Chase Away Credit Card Blues?
Credit Card Debt Hurts Issuers
When the boss of JPMorgan Chase wrote to his shareholders last week, he had some explaining to do about the company’s credit card division. In his letter, Jamie Dimon, the bank’s chairman and CEO, said:
By all measures, 2009 was a terrible year for our credit card business. The economic environment drove charge-off rates to all-time highs. Card Services lost $2.2 billion (compared with last year’s profit of $780 million).
Those “charge-off rates” he refers to are the amounts of credit card debt his company had to write off as uncollectable. These, it turned out, added up to 8.5% of all Chase card balances, which sounds terrible until you realize that most credit card companies did substantially worse.
Credit Card Regulation and the Future
Mr. Dimon went on to predict that the recent tightening of credit card regulation–mostly in the form of the Credit CARD Act of 2009–would: “…reduce our after-tax income by approximately $500 million to $750 million…”
Extraordinarily for a banker, he followed up that estimate with something dangerously close to praise for the new law. He said:
We believe that many, but not all, of the changes made were completely appropriate. In fact, we had voluntarily eliminated certain of the targeted practices – like double-cycle billing, which resulted in greater interest charges for customers who revolve a balance for the first time (2007); and universal default pricing, in which creditors consider credit histories with other lenders in setting rates (2008).
Chase Sapphire Credit Card–a New Model?
This column previously reported the view of some industry observers who believe that credit card companies need a new business model. They think that in future, card issuers must concentrate on products that deliver such great rewards and services that they attract the most creditworthy and affluent customers.
Well, Mr. Dimon’s team has launched a product that sounds a lot like that. He described it thus: “The Chase Sapphire® Card was developed from the ground up to address the needs of affluent consumers, with premium rewards and exceptional service.”
Balance Transfer Credit Cards
While exploring Chase products, the company has an interesting balance transfer credit cards program, currently offering zero percent introductory APR on balance transfers for fifteen months. The Chase Freedom® Visa also has a rewards program and “Blueprint,” which is a smart proprietary tool that can help you better manage your finances.
Being allowed to transfer balances is becoming increasingly rare in credit card land, so this is well worth checking out–but only if you have a healthy credit score.
Disclaimer:The information in this article is believed to be accurate as of the date it was written. Please keep in mind that credit card offers change frequently. Therefore, we cannot guarantee the accuracy of the information in this article. Reasonable efforts are made to maintain accurate information. See the online credit card application for full terms and conditions on offers and rewards. Please verify all terms and conditions of any credit card prior to applying.
This content is not provided by any company mentioned in this article. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any such company. CardRatings.com does not review every company or every offer available on the market.
Published (Modified )