First, there was a scramble for credit card issuers to rebuild their portfolios, as revolving debt lost more than $100 billion in interest-generating volume as the pandemic took hold. Then, there was a scramble, and you probably began to see low-cost balance transfers that expire into 2022, to build ballast. Now, watch for more exciting movements from credit card marketers.
Today’s American Banker covered a new offering by Capital One, and it is interesting from a couple of angles.
Capital One Financial is positioning itself for a big rebound in travel by rolling out its first-ever premium-level travel credit card with its reservation service.
The $395-a-year Capital One Venture X card launches next week with the issuer’s new in-house service for booking, Capital One announced Thursday.
Capital One Venture X wedges into an intensely competitive niche where American Express and JPMorgan Chase have recently revised the features and fees of their luxury travel cards.
Well, who knows if this will impact the Amex Platinum or Chase Sapphire, cherished by millions of travel-hungry Americans. But, on the other hand, some may find it exciting after the two recently raised their annual fees. When Mercator first covered the Premium travel card market in 2017, we said it was exciting but pricey and likely to change. Since then, we’ve seen a few fall-outs and some significant changes, but a chunk of mass affluents still miss being on Delta Airlines.
Of course, people want to travel on personal and family business, but the coast may not be clear yet. I miss Hilton coffee in the morning, sending my boss a dinner bill, and talking to an Uber driver in a different city. An extended family trip is long overdue.
Capital One, who knows more than a thing or two about consumer credit, is seeing a recovery in travel. Of course, not everyone wants to pay a hefty fee for a credit card when you can get a Chase Freedom or Discover it for free, but credit cards operate on segments, and this high-end market is a new space for Capital One.
This trend will not be the last big move. We’ve already seen solid bonus programs coming from Bank of America and Wells, both looking to amp up their businesses. In addition, Goldman Sachs is still flexing its muscles, and Citi is back into card offers win a big way. Even credit unions added some juice to their solicitations.
While I won’t suggest you skip your COVID booster shot because Capital One is amping up their travel rewards, look at it as a sign of life. U.S. credit card issuers are back in business, as you can see from the Federal Reserve’s Senior Loan Officer Surveys. But look at the market. Credit is back, and issuers are putting their money where their mouth is, ready for a strong 2022.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group