Chase Picks Up The Tab Appeals To The Gambler Inside You

By Pinyo, on May 17, 2009

Just saw the latest promotion from Chase credit card called Chase Picks Up The Tab. Apparently Chase has been running this promotion since March and will run through June 2009 (and this is not the first time either). The promotion goes something like this. Just use your Chase debit card as you normally would and Chase could pay for your next qualifying purchase (Chase will pick every 1,250 transaction as the winning transaction). If you are the lucky winner, Chase would reimburse you the entire value of your qualifying transaction up to $200.

Sounds Good Right?

Actually, I have a real problem with this kind of promotion. I don’t like the fact that it encourages you to spend more money by appealing to the gambling spirit inside you. Although Chase said using your debit card more won’t help, the reality is you’ll use your Chase debit card more to increase your chance of being one of the 1,250th winning transactions.

A Very Clever Move By Chase

Chase said that it would pay up to 40,000 winners up to $200 each. I think this a great deal for Chase. Here’s why:

1. It’s unlikely Chase will even pay half of its total $8 million ante because the majority of transactions will be below the $200 limit — for example, the winning purchase could be a $10 transaction. So on average, Chase will probably end up paying about 50% of the total “pot”.
2. Chase will be collecting more transaction fees because of the higher volume through its debit cards. Since only non-PIN transactions qualify, the fee can be up to 2% of the transaction.
3. Chase will be paying less in savings interest. Since debit cards are tied to cardholder’s checking account, this forces participants to keep more money in their checking accounts. This effectively lowers the amount that Chase has to pay to its saving accounts customers.
4. Chase will be collecting more overdraft fees. More activities through it debit cards create more opportunities for its customers to fumble and end up paying the overdraft fee.

Use Cash Back Reward Card Is The Better Way To Win

Instead of giving yourself a 1 in 1,250 chance of winning up to $200, I think a better way to win is by using a good cash back reward card like Discover More Card, which offers 5% promotional cashback bonus award and up to 1% cash rebate on normal purchases. You always win something regardless of how much or how little you use your reward card and you don’t have to worry about the pitfalls listed above.

What do you think about Chase Picks Up The Tab promotion? How is this different from gambling? Do you think Chase crossed the line with this one?

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Pinyo is the brain behind Moolanomy personal finance blog and a few other web sites. If you like this article, please subscribe for free daily email updates.

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