Wonder if we'll see a "race to the bottom"

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MemberSince99
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Wonder if we'll see a "race to the bottom"

Postby MemberSince99 » Thu Feb 21, 2013 6:42 am

It would be so fitting given that everything else seems to be that way these days.

What do I mean? Well it's the opposite of where companies offer higher rewards or gimmicks to attract new customers - instead they slash rewards hoping to save money and hopefully even lose customers too.

So, I personally don't envision rewards increasing, I'm actually wondering if we are going to see them slashing to the bone. We've already seen US Bank cripple the Cash + from a terrific card to meh, and Amex has cut rewards as well. Discover actually bumped them but only up to 1% so that shows how puny the rewards were previously with them and they still aren't anything to get very excited about.

Given how corporate America is, I would think they'll all jump on the bandwagon copying the trend, trying to increase their bonuses for the cost savings. It will be interesting to see.


cashback
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Postby cashback » Thu Feb 21, 2013 7:22 am

I don't think there will be much more cutting in rewards. Every card has been nerfed to the point where they are all pretty much equal in terms of cash back.
Credit Cards
Amex BCE 25K ---- PenFed Platinum Rewards 15.5K --- US Bank Cash+ 12K --- Discover IT 6K --- Citi Dividend 5K --- Chase Freedom 12.5K --- Amex SPG 6K --- Citi Thank You Preferred 15K

Not Used
Citi Simplicity - 5K, Sam's Club Discover - 10K

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Sallie Mae World Mastercard

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djrez4
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Postby djrez4 » Thu Feb 21, 2013 2:37 pm

Card issuers will do whatever it takes to make the most money. If that means cutting rewards, they'll do it. If it means increasing them, likewise. The theory is similar to the Laffer Curve - there is an ideal nexus of customers and rewards that provides the card issuer with the most revenue, just like, in theory, there is an ideal tax rate that provides the government with the most tax revenue. What that nexus is, I can't say. It appears the card issuers haven't found it yet, either.
[RIGHT][size=100]- Sapphire Preferred - Freedom - Ink - Platinum - Everyday Preferred -[/size]
[/RIGHT]

Randiesel75
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Postby Randiesel75 » Thu Feb 21, 2013 4:30 pm

djrez4 wrote:Card issuers will do whatever it takes to make the most money. If that means cutting rewards, they'll do it. If it means increasing them, likewise. The theory is similar to the Laffer Curve - there is an ideal nexus of customers and rewards that provides the card issuer with the most revenue, just like, in theory, there is an ideal tax rate that provides the government with the most tax revenue. What that nexus is, I can't say. It appears the card issuers haven't found it yet, either.


Good point, I agree.

FutureBillionaire
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Postby FutureBillionaire » Thu Feb 21, 2013 5:00 pm

djrez4 wrote:Card issuers will do whatever it takes to make the most money. If that means cutting rewards, they'll do it. If it means increasing them, likewise. The theory is similar to the Laffer Curve - there is an ideal nexus of customers and rewards that provides the card issuer with the most revenue, just like, in theory, there is an ideal tax rate that provides the government with the most tax revenue. What that nexus is, I can't say. It appears the card issuers haven't found it yet, either.


Solid analysis. Ultimately, if they want those swipe fees, they'll keep us appeased. Otherwise, I will choose the bank that gives me the biggest limit and lowest interest rate and stay loyal to it.
Gas: Discover It, Penfed Platinum Rewards x2, Chase freedom, Citi TYP
Plane tickets: CSP
Groceries: AMEX BCP, Penfed Platinum Rewards,Citi TYP
Clothes: Express, Amex BCP, Discover IT
Amazon: Citi Forward, Cash +
Restaurants: Citi Forward, Chase Freedom, Discover IT, CSP
Hotels and other travel: Discover Escape, CSP
Movies: BofA travel rewards visa signature(fandango), Discover IT, Citi Forward, Freedom
Bars, clubs, tomfoolery: CSP, Citi Forward, Discover IT, Freedom
Balance transfers: Kroger 123 rewards
Bill Pay: Chase Ink Plus, Citi Forward
Everyday spending: Bofa Accelerated cash rewards amex, Discover Escape

Bksuper
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Postby Bksuper » Thu Feb 21, 2013 10:09 pm

If the competition gets slashed as well, then customers may be appeased with less rewards. Also, I agree with Member's conclusion, the bankers will care about short term bonuses more than long term profits as well, they can always jump around or get bailed out if they mess up.
Sole Ownership Cards:
1st Financial Bank Platinum Student Visa, $500 CL, Open Since 3/2012
Citi Forward Student Visa, $6k CL, Open Since 10/2012
Costco TrueEarnings Amex, $6k CL, Backdates to 1/2012
SallieMae Rewards Barclay Mastercard, $2.5k CL, Open Since 4/2013
Jointly Owned Cards (co-owner with mom, not AU, used and paid only by me):
Chase Amazon Rewards Visa Signature, $2k CL, Open Since 8/2012
US Bank Cash+ Visa Signature, $13.5k CL, Open Since 10/2012
Authorized User (Parents Pay/Use)
Costco TrueEarnings Amex $29.4k CL, AU since 11/2012



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