@Open123 wrote:
-- Years ago, by hiring Mr. Gordon Smith away from Amex, Chase made a strategic choice to commit considerable resources to aggressively compete for Amex's top tier "white shoe" clientelle. Of course, this would require a world class travel rewards program, very high to no caps on rewards, and significant upfrong client acquisition costs. Of course, I agree (obviously), Chase wasn't targetting the bonus chaser or perk abuser, but I suspect they accepted it as a necessary short term price to pay for coveting Amex's spendcentric cardmembers. Competition benefits consumers and should be encouraged at every turn. In my view, Amex had gone far too long without some kind of competition. Naturally, in any competitive environment, while consumers benefit with the sudden proliferation of free points (combination of price war and unprecedentd QE, zero rates, and cheap money), all the Issuers found utilizing free cash towards client acquisition as a much better option to earning zero interest and incurring a higher tax liability. I sense UR inflationary pressure is the reason why Chase has implemented the 5 in 24 restriction on their UR based cards.
Certainly, I believe Chase accepted that there would be some churners as a short term price to pay. How big a price they were willing to pay at what retention rates, though, only they can say. In my opinion, Chase may not have originally anticipated the number/severity of churning/bonus chasing correctly and decided later that the cost was too much and/or the retention/normal use rate too low.
I also agree that competition is good and should be encouraged. Amex had been without competition, for certain, and Chase is not the only one providing competition now. Citi has stepped up, and while they may not be as good with transferring points, the 1.6x bonus of TY points when booking American is pretty sweet if one has the Prestige. My point is though that Chase went a little too far with how aggressive they were going to be, and they are doing some rethinking now.
@Open123 wrote: -- Well, different business model. Chase, by targeting on Amex's travel rewards spenders, has basically made a strategic decision to devote less resources to their cashback offerings.
Right; what I'm saying is Discover's business model is paying off. Not that Chase's isn't - in fact, I think Chase has decided that they have "arrived" and can afford to play a little more hardball with customers - but I think Chase's business model/strategy is part of the reason why the they would inevitably clip off the Freedom's wings.
@Open123 wrote:
Also, the cost to Chase isn't as great as it may appear. They purchase these points at a very high volume and greatly reduced rates.
Oh, I'm not saying that Chase is suffering some great loss. I am just saying they probably are not making as much as they want to, which is why the offerings are getting weaker. I don't think the question is whether Chase is losing money. It's whether they are making enough to hit or exceed their internal profit targets for specific divisions or evens specific products.
I thought I made that amply clear too, what with mentioning multiple times that this was only my opinion and stuff!