CSR - New article in Bloomberg. Interesting read...

[projectx]

HT to Reddit...

https://www.reddit.com/r/churning/comments/540emn/next_weeks_cover_of_bloomberg_businessweek/

The hype on this card is full blown red alert, but reading the article I couldn't help but think... what's next? It's clear Chase has crushed it with this card. Meanwhile, the premium cards from other issuers don't look nearly as enticing. Will this force the hand of other issuers to step up their offerings?

For you theme park junkies out there, I remember back to 1989. Cedar Point in Sandusky, OH unveiled the highest, fastest, steepest coaster on the planet. It attracted unprecedented attention for a roller coaster from the media and general public. Many enthusiasts and experts consider it "the first shot fired in the coaster wars," as parks competed with one another building the biggest rides at a rapid rate.

Granted credit cards are a completely different industry, but demand and media coverage for CSR is through the roof. Amex, Citi, etc have to be taking notice. I can't help but wonder if Chase unintentionally fired the first shot in the credit card wars. Maybe some of you in this game longer than me can remember a card gaining more mainstream hype, but I can't think of one.

 

[JakeFromStateFarm]

When I first came across the Businessweek cover, I have to admit that I was nervous about MS & points collecting garnering unnecessary attention in a mainstream publication. After reading the actual article though, Businessweek basically just glossed over the point-collecting part of it, instead focusing on how Chase's branding and marketing strategy changes over the past decade led to this card's apparent success.

Outside of the Miles & Points community though, do we really know how big of a success it's been? Chase won't release actual application/approval numbers, instead just focusing on the fact that it "exceeded their expectations" and caused them to run out of metal cards.

 

[projectx]

It's been a big enough success that there is some buzz/rumor about Amex preparing a product to compete with CSR.

 

[lochquel]

When I first came across the Businessweek cover, I have to admit that I was nervous about MS & points collecting garnering unnecessary attention in a mainstream publication. After reading the actual article though, Businessweek basically just glossed over the point-collecting part of it, instead focusing on how Chase's branding and marketing strategy changes over the past decade led to this card's apparent success.

Outside of the Miles & Points community though, do we really know how big of a success it's been? Chase won't release actual application/approval numbers, instead just focusing on the fact that it "exceeded their expectations" and caused them to run out of metal cards.

Yeah, you have to wonder what the expectations were. I mean, sure we as a community are well aware of it, but when I talk to family members/friends about it, they don't have a clue. I'm thinking it's kinda like the CSP, where everyone that came close to it realized it's real value based on signup bonus alone. Keeping the card with a $450 yearly fee after one year will be it's legacy though.

 

[italdesign]

I assume this is the article mentioned by DoC recently. I take interest in this statement:

... card issuers can make money in two ways: interest and fees or interchange. The recession and the CARD Act made the interest-and-fees strategy a much harder proposition. “It was clear that revolving-credit cards were not going to be the moneymaker they once were,” says David Robertson, the publisher of the Nilson Report, an industry newsletter... Interchange became the way to go.

If this is accurate, then it debunks the popular notion that high interest is the bread and butter of banks' revenue. That would have been true before CARD, but no longer.

 

[MickiSue]

I disagree heartily. Credit card issuers are still able to charge up to nearly 30% interest for their customers who have missed payments, etc. Not to mention stiff fees for being as little as one day past the due date.

What actually happened, though, is that card issuers, in the wake of the tightening rules, got rid of a lot of their customers by either abruptly closing accounts that were up to date, or notifying customers that they would be paying an annual fee for a plain vanilla card with no earning benefits. Causing many of THOSE customers to close the cards, themselves.

If you are not into collecting points/miles/cash back from a CC, and your card is suddenly closed, one of two things happen (maybe, both). You say Screw 'em, and don't pay them. And/or you realize that you can live just fine without a CC. Given that the big players, like Chase and BoA were found to have employed auto signing for CC records, just as they did for mortgages, the chance of collecting those mostly small balances became slight, and the projected cost greater than the worth of the effort.

Interest and fees are still big moneymakers for CC arms of the big banks. They wouldn't be so eager to give them away if that were not true.

 

[Cory]

Interest and fees are still big moneymakers for CC arms of the big banks. They wouldn't be so eager to give them away if that were not true.

They're still making money from interest and fees, definitely enough to convince Chase to create a new high end card with the Reserve. The TPG interview with the President of Chase Branded Cards had a question to the effect of "How can you offer these rewards and still make money?" The answer was (paraphrasing) "don't worry about Chase, we'll be fine".