This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Chase's Revival of Free Balance Transfer Card Is Questionable

NEW YORK ( TheStreet ) -- What on earth is Chase up to?

It's a fair question to ask in reaction to the decision by the nation's largest bank to offer products with questionable profitability. You see, JPMorgan Chase (JPM - Get Report) is at the forefront of the resuscitation of free balance transfer credit cards, which offer introductory 0% balance transfer APRs and do not charge balance transfer fees. Issuers once made money off these cards by instituting default rates at the drop of the hat, but since the CARD Act prohibited such tactics, free balance transfer offers were believed to be collateral damage of this pro-consumer reform law and in fact disappeared for a couple of years.

Until recently, that is. Chase and Discover (DFS) reintroduced this genre to the credit card market a few months ago. Discover's quick discontinuance of their online offer for the No Balance Transfer Fee More Card only served to support the theory that these cards are unsustainable and fuel curiosity about Chase's motives in offering a No Balance Transfer Fee Slate Card with 0% interest on transferred debt for 15 months.

There are really only two possible explanations when you get down to it: 1) Chase believes that free balance transfer cards can be gateways to significant profits or 2) They want to give investors the perception of credit card growth.

Free balance transfer credit cards: profitable bait?
Starting with the first possible explanation, it's at least conceivable that free balance transfer credit cards could attract a sizeable number of new customers for Chase, which can then cross sell them other, more profitable products and actually make money when all is said and done. While these cards themselves generally won't bring forth any revenue for at least 15 months, they are extremely attractive to the nearly 40% of consumers who have revolving debt, according to the National Foundation for Credit Counseling's 2012 Consumer Financial Literacy Survey .

With a foot in the door thanks to the obvious appeal of a free balance transfer, Chase gains a captive audience for its bank accounts, car loans, mortgages, etc. And since only around 7-10% of consumers switch banks each year, Chase, it seems, is banking on these new customers sticking around for a while.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
JPM $61.28 -0.49%
AAPL $128.46 -1.50%
FB $78.97 -1.79%
GOOG $558.40 0.53%
TSLA $203.34 -1.86%

Markets

DOW 18,132.70 -81.72 -0.45%
S&P 500 2,104.50 -6.24 -0.30%
NASDAQ 4,963.5270 -24.3630 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs