JPMorgan Chase & Co., Citigroup Inc., other U.S. large banks and American Express Co. are considering how to scale back the benefits they offer on their credit cards, The Wall Street Journal reported, citing people familiar with the matter.
For example, JPMorgan executives talked about whether to stop cardholders from pooling points from multiple cards they hold, sources told the newspaper. Citigroup plans to limit the number of times in a year their Prestige cardholders can get a free fourth night stay in a hotel they stayed for four consecutive nights in; and American Express is rolling out cards featuring less sign-up bonus points, according to the Journal.
Sign-up bonuses offered on premium cards averaged 44,000 points in the first seven months of 2018, as compared to 58,000 points in 2017 and 66,000 points in 2016, according to the report, citing consulting firm Simon-Kucher & Partners. This is largely due to customers who stopped using their cards, which have high sign-up bonuses, after using up their early rewards, according to the Jan. 1 news article.
Credit card reward costs increased by an average of 15% in the third quarter of 2018 from the year-ago period at Bank of America Corp., Citigroup, U.S. Bancorp and Wells Fargo & Co. In addition, merchants such as Amazon.com Inc., Target Corp. and Home Depot Inc. are battling to lower interchange fees, the rate they pay to banks whenever customers shop with a credit card and which are used to primarily fund credit card rewards, according to the news outlet.