12 PM PDT by Quality_Not_Quantity (Capitalists sign their checks on the front. Socialists sign theirs on the back.)
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To: Simon Green

Well, then they shouldn’t offer those conditions if they don’t want people to use them. If they will give you 5% on gas, then you use the card that gives you that.


3 posted on 07/18/2018 1:26:21 PM PDT by I want the USA back (Liberalism, like insanity, is the denial of reality.)
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To: Simon Green

I know a woman who is a credit super user. I frequently let her run some of my high dollar business purchases through one of her cards and then pay her by check. It costs me nothing except the few piddling dollars I’d earn back and she has been instrumental in helping me with my business. She parlays the points into travel benefits like upgrades to business class, which she flies frequently. (Right now she’s on the first of two European cruises largely paid for by points.)

The Costco checker told me one of their customers recently cashed a credit card voucher for $8000. The customer uses his card for all his business purchases.

These programs are probably targeted for people who keep a balance, not those who use the card for everything and then pay it off every month.


4 posted on 07/18/2018 1:27:03 PM PDT by Gen.Blather
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To: Simon Green

I’ve taken several trips to Europe on points. But don’t try it if you can’t control your spending.


5 posted on 07/18/2018 1:33:12 PM PDT by 11th_VA (ItÂ’s the Enforcement Stupid)
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To: Simon Green

Headline: Banks Think Their Customers Are Dumb!

“’There’s a subset of savvy credit-card users who are diligent about maximizing their usage to capture the biggest benefit they can,’ McBride said.”

And good for them!


6 posted on 07/18/2018 1:57:02 PM PDT by Diana in Wisconsin (I don't have 'Hobbies.' I'm developing a robust Post-Apocalyptic skill set.)
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To: Simon Green

What do they give you for $450.00 a year?


7 posted on 07/18/2018 1:57:24 PM PDT by Ann Archy (Abortion....... The HUMAN Sacrifice to the god of Convenience.)
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To: Simon Green

Well, boo hoo for Chase. Look, banks basically create money out of thin air. All the money is based on debt. Is the money real or counterfeit?


8 posted on 07/18/2018 2:07:05 PM PDT by captain_dave
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To: Quality_Not_Quantity

Look it up, they’re a public company, plus they’re a bank, so you can see their balance sheet.


9 posted on 07/18/2018 2:09:18 PM PDT by Tea Party Terrorist (A bad peace is better than a good war.)
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To: Simon Green

So because they are bankers who apparently can’t do math, in a few years they will be back to ask us for another bailout.


10 posted on 07/18/2018 2:14:52 PM PDT by Buckeye McFrog
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To: Ann Archy
What do they give you for $450.00 a year?

Signup bonus (at the time) of 100,000 points
$300 annual credit towards travel expenses
Priority Pass lounge access
Global Entry membership
Earn triple points on travel and dining

Numerous minor perks (travel insurance, delay coverage, concierge service, etc.)

11 posted on 07/18/2018 2:17:37 PM PDT by Simon Green ("Arm your daughter, sir, and pay no attention to petty bureaucrats.")
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To: Simon Green

Banks have been hosing people since the day of the first Bank.
Yet they have more respect than a pawn shop?
WTF is wrong with this picture?


12 posted on 07/18/2018 3:28:12 PM PDT by hadaclueonce ( This time I am Deplorable)
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To: Simon Green

OK....sounds like a good deal if you FLY a lot.


13 posted on 07/18/2018 4:01:18 PM PDT by Ann Archy (Abortion....... The HUMAN Sacrifice to the god of Convenience.)
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To: Ann Archy
OK....sounds like a good deal if you FLY a lot.

I wouldn’t recommend it to someone unless they fly internationally at least once per year.

14 posted on 07/18/2018 4:31:08 PM PDT by Simon Green ("Arm your daughter, sir, and pay no attention to petty bureaucrats.")
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