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Most credit card users have been hit recently with higher interest rates due to the economic situation; analysts also predict that the reform act of 2009 will also lead to less rewards and higher annual fees. Good news is out there, however, as one credit card issuer goes against these negative trends.
JP Morgan Chase recently sent out notices to United Mileage Plus Visa card holders offering lower interest rates on purchases.
The rate has been lowered to prime plus 7.99%, or currently about 11.24%. Rates recently for the same credit card were about 13.49% meaning a savings of over 2% once the rate takes effect during the July billing cycle. United Mileage Plus Visa cardholders can enjoy this new APR for at least 12 months.
The letter also stated the following: “Now if you use your United Mileage Plus Visa card to make all of your purchases–including those that life can throw at you unexpectedly–your new lower rate can lead to smarter borrowing decisions.”
The intent is clear; more transactions will mean more transaction fee income for Chase bank. After all, poll after poll has shown that consumers are spending less and using credit cards less often than ever before. Chase is hoping lower rates will equal more spending. Which will equal more interbank fees.
The letter also hinted at the rewards and miles cardholders will still earn, adding “even at a time when other rewards programs may be cutting back.” It’s true that many rewards credit cards have been lowering the reward rate, even American Express. Spending floors have been implemented, as well as shorter expiration dates, higher point requirements for redemption and other tricky changes to rewards programs.
In addition to the new lower rates some Chase cardholder’s are enjoying, Chase has announced a new rewards program called the Ultimate Rewards program. This new program is designed to allow customers to accumulate one point for every dollar they spend, along with double points during special opportunities and on airline travel.
Chase is saying this new rewards program will give consumers the flexibility they desire from a rewards program, along with no points limits or maximum redemptions. Points will never expire and there are no tiers to achieve.
Points with the Ultimate Rewards program can be redeemed for cash, gift cards, travel certificates, statements credits and merchandise, offering a great deal of versatility.
There are two credit cards Chase currently has that can be used with the Ultimate Rewards system: the Chase Sapphire and the Chase Freedom. The Chase Freedom has no annual fee but does require $30 per year for customers to get an extra 3% cash back on groceries, gas and fast food. The Chase Sapphire, on the other hand, is a premium credit card aimed at well-off customers.
So far the news is great for Chase customers. Hopefully we’ll soon see other credit card issuers following Chase’s lead, creating more incentives for cardholder’s to use their cards and to keep them in good standing.