In credit card news: Chase will continue to offer its cobranded United credit card. The offer will extend the arrangement by several years, though nobody has yet said exactly how many.
What’s interesting is this tidbit from Crain’s Chicago Business:
In a related securities filing, the airline said it expects the deal to add $200 million in revenue during the final six months of this year, implying an annual jolt of $400 million starting next year.
$400 million! Remember how Costco ditched Amex after Amex refused to pay the premium Costco apparently wanted? Cobranded card arrangements are expensive. (Incidentally, Amex just signed a deal with Sam’s Club so you’ll be able to use your Amex there soon.)
When executives make deals like this, they have their spreadsheet people come up with certain assumptions about how many cards they’ll issue, how much money they’ll make from existing cardholders, that sort of thing. If the cost of the deals is rising, then the spreadsheet wizards will tweak assumptions upward to justify the price. Then, once the deal is signed and the budgeting process starts up for next year, the marketing department will be told, “Here’s your new account goal for next year! We increased the goal to justify the exorbitant cost! Have fun!”
All of which is to say, I may be wrong but I wouldn’t be surprised to see some higher sign-up bonuses on the United card in the next year as Chase tries to recoup their investment. We’ll see what happens…