September 24, 2010
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Chase Gives AmEx A Run For Their Money, Pt.2
A tuff race for at least one company.There's no doubt that Chase has given American Express a run for their money. As one of the nation's largest credit card companies, it held a special reception for 200 of its Sapphire cardholders with Travel Channel's host, Samantha Brown. Chase offers its Sapphire credit card to only those cardholders with an annual household income of $120,000 or more. The event was held at San Francisco's Asian Art Museum where guests were served risotto fritters and drinks and had an opportunity to hobnob with the travel grew rue. Gordon Smith, formerly with American Express is heading Chase's new marketing strategy. Along with Smith who left AmEx in 2007, Chase also hired another AmEx high ranking executive, Richard Quigley. Quigley now runs Chase's new small business credit card division which offers its charge card Ink.
To burden American Express further, the soon to be completed merger between United Airlines and Continental Airlines will cause AmEx to loss their co-branded Continental credit card. Continental Airlines announced without any provocation from Chase, that it would be dropping its AmEx program which allowed travelers to transfer AmEx points to Continental's frequent flyer program. Chase already has a credit card program in place with United who does not have a business partnership with AmEx. According to Chase, the company did not ask Continental to make the switch, it was their own decision and that the switch was not related to the pending merger.
Both Chase and American Express had been hurt by the recent recession. Chase lost nearly $3 billion in credit card defaults over the past two years resulting. The lender was able to report a profit this past quarter. AmEx, on the other hand, also suffered great losses particularly resulting from a poor business decision to open up credit to less prime customers. The move cost the company and as a result, AmEx has made some changes in its portfolios. They were however able to bounce back quicker than its competitors from the recession. Chase has also made some changes it its card portfolios; the lender dropped a few of its co-branded cards such as Starbucks Duetto, and Avon cards. It will be an interesting year ahead as we watch both companies diligently pursue the more affluent cardholder.