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CreditScholar
Posts: 2,300
Registered: ‎01-22-2012
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Re: WOW AUTO CLI JPM SELECT

[ Edited ]
What they should do IMO is to add a gas and groceries card under the Chase brand with a 2x (or 3x bonus), although I think 2x would be much more plausible. Then the card could act similar to the Freedom, whereby you can transfer points to UR if you have a premium UR card like the CSP or Ink series. By controlling (or possibly increasing) the underwriting requirements for the CSP, they could then offer a two-tiered system. Those who have credit profiles strong enough to get a UR card can benefit by transferring points similar to how the Freedom/trifecta work. At the same time they can lockout people with marginal credit scores with a simple cash back card, as these people won't be able to transfer to UR which is where the real rewards are. This way they can gain access to a new market (namely those holding an Amex PRG) and reward those handsomely, take business away from their main rival Amex, offer a new basic cash back card with bonuses that fill a void in their otherwise impressive lineup, and dangle a carrot in front of those with the basic cash back card that essentially says "Hey, improve your credit and those points you're earning with your gas and groceries spending will suddenly become a lot more valuable. It pays to do more business with us". That's essentially 4 things accomplished by implementing a fairly simple product, and it works well with their existing programs.
FICOs: EX: 826, EQ: 817, TU: 810
Bank of America Privileges with Travel Rewards Visa Signature - $23,200 CL
Chase Sapphire Preferred Visa Signature - $12,700 CL
Chase United MileagePlus Club World Elite MasterCard - $26,500 CL
Citibank American Airlines Executive World Elite MasterCard - $22,500 CL
J.P. Morgan Ritz Carlton Visa Signature - $23,500 CL
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Koop10010
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Re: WOW AUTO CLI JPM SELECT

That does sound like it would work nicely, hope somebody at Chase hears that..

FICOs (2/24/12): EX 752, EQ 740
Chase Sapphire Preferred, Freedom; American Express PR Gold, Blue Cash Everyday
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CreditScholar
Posts: 2,300
Registered: ‎01-22-2012
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Re: WOW AUTO CLI JPM SELECT


Koop10010 wrote:

That does sound like it would work nicely, hope somebody at Chase hears that..


Maybe bribro can pass it along. He works for JPM and I'm sure he will read this thread at some point.
FICOs: EX: 826, EQ: 817, TU: 810
Bank of America Privileges with Travel Rewards Visa Signature - $23,200 CL
Chase Sapphire Preferred Visa Signature - $12,700 CL
Chase United MileagePlus Club World Elite MasterCard - $26,500 CL
Citibank American Airlines Executive World Elite MasterCard - $22,500 CL
J.P. Morgan Ritz Carlton Visa Signature - $23,500 CL
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Koop10010
Posts: 731
Registered: ‎02-15-2012
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Re: WOW AUTO CLI JPM SELECT

I do like how you can already do that with the Freedom card, transfer points to the CSP so they become much more useful.  But between the $1500 cap and frequently having mediocre categories (movie theaters, Best Buy, Kohls), it's really only a good combo if you have Chase checking for the trifecta.  Since I don't, I would almost certainly replace my Freedom with a straight 2x gas/grocery card.

FICOs (2/24/12): EX 752, EQ 740
Chase Sapphire Preferred, Freedom; American Express PR Gold, Blue Cash Everyday
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CreditScholar
Posts: 2,300
Registered: ‎01-22-2012
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Re: WOW AUTO CLI JPM SELECT

Part of me can't help but wonder how much of this is intentional on Chase's part. I can't believe that they are unaware of this hole in their portfolio, which essentially leaves 3 possible outcomes.

 

1. They're working on something currently to fill this void.

2. They'll get around to it eventually, but are more focused on other areas at the moment.

3. They're intentionally avoiding this area due to the demographics of those who would seek out this card.

 

Number 3 is what concerns me the most. Given the recent credit card reforms which limits interest rates and fees, there has been an unprecedented (in recent times) rush to attract affluent customers. Amex has been doing this for some time, but now Chase, Citibank and others like BofA have ramped up their efforts. Traditionally there have been two different models for credit cards to make money - high APRs and fees (commonly found in the subprime areas), and high-spending/low risk spend-centric models (made popular by Amex).

