Citigroup takes on JPMorgan with new 5% card

Pam Habner, Citigroup’s Head of US Branded Cards

Source: Citigroup

Banks have been falling over themselves to entice new credit score card prospects, dangling hefty 100,000 level bonuses and rolling out new merchandise.

Now, Citigroup is making a push in one of many fastest-growing card segments.

The financial institution on Thursday is launching a credit score card that offers customers 5% money again on as much as $500 of spending per thirty days in a class – from eating places to groceries or journey – and 1% money again on all different purchases, in response to Pam Habner, Citigroup’s head of U.S. branded playing cards.

Unlike current playing cards from opponents together with JPMorgan Chase, the new Custom Cash card does not require customers to enroll in or choose the classes for that 5% fee; as an alternative it mechanically applies the speed to a person’s high class of spending.

“The problem with those cards is they’re complicated; you have to keep track of rotating categories that change each quarter, or you have to remember what the issuer specifies as the category you might get cash back on,” Habner mentioned this week.

“So the customer has to adapt to what the card is offering as opposed to the way it should be, which is the card simply adapts to the customer’s lifestyle.”

Habner has a singular view of the aggressive panorama in playing cards. She joined Citigroup final yr from JPMorgan, the place she helped create the financial institution’s Sapphire Reserve card. That product was so common at its 2016 launch that the financial institution ran out of the metallic used within the playing cards.

The Sapphire, which had an unheard-of stage of rewards on the time, escalated the battle amongst banks for high-spending prospects. Credit card issuers together with American Express, Capital One and Discover had been pressured to supply lavish sign-on bonuses.

It additionally helped unfold a subculture of rewards-maximizers, individuals who extract the best variety of factors doable from a rotating solid of playing cards, leaning on Excel spreadsheets to maintain observe of all of it. Savvy card customers pressured JPMorgan to take a number of massive accounting hits, an admission that prospects had been incomes factors sooner than the financial institution had anticipated.

`Hyped-up rewards’

While banks pulled back their card promotions final yr on concern that the coronavirus pandemic would result in a wave of defaults, they’re now again with a vengeance. American credit score card prospects proved to be way more resilient than anybody would have guessed, aided by a number of rounds of presidency stimulus packages that injected trillions into the economic system.

Now, American Express and Capital One supply playing cards with 100,000 level signing bonuses. JPMorgan not too long ago bumped up the bonus for its Sapphire Preferred card to 100,000 factors for the primary time. This week, Wells Fargo introduced a 2% money again card, taking aim at Citigroup’s common Double Cash card.

“We’re seeing a lot of hyped-up rewards and more marketing activity in the past few weeks,” mentioned Ted Rossman, a senior analyst at “It had been a slow year, but then suddenly things are popping again. It just shows the card companies want in on the rebound in spending.”

After becoming a member of Citigroup final July, Habner started on the lookout for methods to spice up the financial institution’s market share. While it is a chief within the card trade, its mortgage e book and roster of lively prospects contracted in the course of the pandemic. The financial institution employed an out of doors agency to assist it survey millennials on what a great card could be, she mentioned.

They prioritized a cash-back, no-fee card that was straightforward to make use of through smartphone app, Habner mentioned. Custom Cash customers can preserve observe of their spending through the financial institution’s cell app, which can present what class is incomes essentially the most rewards in any given month, Habner mentioned. Like opponents, the product has a $200 signing bonus.

“We wanted to make it easy for customers to purely focus on enjoying their lives, especially in this post-pandemic period where they’re getting back to the things that they love to do,” Habner mentioned.

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