Just a few days ago we learned that Chase credit card users redeemed a huge amount of rewards in Q2 of 2018. That’s a lot of rewards points being cashed in, but in the larger scheme of things it’s a positive move for Chase. They raked in a $8.32 billion profit.
Amex Spends $2.43 Billion in Rewards
Chase is not the only card issuer that are looking at improving their rewards programs as a way to attract more customers. American Express is spending way more on its rewards program. The company has been improving its rewards programs as it tries to fend off competition from big bank rivals such as Chase, Citi, Barclays and more. Just in the the second quarter of this year, Amex said it spent $2.43 billion on card member rewards. An 11% increase from a year earlier.
Importance of Rewards Programs
Customer acquisition is very expensive for credit card companies. They give out huge sign up bonuses and ongoing rewards for everyday spending. The American Express Platinum card for example has a possible 100,000 points bonus, and an ongoing 60,000 bonus. Cards like the Chase Freedom give you 5X rewards on rotating quarterly categories that almost everyone would use. Barclays is offering a 60,000 bonus and 2X on all your purchases with the Arrival Plus card. The point is to create a relationship and also make a customer loyal to their cards. They want you to pull out that American Express or Chase card every time you make a purchase.
“Revenue growth was driven by broad-based increases in Card Member spending and fees,” Chief Executive Officer Stephen Squeri said in a statement as Reuters reports. That means that the strategy is working. Their customers are spending more.
American Express’ net income rose to $1.62 billion, or $1.84 per share, in the second quarter from $1.34 billion, or $1.47 per share, a year earlier.