(Bloomberg) — JPMorgan Chase & Co. is rolling out a travel-focused credit card, breaking with competitors who are reining in exposure to U.S. consumers amid a surge in unemployment.
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The new card — the Freedom Flex — was in the works before the Covid-19 pandemic started and, according to a statement Monday, rewards customers with 5% cash back for travel purchased through the bank’s rewards portal, as well as other perks including 3% back on dining.
While travel has plummeted during the pandemic, the goal is to attract customers who might be thinking about future trips, according to BJ Mahoney, who runs the New York-based bank’s Chase Freedom cards.
“We wanted to get the product out there so that, as folks feel like they’re ready to return to travel, we’ve got options for them,” Mahoney said in an interview.
Many credit card companies have pulled back on trying to attract new customers, spooked by rising unemployment rates in the wake of nationwide lockdowns to curb the spread of the coronavirus. Banks mailed out 96 million credit card offers in July, 68% fewer than a year earlier, according to data compiled by Credit Suisse Group AG.
Capital One Financial Corp. is cutting borrowing limits for many customers, reducing potential exposure after negotiations stalled over extending more government assistance to the unemployed.
Read more about Capital One’s decision to curb credit lines
JPMorgan has instead continued to seek out new customers throughout the pandemic, according to Mahoney.
“We are anxious and excited about the ability get this new product out there,” he said. “There’s never a bad time to do that. We are not stopping acquisitions by any means.”
The card also represents a coup for Mastercard Inc., as it will be the company’s first branded-card deal in more than five years with JPMorgan, the nation’s biggest credit-card issuer. The partnership means the card will also come with Mastercard’s world elite benefits, including mobile-phone insurance and credits for Lyft Inc.’s ride-hailing service.
Mahoney said he doesn’t expect the no-fee Freedom Flex card to compete with the bank’s more expensive Sapphire Reserve, which also has perks emphasizing travel and dining. The new card will be geared more toward “value seeking, cash-back enthusiasts,” he said.
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