I Didn't Mean to Churn, Yet it Happened

[Anonymous]

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@yfan wrote:

Often times though, the response to their feelings is something along the lines of "Yeah well I got mine, so whatever." 

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It was fun while it lasted.

[red259]

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@yfan wrote:

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@red259 wrote:

Not going to get in a debate about what constitutes advantage taking or whatever, but I do want to point out a key difference. People come on here when they are upset if a bank has taken AA action against them/ denied them cards etc (even in cases not involving things where they have done nothing wrong). It is one thing where a person rants against a financial institution because they are upset. However, if someone makes a post like that I think it is totally not in the spirit of the forumns to cheer on the financial instutions at that person's expense. One side is a big business. The other side is a single individual person who is here looking for support and advice.

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I guarantee you I would have no problem with someone's behavior of all they were affecting were the big bad banks. But banks aren't taking the loss - rather they are changing the products in ways that sometimes reduce overall benefits, passing the cost along to those who don't churn. This isn't about banks vs one individual. Churning is about what other individuals may believe to the adverse effect of a certain behavior by other individuals on a product they use.

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@red259 wrote:

I'm not saying that you yfan would directly attack someone, but if someone had AA taken against them and then thirty minutes later there is a thread that says I'm happy that banks are taking these adverse actions against people to me that is a problem. I believe we should take into consideration the feelings of people who may be going through AA or getting denied cards, even if someone believes they deserved it. Comes down to the sentiment that if you do not have anything nice to say don't say anything at all. Obviously pointing out a banks rationale for taking actiomns to help a poster understand why it happened is one thing. However, that can be done in a neutral non-opinionated way without cheering on the bank and making the person feel worse. 

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Again, if we are talking about considerations for individuals, then we should also take into consideration the feelings of people who feel that the way others are using a product is hurting the product's benefits that they want. After all, that is, in effect, an adverse outcome. Often times though, the response to their feelings is something along the lines of "Yeah well I got mine, so whatever." 

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Again. This is all speculation and not hard facts. That is the problem I have with it. Only the lenders know why they do the things they do. It may have nothing to do with churning at all. So without actual evidence its like a witch hunt and pointing the finger at people trying to blame them for what the lender did when we have no idea what the lender's motivation was. Lenders pump out the advertising for these cards like crazy and when all these peoiple accumulate miles then it there is a deval. The lender doesn't care they got their customers. I think its very easy to point the finger at churners, but I honestly think its such a small segment of the population that I am hard pressed to imagine they are responsible for all the ills that befall us in the credit world. 

[yfan]

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@longtimelurker wrote:

But any concern is always somewhat arbitrary.    Perhaps we should all be careful not to max out the 5x benefits on Freedom and Discover (especially now with double cash back).   Obviously we shouldn't do it every quarter, but maybe shouldn't do it ANY quarter, because it costs the banks, so they may reduce benefits and "ruin it for others"    So let's all aim at say $500 per quarter and get a respectable $25 back.     And don't tell me the rules ALLOW $1,500, just because they allow it doesn't mean it's not abuse.     (And this really did happen with Cash Plus removing the heavily used categories, even though they were all capped?)

So how do we distinguish?   I wouldn't be at all sure that churning bonuses (now every  24 months with Chase) costs a whole lot more than lots of people using the 5%

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Well the math is simple. Given that the transaction fee merchants pay is roughly 2%, the 5% category spends roughly result in a 3% loss for the issuer (this is even discounting the fact that certain categories pay more in merchant fees, such as online (card not present) transactions, restaurants, etc.). For a $1500 spend, that's a $45 loss. At best. For a whole year, that's $180. Now take the other side. A $400 bonus for $2K spend, for example. The issuer got back in swipe fees $40, and they are $360 in the hole, in much shorter time, like 3 months. That's double the damage in a quarter of the time.

You can argue that more people may do the category spend thing than bonus churn, but I have seen no data to that effect, and these numbers represent the damage an individual cardmember is capable of causing.

But to a broader point, yes, banks don't expect you to do exactly $1500 in bonus category spend and no more and no less every quarter (hence the whole buying GC debate) AND no non-category spend whatsoever. Under normal spending patterns one would either not hit the amount, or hit it and go over, earning only 1% for the amounts above and beyond the $1500 (and some non category spend as well). If you are hitting only $1500 in category spend and no more and no less every single quarter, yes, there's something fishy going on.

[yfan]

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@red259 wrote:

Again. This is all speculation and not hard facts. That is the problem I have with it. Only the lenders know why they do the things they do. It may have nothing to do with churning at all. So without actual evidence its like a witch hunt and pointing the finger at people trying to blame them for what the lender did when we have no idea what the lender's motivation was. Lenders pump out the advertising for these cards like crazy and when all these peoiple accumulate miles then it there is a deval. The lender doesn't care they got their customers. I think its very easy to point the finger at churners, but I honestly think its such a small segment of the population that I am hard pressed to imagine they are responsible for all the ills that befall us in the credit world. 

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I thought you were talking about people's feelings and how we should be sympathetic to people's feelings even if the action taken against them is supported by the facts?

As for what is speculation and what is not, since you are repeating this, I am compelled to repeat my point that plenty of things here are taken as fact without official documentation, such as SP CLI waiting periods of given lenders, threshold limits for increasing the likelihood for FRs, etc. Suddenly requiring a greater burden of proof to the point of demanding official statements when it comes to churning is not flying with me. Just as people suggest factors for these other things, so is churning suggested as a factor (not the only factor) in nerfing - evidently it is strong enough that Admin here is disucssing a ban on its promotion.

[kdm31091]

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@red259 wrote:

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@yfan wrote:

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@red259 wrote:

Not going to get in a debate about what constitutes advantage taking or whatever, but I do want to point out a key difference. People come on here when they are upset if a bank has taken AA action against them/ denied them cards etc (even in cases not involving things where they have done nothing wrong). It is one thing where a person rants against a financial institution because they are upset. However, if someone makes a post like that I think it is totally not in the spirit of the forumns to cheer on the financial instutions at that person's expense. One side is a big business. The other side is a single individual person who is here looking for support and advice.

---

I guarantee you I would have no problem with someone's behavior of all they were affecting were the big bad banks. But banks aren't taking the loss - rather they are changing the products in ways that sometimes reduce overall benefits, passing the cost along to those who don't churn. This isn't about banks vs one individual. Churning is about what other individuals may believe to the adverse effect of a certain behavior by other individuals on a product they use.

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@red259 wrote:

I'm not saying that you yfan would directly attack someone, but if someone had AA taken against them and then thirty minutes later there is a thread that says I'm happy that banks are taking these adverse actions against people to me that is a problem. I believe we should take into consideration the feelings of people who may be going through AA or getting denied cards, even if someone believes they deserved it. Comes down to the sentiment that if you do not have anything nice to say don't say anything at all. Obviously pointing out a banks rationale for taking actiomns to help a poster understand why it happened is one thing. However, that can be done in a neutral non-opinionated way without cheering on the bank and making the person feel worse. 

---

Again, if we are talking about considerations for individuals, then we should also take into consideration the feelings of people who feel that the way others are using a product is hurting the product's benefits that they want. After all, that is, in effect, an adverse outcome. Often times though, the response to their feelings is something along the lines of "Yeah well I got mine, so whatever." 

---

Again. This is all speculation and not hard facts. That is the problem I have with it. Only the lenders know why they do the things they do. It may have nothing to do with churning at all. So without actual evidence its like a witch hunt and pointing the finger at people trying to blame them for what the lender did when we have no idea what the lender's motivation was. Lenders pump out the advertising for these cards like crazy and when all these peoiple accumulate miles then it there is a deval. The lender doesn't care they got their customers. I think its very easy to point the finger at churners, but I honestly think its such a small segment of the population that I am hard pressed to imagine they are responsible for all the ills that befall us in the credit world. 

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If you really think there is no relationship between churning and banks cutting benefits, you're just not being honest with yourself because everyone knows it. Now, I'm not saying every benefit is cut because of churners or that banks don't ever cut benefits purely to save money. I'm sure they do. But for you to insist that it has nothing to do with churning I think is going a little too far. Churners are not as small of a segment as you say. There are dozens of churning websites on the Internet filled with info on how to do it. There are tons of policies put into place that would only make sense to have enacted if the issuer were being churned. Chase's 24 month bonus policy, for example. They don't want to give a churner (or anyone else) the bonus every month, so they enacted the policy.

I don't think anyone says they are responsible for all of the ills, but the idea that I'm supposed to feel sorry for those who knowingly game the system and whine when it crashes down on them? No,  I don't feel bad. On the same line though, I don't feel bad for anyone really when benefits are cut because we aren't entitled to these things. They are fringe perks provided by issuers to get used to spend more. That is how rewards work and that is their sole purpose. We spend and spend and spend to get that 2% or whatever it may be. If it's taken away, well, it wasn't our property, so...our feelings about it don't really matter! But I'm not going to feel bad for someone who purposely, knowingly and repeatedly says "screw you" to the bank and churns the heck out of the products.

As far as the support and advice thing, yes, OP does want and they got advice. However, part of that advice IMO needs to be that you can't have everything. If you're at exposure limit with a bank, you need to reduce limits before you can get anything else. If not, you probably aren't getting anything else, to churn or otherwise. I'm not being mean or rude to OP, but it's the reality. You can have what your profile supports and then you hit a plateau which they have evidently hit.