 

Travel cards and their ilk is a way for banks to position themselves towards affluent clients. Anyone with half of a brain knows that the spending power of the middle class is being squeezed, so unless they want to risk playing in the subprime sandbox, they see these people as offering decreasing returns and increasing risk. By offering more higher-end cards with annual fees, they encourage those whose credit and spending profiles match their goals while simultaneously discouraging anyone else. People who spend 25k, 50k, 100k are usually very willing to pay $100-500 AF on a credit card. Someone who only spends 5-10k annually wouldn't likely find it to be a good value. Lenders can't say "we don't want poor or average people as our clients" due to the PR disaster it would cause, but they're doing this subtly by altering the products that they offer.

 

As I mentioned previously gas and groceries are very "pleb" (although legitmate) expenses, and the kinds of people whose spending is dominated by these categories may not be the target clientele of Chase (or other lenders targetting the affluent). There is a huge difference between someone who spends $400 on groceries compared to someone who spends $400 eating out every week. The previous would likely indicate a large family who may be over-levereged, and whose disposable income will be limited by a mortgage, tuition payments that may not be chargable on a credit card, car loans or other forms of consumer debt, etc. The latter is likely to be an individual, couple or small family with high incomes and (most importantly) a high level of disposable income. These people will on average be at lower risk of default, and will have more money to push through their cards.

 

In time we'll see which of the scenarios is correct by Chase's actions or inactions. In the meantime though we just have to wait and see, although I'm starting to wonder if #3 is more likely than I first thought.

FICOs: EX: 826, EQ: 817, TU: 810
Bank of America Privileges with Travel Rewards Visa Signature - $23,200 CL
Chase Sapphire Preferred Visa Signature - $12,700 CL
Chase United MileagePlus Club World Elite MasterCard - $26,500 CL
Citibank American Airlines Executive World Elite MasterCard - $22,500 CL
J.P. Morgan Ritz Carlton Visa Signature - $23,500 CL
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Koop10010
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Registered: ‎02-15-2012
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Re: WOW AUTO CLI JPM SELECT

You may be right, but I still think option 2 is more likely.  You're absolutely right that Chase has made a move towards Amex's traditional business model and has fought for Amex's customers.  They've begun offering many high-end travel cards with special benefits and annual fees that don't make sense for many low spenders or infrequent travelers.  At the same time though, they do still offer the Slate and Freedom cards; they aren't closing themselves off to completely to low spending non-travelers.  Also, there are a lot of high income people who spend considerably on gas and groceries, and I think there is a way to target only high incomes on gas and groceries if they wanted.  They could offer a card more comparable to the Amex PRG that comes with a decent annual fee, making it not attractive to more moderate spenders.  Or they could issue something more like an Amex BCE/BCP, like you suggested earlier where you would get points that you could transfer if you have a CSP, Select, etc.  If they set the underwriting requirements higher, like similar to the Sapphire or Amex's BCE, they could atleast keep away low/moderate spenders with a history of irresponsibility while still attracting more high spenders who already have the CSP.  I definitely think it's possible to find a way to issue a gas/grocery card while still going after the high end crowd, American Express is already doing it.  I think it may be because Amex already has gas and groceries "locked down" by coming at it from two different angles (PRG and BCE/P) that Chase is taking its time in releasing a similar card.  But if they really want to take a run at Amex, I think they will have to release some kind of gas and grocery card.

FICOs (2/24/12): EX 752, EQ 740
Chase Sapphire Preferred, Freedom; American Express PR Gold, Blue Cash Everyday
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Cdnewmanpac
Posts: 767
Registered: ‎01-16-2012
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Re: WOW AUTO CLI JPM SELECT

What I don't get in this conversation is how raising credit standards achieves any of the speculated goals. We aren't talking about the super affluent, we are talking about mass affluent. I am unaware of any correlation between credit score and income. In fact, the groups most likely to be in the mass affluent class, such as entrepreneurs, business owners, investment bankers, executives, etc. are typically higher credit risks or have dings from past failed ventures. 

I was at a monthly wine tasting put on by the local wine storage facility last night. At these events, members open and share wines from their collections within a set theme. these tastings tend to attract a mix of collectors and restauranteurs. Last night, we ended up talking about greatest financial mistakes. It was amazing how many of these guys had bankruptcies, forclosures, "lost it all" disasters, etc. How often do you read about some startup that the CEO financed by maxing out his credit cards. 

So who does chase want to attract, the staid CPA with the 800 score who eats a hamburger for dinner every night or the guy with 7 failed businesses over the last 20 years who is willing to throw down for a bottle of drc at a restaurant just to win an argument?

