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American Express Co. and Mercedes-Benz USA have introduced a cobranded card with rewards tied to the luxury car brand, in the latest credit card industry effort to gain business from upscale consumers.
August 22 -
JPMorgan Chase & Co.'s new process for spending rewards points directly on Amazon.com replaces an old process that the issuer determined was not all that rewarding.
June 27 -
Continuing a push to maintain its affluent customer base, JPMorgan Chase & Co. has added daily travel auctions to its Ultimate Rewards credit card program and has eliminated the foreign transaction fee on another of its cards.
March 31
Capital One Financial Corp. is the latest bank to roll out yet another rewards card for affluent customers this summer, but its version has some unusual strings attached.
Unlike many recent entries for rewards card junkies, the Capital One Cash card requires cardholders to stick around for at least a year to earn all of the promised rewards.
Cardholders who use the cards for at least a year will earn 1.5% cash back on purchases, but initially they will only see cash refunds on 1% of their spending. After the card has been active for one year, Capital One will give the cardholders an additional cash refund for 0.5% of all their spending over the previous twelve months.
The one-year commitment could be a powerful weapon for Cap One in battling the attrition plaguing the affluent card sector, where new rewards deals are increasingly popular with issuers pursuing low-risk, high-spending customers.
"It's a very rich offer, and requiring people to stay at least a year to get the maximum rewards will weed out the gamers-the people who come just for the introductory bonus points or miles that a lot of card offers dangle," says Megan Bramlette, a director with Auriemma Consulting Group.
The card has no annual fee and no maximum limit on rewards. New customers also receive a one-time $100 bonus once they spend $500 during the first three months.
Other perks include cash rewards that never expire and, like all other Cap One cards, it imposes no foreign-transaction fees.
Cap One's new card comes during the same week American Express Co. announced a new cobranded Mercedes-Benz card with special perks designed to appeal to luxury drivers. JPMorgan Chase & Co. also recently introduced significant upgrades to its affluent Sapphire card.
Cap One is targeting only prospects with "excellent" credit for its newest card, including "those who tend to pay their bills on time," Celia Edwards, a Cap One vice president, says. She declines to say whether Cap One is specifically targeting "transactors," or those who pay off their credit card balance in full each month.
But it is likely Cap One primarily wants to attract customers who do not routinely carry a balance. That would be similar to the strategies of other issuers that in recent months have trotted out richer rewards programs, Bramlette suggests.
"Issuers want cardholders who spend a lot and pay off their balances each month because they can earn money on interchange, while they have no stomach for taking on a lot of risk in this economy," she says.
Cap One is offering the card only as a MasterCard to new customers. Existing Cap One cardholders who switch to the Capital One Cash card will retain whichever brand they already have-Visa or MasterCard, Edwards says.
Cap One recently has been pushing MasterCard more heavily in direct mail and online offers, as MasterCard continues to try to close its market-share gap with Visa, observers say. Cap One for many years has supported both brands.
