(Adds details of competition)
NEW YORK Feb 29 JPMorgan Chase & Co
will offer a richer cash-back credit card in April to better
compete against products from Capital One Financial Corp
and Citigroup Inc.
The new "Freedom Unlimited" card will pay back 1.5 percent
on all purchases, a higher standard rate than its current
Freedom card, Pamela Codispoti, president of Chase Consumer
Branded Cards, said in an interview.
The new card is the latest salvo in credit card wars that
have escalated in recent years due to new regulations imposed on
other bank businesses after the financial crisis.
Capital One's Quicksilver card is currently the best
cash-back card for customers with limited, fair or good credit
scores, according to cardhub.com. It pays back 1.5 percent.
Citi's Double Cash Card, which pays 2 percent, is rated best for
people with excellent credit.
JPMorgan CEO Jamie Dimon said at the company's annual
investor day conference last week that Chase would "have a new
card coming out that would compete better with (Capital One's)
Citi's 2 percent rate, introduced in September 2014, is at
the limit of profitability because banks often collect less than
that amount from merchants who accept the cards, industry
experts have said.
Last year, Citi raised the stakes for co-branded cards with
retailers and travel companies when it took the Costco Wholesale
Corp business from American Express Co. Since
then, JPMorgan has agreed to give up some $900 million in annual
revenue to renew some co-brand deals.
Chase is the biggest issuer of general purpose credit cards
in the United States, according to the Nilson Report. It also
operates the biggest wholly-owned business handling payments to
merchants for their card transactions.
JPMorgan's card operations earned $3.9 billion in 2015,
accounting for 16 percent of total net income.
The credit card business is attractive for banks because it
does not face the same fee restrictions as debit cards under
post-crisis regulations. And, it requires less capital than
Codispoti said the Freedom Unlimited card will available as
an alternative, or a companion, to Chase's current Freedom card,
whose standard cash-back rate is back 1 percent. It also offers
quarterly specials of 5 percent back on changing categories of
spending, such as groceries or gasoline, up to $1,500.
"I don't think we were late, per se," with the simpler,
richer cash-back card, she said. Different customers like
different offers and some like the current Freedom card, she
(Reporting by David Henry; Editing by Lisa Shumaker)