Higher fees, categories that align with disposable income, transferability, sure. But 740+ scores? I would be shocked to see chase go that route.

In wallet: Ink Plus 10k, AMEX TE 25k. In bag: CSP 16k, USAA WMC 15k, Hyatt 13k, United MPE 12k, AMEX HHonors 3k. In SD: Cap 1 QS 5k, Discover IT 7k. FICO 08 says my EQ is now 844, was 510 in 2010.
Valued Contributor
bribro
Posts: 1,367
Registered: ‎04-20-2012
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Re: WOW AUTO CLI JPM SELECT


CreditScholar wrote:

Koop10010 wrote:

That does sound like it would work nicely, hope somebody at Chase hears that..


Maybe bribro can pass it along. He works for JPM and I'm sure he will read this thread at some point.

Unfortunately, I don't know of any impending credit card product launch that includes gas/groceries as bonus categories. I too would like to see such a card from Chase, but my sense is that by offering those categories quarterly on their Freedom card, JPMC thinks they've got it at least somewhat covered.

TU FICO: 800 (2/1/14) | CK Score: 802 (2/1/14) | CS Score: 805 (2/1/14)

J.P. Morgan Palladium ($250k) | AmEx Platinum (NPSL) | AmEx SPG Personal/Business ($50k/$50k) | Citi Executive AAdvantage WEMC ($50k) | Citi Dividend WEMC ($50k) | Chase Sapphire Preferred VS ($50k) | Chase Ink Bold WEMC ($50k Flex) | Chase Ink Plus WEMC ($25k) | Chase Freedom VS ($25k) | Chase Freedom WMC ($25k) | Chase MileagePlus Explorer ($25k) | Chase Southwest RR Plus Business/Personal ($15k/$15k) | Barclays US Airways ($25k) | Barclays Hawaiian Airlines ($25k) | BofA Alaska Airlines ($10k) | Lexus Financial Services ($30k) | Mercedes-Benz Financial Services ($50k)
Valued Contributor
CreditScholar
Posts: 2,300
Registered: ‎01-22-2012
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Re: WOW AUTO CLI JPM SELECT


Cdnewmanpac wrote:

What I don't get in this conversation is how raising credit standards achieves any of the speculated goals. We aren't talking about the super affluent, we are talking about mass affluent. I am unaware of any correlation between credit score and income. In fact, the groups most likely to be in the mass affluent class, such as entrepreneurs, business owners, investment bankers, executives, etc. are typically higher credit risks or have dings from past failed ventures. 

I was at a monthly wine tasting put on by the local wine storage facility last night. At these events, members open and share wines from their collections within a set theme. these tastings tend to attract a mix of collectors and restauranteurs. Last night, we ended up talking about greatest financial mistakes. It was amazing how many of these guys had bankruptcies, forclosures, "lost it all" disasters, etc. How often do you read about some startup that the CEO financed by maxing out his credit cards. 

So who does chase want to attract, the staid CPA with the 800 score who eats a hamburger for dinner every night or the guy with 7 failed businesses over the last 20 years who is willing to throw down for a bottle of drc at a restaurant just to win an argument?

Higher fees, categories that align with disposable income, transferability, sure. But 740+ scores? I would be shocked to see chase go that route.


They won't because if they only had to rely on those people, there wouldn't be enough out there for them to make a better profit. They've lowered their standards (and continue to do so) in order to attract additional people that while on the borderline, would still be locked out.

 

That CPA with the 800 score has something that is becoming a rarer commodity with each passing day: stability of income. All of the CPAs I know (and I know quite a few) are pulling in 6 digits with significantly higher job security than most in other fields. They also don't all eat hamburgers at night. Most in fact, eat fairly well. The number of truly successful business people who maxed out their credit cards to start up are fairly low. Economies of scale will show that there are many more people with decently high incomes (100-200k or more), and when added together, bring in more revenue combined than the few successful credit card start-up CEOs. The vast majority (90%) of new businesses fail within a very short period of time, so from Chase's perspective chasing after these people might not be as good of an idea as you suggest.

 

FICOs: EX: 826, EQ: 817, TU: 810
Bank of America Privileges with Travel Rewards Visa Signature - $23,200 CL
Chase Sapphire Preferred Visa Signature - $12,700 CL
Chase United MileagePlus Club World Elite MasterCard - $26,500 CL
Citibank American Airlines Executive World Elite MasterCard - $22,500 CL
J.P. Morgan Ritz Carlton Visa Signature - $23,500 CL

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