JPMorgan Wants to Be What’s in Your Post-Covid-19 Wallet

If history is any guide, JPMorgan Chase & Co. might have just called the end of the coronavirus-induced recession.

The biggest U.S. bank said that starting on Sept. 14 it will offer a new credit card called the Freedom Flex, which gives users 5% cash back on travel purchased through Chase Ultimate Rewards, as well as 3% back on dining and drugstore purchases. A travel-focused offering might seem too soon, but BJ Mahoney, who runs the bank’s Chase Freedom cards, told Bloomberg News’s Michelle F. Davis and Jenny Surane that “we wanted to get the product out there so that, as folks feel like they’re ready to return to travel, we’ve got options for them.”

This is consistent with Chief Executive Officer Jamie Dimon’s long-held strategy of seizing market share when others pull back. In an earnings call last year, he noted that the bank’s popular Sapphire brand was introduced in 2009, just months after the recession ended. “Marketing money is usually better spent in a downturn; the returns on it usually double,” he said. Given the timing of the Sapphire launch in the wake of the financial crisis, unveiling the Freedom Flex now feels significant, even if it was technically in the works before the Covid-19 pandemic.

It shouldn’t be lost on anyone that this rollout also comes just days after Capital One Financial Corp. confirmed it’s cutting the borrowing limits on credit cards of some of its consumers. As Surane reported last week, the third-largest U.S. credit card lender “is watched closely as a harbinger of what’s to come at other major banks.” The move seemed to signal what the largest financial institutions had feared: the failure to extend existing federal aid, which could leave banks on the hook for billions of dollars in bad loans.

To be clear, that’s still a risk. JPMorgan, however, braced for this possibility and then some. As I noted after its second-quarter earnings, the bank’s $10.47 billion in loan-loss provisions seemed high relative to the path of the U.S. economic recovery. Dimon himself admitted that “if the base case happens, we may be over-reserved. I hope the base case happens.”