The Black Sheep of Credit Cards

Our first question comes from SJDP1234, who asks, "Is Chase dabbling in private credit a way to ease up on co-brands, i.e., no more 5/24 if it's a United card you're after, while still keeping stricter issuing rules for the in-house card, Sapphires, Freedoms keep the 5/24? Or is it just a way to share the risk from weaker credit profiles while still making an acquisition of Chase-issued cards difficult for the consumer?" RJ?

It could be a way to offshoot the co-brands, and Chase has a fair number of co-brands.

Proportional to their Chase cards, they have quite a lot of them, from Disney to they're about to get Apple, so they're about to get a lot of people.

And Apple is going to want a lot of people to continue to get their cards.

So this is going to be something I think Chase is gonna have to think about, especially taking on Apple.

Disney and Apple are probably the biggest companies Chase works with, and Apple is a different kind of particular, and they are bank-like, if not banks.

So I think that's part of it.

I do think they also, there are cards I'm sure they are comfortable with certain people going a different pathway for, probably not unlike the CSR.

That's fair.

Now, there's no possible way to be able to honestly answer this question, so it's completely opinionated in my personal opinion.

But I am, and I've talked about this last week and I even talked about it in my members only videos, these credit card companies, Chase being one of the top tier ones, one of the big ones that is, they are looking for ways to help save whatever little bit more they can.

Not just with Chase, is these new breakage credits.

And what I mean by breakage credits is, oh, now it's, we'll give you $100, but it's $25 a quarter, in hopes that of course you don't necessarily use it, and of course they, you know, eat the profits on the other end.

Like a, like an all-inclusive resort.

You got that one person over there that's eaten half the menu, but then the table right next to it that has the kid that's only eaten buttered noodles and french fries is compensated by the other person, so it like balances out.

So when I look at it from we're gonna limit some of these people with like a 3/24, but then you have people like us in the inner community here that are literally the table eating half the flipping menu and half of the buffet.

And so it's the only way they can help balance it out, and that's the way that I personally am looking at it.

It is a business case, but it's not a business case against us.

It's a business case against the people that are here that ruined it for everyone else that's not here yet.

I do think there's an easy way for Chase to solve some of their problems, especially with United.

Amazon's already exempt from the 5/24 rule.

I have a feeling Apple will be exempt from the 5/24 rule.

Just make United exempt from the 5/24 rule and you've solved your United problem.

You are going to have to be somewhat strict on the underwriting for those people, but if you also go to United and say, "Hey, you're effectively a bank as well.

You assume the risk if they default," maybe that is a way out of that little quagmire, if in fact that is where the relationship is.