Souring Loans
The extra investment comes at a tough time for card lenders, who had to set aside extra provisions to cover souring loans last year as the pandemic drove up unemployment. That’s pinched the overall profitability of their card portfolios.
Still, the companies’ efforts to keep customers seem to be working so far. Attrition levels haven’t begun to tick up for premium cards at JPMorgan, Citigroup and AmEx. And consumers paid about $13 billion in annual credit-card fees last year, the same amount as in 2019, according to consultancy R.K. Hammer.
For AmEx, Covid-19 has forced the card giant to temporarily shift its longtime focus on travel and dining. Last year, for instance, the firm offered Platinum customers as much as $320 in statement credits for spending on select streaming and wireless-telephone services.
This month, the lender unveiled new temporary perks tied to rewarding customers’ increased reliance on online shopping, including as much as $650 for virtual personal-training sessions from the luxury-gym chain Equinox, and $150 back for the food-delivery service Home Chef.
‘Essential Categories’
“For many years our focus has been on driving long term card member loyalty by regularly evolving our card offers and benefits,” Rachel Stocks, executive vice president of global premium products and benefits at AmEx, said in an emailed statement. “The offers we’ve introduced over the past year in at-home essential categories like streaming, wireless, grocery, e-commerce, business essentials and more are a continuation of this strategy.”
Crawford, the AmEx customer who took extra points to keep her Platinum card, said she appreciates some of the newer offers, such as the credits for streaming services, saying they “took the sting” out of the fact she couldn’t use many other perks.
“I do want to give AmEx credit,” she said. “They pivoted really well.”
This article was provided by Bloomberg News.