I think most banks expect
a substantial amount of their customers to use their card only
in the "sweet spot". That's part of the risk of issuing credit cards, but it's not as much of a risk as you may think. Even if you pay in full every month, they still make money off of the merchant fees.
For example, let's say every
Discover IT customer used their cards only
for the 5% category that quarter and they all
paid their balance in full every month. Discover would still probably break even. Of course, that's not going to happen- a substantial amount of their customers will not pay in full and pay interest and/or will use it for every purchase, so the future of Discover is not in danger.
tschmelcher wrote: Can they even do that?
If your credit card company sends you a letter which says they are closing your account because they don't like you, you smell, and your mother dresses you funny- they probably aren't breaking the law in most states. They're all careful to give themselves an out in the cardholders agreement stating they can cancel your account at any time for any reason (they can't of course close you for any discriminatory reason such as race, gender, religion, etc though). Of course, they are in business and they approved you in the first place, so they typically don't disapprove you unless they have good reason such as: you file bankruptcy, become delinquent on other accounts or apply for a bunch of accounts after they approve you (Barclaycard has a reputation for closing peoples' accounts in the first six months because they apply for too much credit).
Would any credit card issuer ever close the accounts of those who only use the bonus categories? Not likely, but I could see this scenario: new management takes over the credit card division of a company(or the entire division gets sold to a different company). The new management doesn't like the margin they're getting on cards so they decide to get rid of those who are the lower margin customers(those who use it only for the bonus categories and pay in full). That's not likely, though- even with that scenario, they would probably more likely weaken the bonus somehow or make it harder to redeem.
In my Wallet:
Sometimes in my Wallet:
- Amex PRG NPSL[3-14, bd 91]
- Sallie Mae MC $8000[1-14]
- Chase Freedom $4700[1-14]
- Discover It $2750[8-13]
- BoA UCF Alumni Cash Rewards $5000 [3-15]
- GM BuyPower WEMC $5000[9-14]
- Wells Fargo Propel 365 Amex $7000[4-14]
- Barclaycard Arrival WEMC $7000[3-14]
- BoA Better Balance $3000[2-15]
In my sockdrawer: Amex BCE $1000[10-13, bd 91], OCCU Duck $10000 [11-13], The Sportsman's Guide Visa $8000[8-14], Chase Slate $4000 [9-14]Delta Gold Amex $2000 [2-15 bd 91], Diners Club MC $20000 [10-14] Commerce Bank Visa $2000 [3-15] Citi Double Cash $1000 [3-15]
Total CL: $90450