NEW YORK (AP) - To attract even more cardholders, JPMorgan Chase & Co. is ramping up the rewards program for its popular Freedom card.
The benefits of rewards for credit card companies tend to outweigh the costs -- it's a lure they use to gain share in the mature, saturated U.S. credit card market.
Before, Chase Freedom cardholders would get triple rewards points at gas stations, grocery stores and fast food restaurants. Now, they will get triple rewards points in the three categories where they spend the most during any given month out of 15 categories -- including the previous three categories, plus department stores, drug stores, utilities, phone companies, health clubs and others.
The cardholder just has to spend, and then Chase figures out how to maximize the rewards, said Stacy Hamilton, senior vice president of product development and marketing at Chase Card Services. 'We wanted it to be the top card for everyday spending.'
Cardholders can choose to receive their rewards as cash back or as points that can be redeemed for gift cards, travel or merchandise.
The U.S. credit card space is competitive, and Chase is reacting to that by boosting its rewards, said Ken Paterson, director of the credit advisory service at Mercator Advisory Group Inc. in Boston. 'Everybody's trying to differentiate,' he said.
Chase has the second-largest amount of Visa and MasterCard balances outstanding after Bank of America Corp., according to the Nilson Report. In March, Rich Srednicki, the former chief executive of Chase Card Services, said cards with rewards rose to 53 percent of outstanding balances in 2006, up from 32 percent in 2003.
And in a recent conference call with analysts, JPMorgan Chase CEO Jamie Dimon said the company was cutting back on teaser rates and balance transfers and looking instead to profit from greater growth in existing accounts.
Chase has issued more than 1.5 million Freedom cards since it launched the product last year. For proprietary reasons, Chase, which has issued more than 154 million credit cards, would not reveal how much revenue it has made specifically from the Freedom card, or how much it spends on rewards.
The card has no annual fee, and its rate depends on the cardholder's credit history.
According to September 2007 data from Cardweb.com Inc., JPMorgan Chase's interest rate range of 12.24-32.24 percent for its cards amounts to the highest average rate among the 10 largest card issuers.
Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.