US Bank Downgrading Restaurants on Cash + to 2%

Discuss the Visa & MasterCard payment networks as well as cards that operate through them.
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otter
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Postby otter » Mon Nov 03, 2014 5:19 pm

yfan wrote:I can name more than one bank with rewards debit cards. Discover Cashback checking (10 cents on every swipe, check, bill payment), and Bank of America debit cards - which are eligible for BankAmeriDeals cashback, which offer 10% or more cashback on specific purchases.

As much as there is cost of fraud, the changes to the rewards programs are due neither to the cost of fraud nor regulation. It's a result of the programs not making enough money. Banks are getting really good at detecting fraud and shutting down cards (and issuing new ones) before major damage. But the rewards program competition has caused too many people to get rewards cards just for the bonus, or the bonus categories (at least, more than the banks anticipated), and not use the cards otherwise. That means they have the loss leaders (sign up bonuses and bonus categories) but less of the benefit of having that card become the default card for the consumer. That's why we're seeing rewards nerfed.


I actually tried to open a checking account with Discover and was told they'd need to verify I was who I said I was (duh, I applied from a link they sent to my e-mail, the same e-mail addy I've had the whole time I've had my Discover It card. As for the BoA BankAmeriDeals, I used to use it, but the deals aren't nearly as good as they used to be.

I think a lot of the nerfing is because too many people are getting smart.The cards which have the highest credit criteria are the ones likely to get nerfed (PenFed, CSP, US Bank Cash+) simply because those with the best credit simply don't carry a balance and so the issuers don't get the desired interest which is their expected bread and butter. The "break even" for CC's seems to be 2% so without substantial interest income, a card issuer is losing money when they give an initial bonus and/or 2%+ rewards and the cardholder just gets his bonus, pays off the card and uses the card only for the targeted categories. Ironically, cards with a little lower credit customer (good to excellent credit) seem to be less likely to be nerfed. The Chase Freedom and Discover It are examples of those... people with those cards have a little lower average credit so enough of them have a recurring balance and from what I've seen where I work, people will use those cards even when it's not for 5% categories. The credit savvy customer gets the Freedom and IT, but so does the average Joe.
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]
Sometimes in my Wallet:
  • 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


yfan
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Postby yfan » Mon Nov 03, 2014 5:35 pm

otter wrote:I actually tried to open a checking account with Discover and was told they'd need to verify I was who I said I was (duh, I applied from a link they sent to my e-mail, the same e-mail addy I've had the whole time I've had my Discover It card.

This is standard procedure though. It asked me as well, and I did, and it worked just fine. There was no additional inquiries either, I think because Discover did the verification from my credit reports they already SP to provide me with my FICO score.
The credit savvy customer gets the Freedom and IT, but so does the average Joe.

I think there you have it, right here.

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CarefulBuilder14
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Postby CarefulBuilder14 » Mon Nov 03, 2014 5:54 pm

It's true Discover does make a lot of its money on interest (relative to swipe fees, compared to other issuers). So there must be a big part of the customer base carrying balances from one month to another and paying interest.
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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otter
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Postby otter » Mon Nov 03, 2014 6:41 pm

yfan wrote:This is standard procedure though. It asked me as well, and I did, and it worked just fine. There was no additional inquiries either, I think because Discover did the verification from my credit reports they already SP to provide me with my FICO score..


Actually, I left something out. They put me on hold for around 10 minutes and then came back and said they'd call me back later and I asked what time and they said later that week. I had a "membersince" moment and told them to f- their checking account...
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]
Sometimes in my Wallet:
  • 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

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otter
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Postby otter » Mon Nov 03, 2014 6:53 pm

CarefulBuilder14 wrote:It's true Discover does make a lot of its money on interest (relative to swipe fees, compared to other issuers). So there must be a big part of the customer base carrying balances from one month to another and paying interest.


Sometimes I look at these cards as if I was the credit issuer to see how they think they can make their money. Some are obvious. Discover obviously likes people who carry balances and rewards them with CLI's while Amex punishes those who carry on their revolvers. So Amex = swipe fees, Discover = interest. One card I've never figured out has been the Arrival- it's almost the "too good to be true" card. I don't think you can sustain a 2.2% rate on everything indefinitely unless you have a lot of people who carry a balance- and the Arrival even gives a 12 month 0%. They even have a travel type site where you can post blog entries and photos and get points (I racked up 5000 points in one night with less than 2 hours of effort- if I had the time, I could accumulate $500 worth of points easily). They've recently done away with the 40000 points/$3000 spend, though.
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]
Sometimes in my Wallet:
  • 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

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CarefulBuilder14
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Postby CarefulBuilder14 » Mon Nov 03, 2014 7:12 pm

otter wrote:Sometimes I look at these cards as if I was the credit issuer to see how they think they can make their money. Some are obvious. Discover obviously likes people who carry balances and rewards them with CLI's while Amex punishes those who carry on their revolvers. So Amex = swipe fees, Discover = interest. One card I've never figured out has been the Arrival- it's almost the "too good to be true" card. I don't think you can sustain a 2.2% rate on everything indefinitely unless you have a lot of people who carry a balance- and the Arrival even gives a 12 month 0%. They even have a travel type site where you can post blog entries and photos and get points (I racked up 5000 points in one night with less than 2 hours of effort- if I had the time, I could accumulate $500 worth of points easily). They've recently done away with the 40000 points/$3000 spend, though.


Discover makes it easy, since the It, Chrome, and their few remaining legacy cards are so similar. You can look at the financial data they have to give their shareholders. (I've considered becoming a Discover shareholder but I already have a lot in financial companies and it's not a favorite investment.)

Amex doesn't have a lot in the way of other banking operations, so you can clearly tell from the financial statements that they definitely prefer big swipe fees to interest income.

WEMC has a higher swipe fee than Platinum MC and (I think) World MC, so I can see it as a profitable card for Barclaycard. That annual fee does a lot to help offset the cost of rewards.

The $3k spend / $40,000 point offer for Arrival+ is still on the Barclaycard website (at least for my cookied browser as an existing customer of Barclaycard).
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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lobbythis
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Postby lobbythis » Mon Nov 03, 2014 8:15 pm

CarefulBuilder14 wrote:
The $3k spend / $40,000 point offer for Arrival+ is still on the Barclaycard website (at least for my cookied browser as an existing customer of Barclaycard).



Same here. I see it every day I login.



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