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Credit card companies may not be filling mailboxes with teaser rate marketings to the same extent as they had in the mid-2000s, but that does not mean the competitive landscape has lessened.
To the contrary, the post-CARD Act competition between and among issuers of bankcards and private-label store cards has simply shifted to other areas. The battle for consumers' spring cleaning and gardening business offers a case study of the extent to which rewards programs have come to dominate the marketplace.
Citigroup Inc.'s Dividend Platinum Select MasterCard, JPMorgan Chase & Co.'s Chase Freedom, Discover Financial Services's Discover Card all are offering 5% cash back on purchases made at home improvement stores throughout the second quarter. Lowe's Cos. Inc. joined the fray on April 22, announcing a 5% rebate program for its GE Money Bank-issued private-label consumer credit card. GE Money Bank is a unit of General Electric Co.'s General Electric Capital Corp.
The 5% Lowe's discount only applies to single-receipt purchases of $299 or more, but it offers a degree of immediacy that the bankcards lack in that the discount is applied at checkout. Consumers who use the Chase Freedom card for their Lowe's purchases, for instance, see rewards points accrue to their "Ultimate Rewards" balance. To receive a cash-back check at the minimum denomination of $20, they must build a balance of at least 2,000 points, then log on to the Chase website, order the check, await its delivery, then cash or deposit it.
So, in effect, customers would need to spend $400 on home improvement purchases (assuming they did not use the card for additional purchases) to qualify for the minimum cash reward. And, with the 5% promotion only applying to the first $1,500 of home improvement purchases, the maximum reward available would be $75. The fine print on the Internet marketings for Chase's 5% reward promotion, which is located below a list of the kinds of merchants where the rewards may be obtained, also cautions that "It is possible that not all purchases made at these retailers will be eligible for the 5% cash back promotion." The bankcard programs...