Nov. 5 (Bloomberg) -- JPMorgan Chase & Co., the biggest credit-card lender, and British Airways Plc will offer new customers 100,000 airline miles, intensifying the battle for affluent spenders.

The miles, worth a round-trip transatlantic flight, will be awarded to customers who spend $2,000 on the co-branded British Airways Signature Visa cards within the first three months, according to a statement. Credit-card issuers including American Express Co. have sweetened their rewards programs, even after lenders said federal regulations enacted in May could squeeze profit, increase costs and prompt them to scale back incentives.

“That’s probably the best introductory offer that I’m aware of,” Bill Hardekopf, chief executive officer of LowCards.com, said of Chase’s promotion. His Birmingham, Alabama-based firm reviews about 1,000 credit cards. Hardekopf hasn’t seen the terms of the offer.

Customers spending at least $30,000 in the first year will receive a matching travel voucher for a companion to fly British Airways, Europe’s third-largest carrier, and card holders will earn 1.25 miles for each dollar spent, according to the statement. There’s a $75 annual fee. The promotion is scheduled to start tomorrow for U.S. British Airways Executive Club members and Nov. 16 for nonmembers.

“We believe this offer provides tremendous rewards for the dollars our card members already spend,” Tony Glover, general manager at Chase Card Services, said in the statement. “The timing of these enhancements is optimal for holiday spending.”

Rewards War

The rewards war heated up in August when JPMorgan targeted households with incomes exceeding $120,000 for Chase Sapphire, which has no preset spending limit and offers one point for every dollar spent.

AmEx, which dominates the market for affluent customers, introduced on Oct. 8 the Premier Rewards Gold Card with triple points on airfare purchases, double points on gasoline and groceries and one point for all other spending. The card has 15,000 bonus points for purchases topping $30,000 in a calendar year. The $175 annual fee is waived for the first year.

American Express is removing the 60,000-mile cap on its Delta SkyMiles Card, effective in February, and offers up to four points for every dollar spent at 200 online retailers, said spokeswoman Desiree Fish.

A credit-card mile or point typically is worth about 1 cent, Hardekopf said.

Perks Survive

The added benefits defy industry predictions that U.S. curbs on credit-card practices would lead to fewer perks. Five days after President Barack Obama signed the Credit Card Accountability Responsibility and Disclosure Act in May, Discover Financial Services Chief Executive Officer David Nelms said “some of these new changes will cause competitors to continue to pull back even more in rewards.”

Nelms, whose firm pioneered cash rebates on card purchases, said Riverwoods, Illinois-based Discover will continue to emphasize rewards because it’s part of the card’s brand identity and spurs customer usage and loyalty.

The card law, which takes effect in stages, includes limits on interest-rate increases and a requirement that banks apply payments to higher-rate balances first. The U.S. House voted yesterday to impose the remaining provisions immediately instead of next year. Lawmakers including Representative Barney Frank, chairman of the House Financial Services Committee, said lenders have taken advantage of the delay by raising rates and fees.

Interchange

The law also required the Government Accountability Office to study the feasibility of regulating interchange fees that help fund rewards programs. The report, which may lead Congress to enact interchange legislation next year, is likely to be released Nov. 20, said GAO spokeswoman Laura Kopelson.

The fees, charged to merchants at the point of sale, average about 2 percent in the U.S. -- the highest in the world, according to Representative Peter Welch, a Vermont Democrat.

Welch says richer rewards hurt “mom-and-pop” merchants in his district and he is sponsoring a bill with Representative Bill Shuster, Republican of Pennsylvania, that would prohibit payment networks including Visa Inc. and MasterCard Inc. from setting higher interchange fees for premium cards.

“These fees are becoming the largest expense items for many businesses,” Welch said in an Oct. 7 interview. “Why let person A and B work out an arrangement that works for them, and then make person C pay for it?”

The bill is pending in Frank’s committee.

To contact the reporter on this story: Peter Eichenbaum in New York at peichenbaum@bloomberg.net

Last Updated: November 5, 2009 16:11 EST