- Centurion Member
- Posts: 4060
- Joined: Thu May 08, 2014 7:42 pm
- Location: United States
It seems to me that there is a pretty clear pattern issuers follow with AF travel credit cards, as well as all credit cards in general:
1. Create a card with great rewards and perks.
2. Offer a big signup/initial spend bonus and waive the annual fee for the first year. Lose some money here up-front.
3. Attract a lot of customers. Some will pay in full and use the perks a lot, and others will pay interest and not use the perks often.
4. Gradually cut the rewards rate (or their buying power with transfer partners) and benefits every year. Keep the annual fees, interest, and swipe fees, while paying out less and less in rewards. Add one or two hard-to-value perks to confuse things. Try not to raise the annual fee — that would be too obvious.
5. Drive away your savvy, unprofitable customers (who mostly spend on bonus categories, pay in full and make heavy use of the benefits). Keep customers who have your card for image/status, account age, or who don’t know better. Make a ton of money here.
6. Eventually end the product and try to PC the remaining customers into something of equally bad value.
Do you think I have it about right? Or does anyone think Amex, Chase and the others are genuinely trying to maintain the benefit levels, but invariably need to cut them? Are we reward geeks partly responsible for the benefit cuts, as we adjust our behavior with cards to suit changing incentives? Or would the cuts be happening anyway? I know, on some level, that not every Amex customer can routinely get free shipping on a $2 pack of razor blades.
I see a lot of AF cards that simultaneously offer enormous bonuses for new customers and benefit cuts for old customers. I’m thinking, in particular, of the Amex charge cards and the CSP.
I’d really be quite happy to have a small signup bonus, or no bonus at all, if I had any confidence that a card’s rewards and benefits wouldn’t be cut within a matter of months. Why does it have to be such a short-term game?
Very useful: SchwabPlat, CSP, IHG, Costco (was AA Plat), Freedom, SPG
Somewhat useful: Discover, ED (was EDP), BCE, Hyatt, Arrival
May close or PC: Prestige, BrooksBros
Might add: Proper business card, CSR, Ritz, Delta Gold, First Tech