Generous Reward Cards Bring Increased Costs to Big Banks
According to a recent Wall Street Journal report, costs associated with rewards credit cards increased an average of 15 percent during the third quarter of 2018 for Bank of America, Citigroup, JPMorgan Chase, U.S. Bancorp, and Wells Fargo. Regarding JPMorgan alone, credit card customers racked up $5.8 billion in rewards that haven’t been redeemed, which is up 53 percent from 2016.
The WJS report added that interchange fees, which are the fees banks charge merchants for purchases on credit cards, are facing pressure. That’s bad news for banks, given those fees are what bankroll rewards programs. Source.