Flying in the face of the credit crisis, J.P. Morgan Chase & Co is introducing a new program for credit card rewards. In spite of the failing economy, Chase still sees a viable market for a rewards program.
The giant credit company is hoping that the new rewards program will be a viable contender to the flagship rewards programs of such lenders as American Express, with its Membership Rewards and Citigroup with its ThankYou Network.
Chase is not playing down the effects of the economy. President Serra, Chase Card Services president acknowledges this, saying, “With all of the challenges in this environment and changes in the economy, we do see that consumers are spending less than they have in the past”.
The move to introduce a new rewards program is surprising as credit companies nowadays are slowing down their rewards program as debt defaults and delinquencies continue. The new credit card bill, expected to become active after nine months, is also going to be cutting into profits and most credit card companies are preparing for that as well. Still, Chase sees some advantages in their new rewards program. For instance, the introduction of the new program will also include the replacement of Chase's Freedom card. This means that Freedom cards that offered great bonus opportunities and generous cash back rewards are going to be ended.
Called “Ultimate Rewards”, Chase's point based rewards program will earn customers one point for every $1 they spend. Bonus points are earned if the cardholder uses the online booking tool of the program for travel or if they use partner merchants for shopping. There is no expiration date or earning caps. Cardholders can use these points for cash, travel, gift cards or statement credits. In general, each point the cardholder earns will be worth one penny. Cardholders can also use their points for merchandise redemption, but the rate will be lesser than 1%.
Currently, the Ultimate Rewards program is available for the Chase Freedom card and for the Sapphire credit card, a new credit card being introduced by Chase to more high scale customers. There are plans to extend the program to other Chase cards but, for now, those two cards are the one that carry the program.
Standard versions of the Sapphire and Freedom credit cards carry no annual fees but earn the cardholder only 1 point for every dollar. If cardholders want a fixed 3% bonus, they will have to pay an annual fee of 30$. The Sapphire Preferred credit card has an annual fee of $95 and allows cardholders to move their Ultimate Rewards points to another travel reward program.