Trying to recoup losses incurred during the Slate Card's 15-month intro period in this manner is a very risky bet for Chase to make, though, and it most likely won't pan out.
Chase: giving the false impression of growth?
Some of the most common metrics tracked by investors researching major banks are the outstanding balances and default rates of their credit card operations. Together, they can provide a snapshot of how much business a bank does, given that credit cards are some of the most popular products offered by banks, and how efficiently it does this business, as default rates are directly correlated to underwriting sophistication.
But what happens when a bank adds a bunch of new accounts that have revolving debt but won't make it any money? Well, outstanding balances go up and default rates go down, but the bank is not operating its business any more effectively and is not turning a greater profit. If anything, it's losing money in the process. Investors won't know that for some time, though, and could be misled into putting more money into the company, thereby driving up stock prices and making executives richer.
Conclusion: Questionable for Chase, Good for Consumer
Only time will tell exactly what Chase is doing, whether or not it's successful, and whether other major issuers like Bank of America (BAC) and Citibank (C) will follow suit.
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