The 'Nerfing' Lifecycle

All about maximizing your rewards!
Members share tips and tricks for getting the most miles, & points.
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yfan
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Postby yfan » Wed Dec 10, 2014 10:44 pm

CarefulBuilder14 wrote:The rewards are really nothing exceptional, though. The 3% on Costco gas is unique, but there are so many other Amex cards that are good for warehouse purchases.

I don't know what other Amex issued cards give better cashback on Costco warehouse purchases, but notwithstanding, this is my point. What we on the consumer side view as "stellar" rewards are often unsustainable on the issuer side. This may well be by design - to suck in new customers and keep them spending even as the rewards are nerfed - or not, but either way, it doesn't seem to be lasting.


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CarefulBuilder14
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Postby CarefulBuilder14 » Wed Dec 10, 2014 11:31 pm

yfan wrote:I don't know what other Amex issued cards give better cashback on Costco warehouse purchases, but notwithstanding, this is my point. What we on the consumer side view as "stellar" rewards are often unsustainable on the issuer side. This may well be by design - to suck in new customers and keep them spending even as the rewards are nerfed - or not, but either way, it doesn't seem to be lasting.


It isn't cash back, but I was thinking of the Amex ED. MR points are trickier to use than cash, but with no AF it can be worth waiting for a proper redemption opportunity - even for a light spender without the 20% bonus. And if someone has an AF Amex, anyway, there are a whole bunch of other options (EDP, SPG, PRG).

Of course, all four of the cards I just suggested as alternatives are prime candidates for nerfing and/or have recently been hit.

I agree with your general point that what we on this site expect in rewards would not be sustainable.
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Letting new accounts cool off since May
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yfan
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Postby yfan » Thu Dec 11, 2014 1:28 am

CarefulBuilder14 wrote:It isn't cash back, but I was thinking of the Amex ED. MR points are trickier to use than cash, but with no AF it can be worth waiting for a proper redemption opportunity - even for a light spender without the 20% bonus.

Right but the ED is 2x at supermarkets, not warehouses. The benefit terms say, "superstores and warehouse clubs are not considered supermarkets."

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CarefulBuilder14
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Postby CarefulBuilder14 » Thu Dec 11, 2014 9:34 am

yfan wrote:Right but the ED is 2x at supermarkets, not warehouses. The benefit terms say, "superstores and warehouse clubs are not considered supermarkets."


I was saying that under the assumption that the customer is going to eventually transfer the MR points (or SPG, etc) to a frequent flyer program, getting more than one cent of value per point. Considering that Costco has a lot of customers who spend a lot of money there, and the card will probably see occasional use elsewhere, the rewards can really add up.
Wallet: Prestige CSP SchwabPlat Freedom It Hyatt SallieMae AAPlat
SD: Arrival BrooksBros BCE ED IHG
Letting new accounts cool off since May
Really not sure what I'll add next or when

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Vattené
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Postby Vattené » Thu Dec 11, 2014 2:37 pm

I suspect there's merit to these hypotheses (as well as insight into broader business attitudes), but I also wonder how many consumers are even that serious about rewards. Many may sign up for the bonuses and because the rewards sound great, but not follow through or pay enough attention to properly utilize them. I feel like our world is pretty small. Credit card companies have us transactors for the swipe fees, but they also have a lot of customers that just want something to give them the illusion of prestige. There are also a lot of consumers that carry balances because credit line = money that's available to me (AKA the cash cows to the credit card issuers).

It might be an effective strategy because all they need to do is say, "Hey! Look at this shiny new introductory bonus!!" and people will jump at it. How many posts does this forum get to the effect of, "I just got approved for the Amex Plat...what are these 'Membership Rewards points' I keep hearing about?"



Brad Bishop wrote:I first noticed this in the 1990s with the long distance companies competing. AT&T, and other companies, would pay you $100 flat out to have them as your long distance company. They would even offer you competitive rates. This was all only if you weren't with AT&T. So, if you were with AT&T and said, "I want a $100 check. I want better rates," they'd tell you, "No - that offer is only for new customers." It was in your best interest to leave AT&T, because of these bizarre business practices, and come back 6mo-1yr later and have them to pay, both in the check and advertising, to win you back.

DirecTV does this. SiriusXM does it. The cable companies mostly seem to do it but if you just call up and ask for the latest discount after paying a month at the normal price.


My parents live out in the country where DirecTV and Dish are the only options for television providers, and both are awful about this. They've just resorted to more or less flipping back and forth between the two every couple of years because of what they'll offer new customers (even though they've been customers in the recent past). They're always running promotions for new customers and are perfectly content in screwing over anyone that's been with them for a few months.
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

yfan
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Postby yfan » Thu Dec 11, 2014 4:05 pm

CarefulBuilder14 wrote:I was saying that under the assumption that the customer is going to eventually transfer the MR points (or SPG, etc) to a frequent flyer program, getting more than one cent of value per point. Considering that Costco has a lot of customers who spend a lot of money there, and the card will probably see occasional use elsewhere, the rewards can really add up.

Oh ok. Gotcha. I am so used to focusing on cashback, I completely missed the point about transferring points to partners. Thanks for clearing it up!

Brad Bishop
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Postby Brad Bishop » Thu Dec 11, 2014 5:17 pm

Vattené wrote:My parents live out in the country where DirecTV and Dish are the only options for television providers, and both are awful about this. They've just resorted to more or less flipping back and forth between the two every couple of years because of what they'll offer new customers (even though they've been customers in the recent past). They're always running promotions for new customers and are perfectly content in screwing over anyone that's been with them for a few months.


I've been playing the cable company game for 10 years:
- call to ask about any discounts or promotions
- receive an extraordinary good deal (like $20/month for cable or $20/month for internet) for 6-12 months
- wait until the 13th month (when I've at least one full price bill at a ridiculous price)
- repeat

I'd be happy getting off this stupid cycle and just paying them $30-40/month depending on service. Nope.

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Vattené
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Postby Vattené » Fri Dec 12, 2014 10:40 am

Well it sounds like you're at least able to get them to offer you something (not that you should have to). But not budging at all? That is just baffling to me. I could potentially see the argument that doing this is more profitable overall (you use good deals to draw in customers, and the current ones are unaware of how or unwilling to do the work to get better rates)....but when you have someone on the line saying "give me the rates you're giving other people or cancel my service?" They're losing money at this point. Maybe poor customer service that is forced to closely follow inflexible rules is a factor in this.

And here we are, back at a total disregard for quality.
-Vattené
FICO-8:
EX - 809 (11/16) | TU - 803 (11/16)
Primary Cards:
American Express EveryDay - $20,000 (10/14)
Discover it - $23,000 (2/14)
AU on Barclay Sallie Mae - $10,000 (8/15)
plus several store accounts of varying usefulness now

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djrez4
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Postby djrez4 » Fri Dec 12, 2014 1:07 pm

Cable companies are a special breed. Comcast fires customer service reps if they don't make enough sales. That doesn't make sense on any planet I've ever visited, but I'm not a CEO.
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