Chase earns over $5 billion in revenue from its credit card portfolio per year, but they’ve made it a corporate priority to build a product that’s intended to kill the credit card business. And CEO Jamie Dimon threatened to fire senior leaders who get in the way.
Facing growing pressure from nimbler fintechs, the chief executive of the biggest US bank pushed the leaders of his two largest divisions to put aside any differences and collaborate on a new payments processing system.
“If I hear that any of you aren’t sharing information with each other, or you’re hiding information, you’re fired,” Dimon told the 15 or so executives who had gathered for the meeting in New York, according to two people with knowledge of the remarks.
Chase is building a direct payment system – intended to route funds from a customer’s account straight into a merchant’s account and going live next year – bypassing credit card processing networks while running much faster than the current electronic funds transfer system. They internally refer to it as a “pay-by-bank” product. The commercial bank is building the product that competes with credit cards from the consumer bank, hence the concern over internal resistance to the project.
- This is meant to be ‘creative destruction’
- There’s going to be innovation, no point in ignoring that
- So they want to be the one that innovates
In some sense this product already exists, and Chase is a part-owner of it: Zelle. However it hasn’t been broadly adopted by merchants. Chase sees their new system displacing payments “for rent and bill payments as well as cash, high-priced debit and cheques,” and not merely for credit cards, but “the bank is making sure it is ready for the potential demise of credit cards.”
Credit cards bundle payments, consumer protections, and lending – and are sticky not just because of habit but also loyalty marketing, they reward customers for their loyalty with rebates and benefits, sometimes from the bank and sometimes from their favorite brands.
Consumers also benefit from the credit card float – buy today, pay a couple of weeks after the end of your billing cycle. That’s not just free financing, it’s especially helpful for those putting business expenses on their cards and waiting to get reimbursed. (One of the greatest features of the old Diners Club card was 60 days to pay, precisely so you didn’t have to worry about whether your employer processed your reimbursem*nt before the bill came due.)
Direct payments serve only one of these functions, though Chase is ‘working through’ what consumer protections would look like. While lower-cost to merchants, they almost certainly entail consumers giving up the same level of protections and rewards and unbundle the option for lending. While I don’t think you should focus on rewards if you aren’t paying off your credit card each month, for those who do revolve on cards it’s frequently better than the alternative.
At the same time, new payment technologies will compete down the cost of interchange – in ways that regulation won’t. Bipartisan legislation to regulate interchange exempts banks with under $100 billion in assets from caps. Market competition doesn’t exempt smaller banks, where credit cards would gravitate towards under mere legislative caps.
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FAQs
The 5/24 rule is an unofficial policy that dictates that Chase won't approve you for its cards if you've opened five or more personal credit card accounts from any issuer in the last 24 months. Put simply, the number of cards you've opened in the previous two years will affect your approval odds with Chase.
What is the Chase 0 30 rule? ›
Chase 2/30 & 1/30 Rules
Second, while Chase has a 2/30 rule, meaning you can only be approved for 2 Chase cards in a 30-day period, Chase has a 0/30 rule for business cards. Unless it has been more than 30 days since your last Chase application, your application is denied automatically (at least most of the time).
How much money does Chase make on credit cards? ›
Income from Credit Card Interest and Merchant Fees
| Company | Credit Card Interest Income | Interchange Income |
|---|
| Barclays | $3,079,000,000 | $244,000,000 |
| Capital One | $18,349,000,000 | $3,179,000,000 |
| Chase Bank | $51,660,000,000 | $20,370,000,000 |
| Discover | $9,700,000,000 | $1,066,000,000 |
1 more rowJan 10, 2024
Chase is the U.S. consumer and commercial banking business of JPMorgan Chase & Co. (NYSE: JPM), a leading global financial services firm with $2.6 trillion in assets and operations worldwide. Si tienes alguna pregunta, por favor llama o visita una sucursal local de Chase.
What is the 2 3 4 rule for credit cards? ›
According to cardholder reports, Bank of America uses a 2/3/4 rule: You can only be approved for two new cards within a 30-day period, three cards within a 12-month period and four cards within a 24-month period.
What is the Chase 24 rule? ›
The 5/24 rule, often referred to as the Chase 5/24 rule, is a credit card application guideline implemented by Chase Bank. It states that if you have opened five or more credit card accounts (from any bank) in the past 24 months, you are likely to be automatically declined for certain Chase credit cards.
What is the 524 rule with Chase? ›
Chase's 5/24 rule means that you can't be approved for most Chase cards if you've opened five or more personal credit cards (from any card issuer) within the past 24 months.
What is the 2 year rule for Chase credit cards? ›
The Chase 5/24 rule limits the number of credit cards you can be approved for within a two-year period and still qualify for additional Chase credit cards. Here's everything you need to know about the Chase credit card rules so you can plan your applications.
What is the 48 month rule for Chase? ›
If you have received a bonus for a Chase Sapphire Preferred® Card or Chase Sapphire Reserve® within the past 48 months, you cannot earn a new cardmember welcome bonus on a new Sapphire card. Period.
What is the highest credit card limit for Chase? ›
The highest reported credit limit for Chase is $100,000, on the Chase Sapphire Preferred® Card and Chase Sapphire Reserve®. A limit this high is naturally only available to people with excellent credit and a high income.
On our list, the card with the highest reported limit is the Chase Sapphire Preferred® Card, which some say offers a $100,000 limit. We've also seen an advertised maximum credit limit of $100,000 on the First Tech Odyssey Rewards™ World Elite Mastercard®, a credit union rewards card.
Do credit card companies like when you pay in full? ›
While the term “deadbeat” generally carries a negative connotation, when it comes to the credit card industry, you should consider it a compliment. Card issuers refer to customers as deadbeats if they pay off their balance in full each month, avoiding interest charges and fees on their accounts.
Is Chase Bank owned by China? ›
JPMorgan Chase Bank, N.A., doing business as Chase, is an American national bank headquartered in New York City that constitutes the consumer and commercial banking subsidiary of the U.S. multinational banking and financial services holding company, JPMorgan Chase.
What is the chase bank controversy? ›
Attorney General Moody, with 18 other state attorneys general argue that Chase “has not extended its openness and inclusivity to everyone,” and points out the company's pattern of targeting and denying service to religious and conservative-leaning customers, like the National Committee for Religious Freedom.
Is Chase Bank owned by the Rockefeller family? ›
Chase Manhattan had long been known as the Rockefeller bank, although the family never owned more than 5 percent of its shares. But Mr. Rockefeller was more than a steward. As chairman and chief executive throughout the 1970s, he made it “David's bank,” as many called it, expanding its operations internationally.
How do I get around Chase 5 24 rule? ›
How to bypass the Chase 5/24 rule? If you've been approved for five cards in the past 24 months, you will not be approved for another Chase card thanks to the 5/24 rule. There have been reports of “Selected for you” and “Just for you” offers being exempt from the 5/24 rule.
Why does Chase have the 5 24 rule? ›
The 5/24 rule states that if you have been approved for five or more credit cards in the last 24 months, you will automatically be denied for any Chase credit card products. This is to prevent consumers from applying to credit cards solely for the welcome bonus and closing the account before the annual fee comes due.
What is the 5% limit for Chase Freedom? ›
EARN 5% CASH BACK FROM CHASE ON UP TO $1,500 IN COMBINED PURCHASES. From April 1 - June 30, 2024. Activate by June 14, 2024. 1 Purchases must post to your account by June 30, 2024.
What is the 2 30 rule for Chase? ›
2/30 Rule. The 2/30 rule says that you can only have two applications every 30 days or else you'll automatically be rejected.
