After spending years fine-tuning travel reward cards, banks have found that the coronavirus pandemic decimated all the effort by reducing the need or will to travel, The Wall Street Journal reports.
The cards contained perks like sign up bonuses, points on airfare, hotel stays and more — but now, with the pandemic necessitating staying at home and out of crowded tourist spaces, customers are wondering if the payments are worth it at all.
In response, the banks are making grandiose efforts to retain their hard-won customers. JPMorgan Chase is delaying a planned $100 increase to the Sapphire Reserve’s $450 annual fee, and it’s handing out extra points on grocery purchases for the remainder of June. Citigroup has introduced more points for grocery, pharmacy and other purchases on its premium Prestige Card through August, and AmEx is offering $320 in statement credits when a customer buys some streaming and wireless-phone services with its Platinum card.
The cards were set up as ways for banks to deepen relationships with customers and offer individual perks. But with the pandemic’s debilitating blow to the travel industry, and many people being unable to make payments on time, banks both can’t afford to lose that source of revenue and also are feeling the extra financial strain of offering new benefits. Spending was down 40 percent for JPMorgan customers around March and April of this year, for example.
The new perks are the banks’ ways of matching the current spending habits of customers.
Thus far, the banks are not reporting a massive upswing in cancellations, WSJ reports. However, some customers have opted to change plans to less expensive ones with less generous rewards.
One Sapphire Reserve customer quoted by WSJ, a 24-year-old from California, reported charging only about a tenth of what she normally does to the card in April. Since she said she mostly cooks at home now rather than going out to eat like she used to, she downgraded to JPMorgan’s Freedom card instead. But once it becomes safer to travel again, she told WSJ she plans to go back to the Sapphire Reserve.
“I buy groceries more than I ever bought in my life,” she is quoted as saying.
Selected by Fintech Tube