Big banks, including Citigroup Inc, JP Morgan Chase & Co, American Express Co, are looking for ways to boost credit card usage while cutting back on the rewards program. This is a must read if you were eyeing that free air travel for using your premium credit cards.
Big banks, including Citigroup Inc, JP Morgan Chase & Co, American Express Co, are in the process of altering some of the reward plans of their respective credit card businesses. Although they do not want to entirely end the rewards program, they do however want to boost the usage of the credit cards and cut back on upfront rewards bonuses, said the WSJ citing sources familiar with the matter at hand.
Traditionally, banks have offered rewards, including free air travel to users of premium credit cards, so as to lure more customers and prompt them to spend more using the cards. With consumers becoming more tech savvy on their usage of cards, financial institutions are looking for ways to revise their rewards strategies.
According to Charles Peabody, a bank analyst, the cost of the rewards programs has grown, on average, 15% on a year-to-year basis as of the third quarter of 2018, at several of the country’s biggest credit card providers
While the cost of the rewards programs have come up, fees paid by retailers to the credit card companies have come down.
Retailers have pushed back through lawsuits against what they believe is excessive charges. This essentially has prompted the reviewing of the rewards program strategy.