Banks go wild with credit card offers
A 125,000-point sign-up bonus. Credits for Equinox personal training. An exclusive airport lounge with cold brew on tap.
The US’s largest banks are pulling out all the stops to lure customers to take on new credit cards again, after retreating from such deals during the Covid-19 pandemic.
Call it the return of the rewards war for credit cards. American Express is dangling the 125,000-point bonus — a $2,500 value that is one of the largest yet offered — in front of new applicants for its higherend Platinum card. It is also offering perks for virtual personal training sessions through luxury gym chain Equinox.
JPMorgan Chase is now offering $120 in credits towards a Peloton Interactive membership. Capital One Financial is planning to open its first airport lounge for certain cardholders along with a 100,000-point bonus of its own.
A year ago, when the pandemic sent unemployment soaring, card issuers slashed incentives as they pulled back on signing up new customers, fearing people would not be able to pay their bills and forcing banks to swallow losses.
Instead, with an influx of cash from the government and payment moratoriums on student loans and other bills, people have been diligently paying their credit card balances and setting aside more in savings.
The losses banks feared never materialised. Even delinquencies — a harbinger of future write-offs — remain near a record low.
Consumers are slowly starting to travel again and looking to accrue credit card points, which are often used to buy flights or book hotels. People seem ready to plan big trips and get back on the road. Mastercard, the country’s second-largest payment network, said it has noticed spending with US airlines doubling in recent weeks compared with levels at the beginning of the year.
At Synchrony Financial, the country’s largest issuer of storebranded credit cards, the firm opened 5-million new accounts in the first three months of the year, a 3% increase from the same period a year ago. It was the first uptick since the onset of the pandemic.
“What we’re really seeing is the consumer willingness to again look for credit,” Synchrony CFO Brian Wenzel said.
US consumers only have to check the mail to see evidence of banks’ renewed interest. Card issuers mailed 257-million credit card offers in March, down 14% from a year ago but up 23% from February. And it is a far cry from the measly 57-million that were mailed during the depths of the pandemic in June.
“This year we’re certainly returning to a more normalised level of competition,” said Roger Hochschild, CEO of Discover Financial Services. “But we feel really good.”
Danny Funaro, a law student who lives in Brooklyn, said he has seen more credit card offers coming his way as he nears graduation. Almost all of them come with a sort of sign-up bonus, typically valued at $300 or $500, he said.
“There’s fine print that I never actually read about how to get that,” Funaro said. “I’ve been getting them almost daily. It’s been pretty wild. It’s clearly trying to get people to get a credit card — and get a credit card now.”