Big banks want to reduce credit card rewards program – Business News

NEW YORK: Large financial institutions including JP Morgan Chase & Co., Citigroup Inc. and American Express Co are easing some of the reward plans that credit card companies offer to borrowers, the Wall Street Journal reported Tuesday.

The financial institutions do not intend to completely terminate the rewards, but they want to change them in ways that encourage the use of credit cards and reduce rewards for rewards in advance. People familiar with the issue told the Journal.

Banks have offered historical rewards such as free air travel to users of premium credit cards to lure customers and ask them to spend more money on their cards.

But some financial institutions are now looking for a review of their reward strategies, which were under pressure when consumers became increasingly smart in using credit cards, according to the Journal.

The cost of reward programs grew by an average 15 percent from the third quarter of 2018 compared to the third quarter of 2018 at some of the largest credit card providers, bank analyst Charles Peabody told the Journal.

At the same time, another major revenue stream from credit cards – fees paid by retailers to credit card companies – is decreasing as retailers are pushing back lawsuits against what they consider to be excessive costs, according to the Journal. – Reuters

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