[longtimelurker]

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@yfan wrote:

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@longtimelurker wrote:

But any concern is always somewhat arbitrary.    Perhaps we should all be careful not to max out the 5x benefits on Freedom and Discover (especially now with double cash back).   Obviously we shouldn't do it every quarter, but maybe shouldn't do it ANY quarter, because it costs the banks, so they may reduce benefits and "ruin it for others"    So let's all aim at say $500 per quarter and get a respectable $25 back.     And don't tell me the rules ALLOW $1,500, just because they allow it doesn't mean it's not abuse.     (And this really did happen with Cash Plus removing the heavily used categories, even though they were all capped?)

So how do we distinguish?   I wouldn't be at all sure that churning bonuses (now every  24 months with Chase) costs a whole lot more than lots of people using the 5%

---

Well the math is simple. Given that the transaction fee merchants pay is roughly 2%, the 5% category spends roughly result in a 3% loss for the issuer (this is even discounting the fact that certain categories pay more in merchant fees, such as online (card not present) transactions, restaurants, etc.). For a $1500 spend, that's a $45 loss. At best. For a whole year, that's $180. Now take the other side. A $400 bonus for $2K spend, for example. The issuer got back in swipe fees $40, and they are $360 in the hole, in much shorter time, like 3 months. That's double the damage in a quarter of the time.

You can argue that more people may do the category spend thing than bonus churn, but I have seen no data to that effect, and these numbers represent the damage an individual cardmember is capable of causing.

But to a broader point, yes, banks don't expect you to do exactly $1500 in bonus category spend and no more and no less every quarter (hence the whole buying GC debate) AND no non-category spend whatsoever. Under normal spending patterns one would either not hit the amount, or hit it and go over, earning only 1% for the amounts above and beyond the $1500 (and some non category spend as well). If you are hitting only $1500 in category spend and no more and no less every single quarter, yes, there's something fishy going on.

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We don't have the figures but my guess is that many more people use reward categories to some extent than churn bonuses, simply because we know that in the general population the total number of cc's held is small (tiny by MyFico standards).   Now of course not everyone has or uses reward cards, but cc use is more common than churning, MS etc.

And if we are talking about individiual damage, charge offs of the entire credit limit are much more damaging, so "damage an individual cardmember is capable of causing" isn't really a compelling metric.

But anyway, regardless of the relative numbers, charging ANY amount at 5% has some impact, so by (a large stretch of )your argument we should avoid it to prevent ruining it for everyone

As I've commented before, a lot of the "moral" stuff preached here seems to be "I use rewards correctly, you push the limits, he/she/it is an abuser", i.e. what you yourself do is perfectly acceptable, stuff you don't do is clear abuse, without there being an obvious distrinction.

[elim]

to OP...

i would call barclays and see if you can move limits during recon if denied for a new product (before apping).     i think it's a smart financial decision to grab another bonus...  that sometimes means you aren't buried in CC debt and making "just over the min" payment (like the average american CC sheep).    congrats if this is so.

[yfan]

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@longtimelurker wrote:

We don't have the figures but my guess is that many more people use reward categories to some extent than churn bonuses, simply because we know that in the general population the total number of cc's held is small (tiny by MyFico standards).   Now of course not everyone has or uses reward cards, but cc use is more common than churning, MS etc.

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But "CC use" is not synonymous with "only using the CC for 5% bonus categories exactly to the limit of the categories and not a penny more or less and not a penny anywhere else" which is where other CC use can even in theory be compared with churning.

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@longtimelurker wrote: 

And if we are talking about individiual damage, charge offs of the entire credit limit are much more damaging, so "damage an individual cardmember is capable of causing" isn't really a compelling metric.

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Hmm, okay. "Damage an individual cardmember is capable of causing without significantly hurting their own credit rating" (which of course subsequently reduces their ability to do further damage), then.

[longtimelurker]

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@yfan wrote:

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@longtimelurker wrote:

We don't have the figures but my guess is that many more people use reward categories to some extent than churn bonuses, simply because we know that in the general population the total number of cc's held is small (tiny by MyFico standards).   Now of course not everyone has or uses reward cards, but cc use is more common than churning, MS etc.

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But "CC use" is not synonymous with "only using the CC for 5% bonus categories exactly to the limit of the categories and not a penny more or less and not a penny anywhere else" which is where other CC use can even in theory be compared with churning.

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I think that is too precise: my scenario is merely often/usually approach the $1500 per quarter mark  (and going above it is also fine up to a certain point, as the overall rewards will still mean a loss for the bank).    But whatever.

[kdm31091]

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@elim wrote:

to OP...

i would call barclays and see if you can move limits during recon if denied for a new product (before apping).     i think it's a smart financial decision to grab another bonus...  that sometimes means you aren't buried in CC debt and making "just over the min" payment (like the average american CC sheep).    congrats if this is so.

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But you have to spend to get the bonus, so sayng youll basically get out of debt from a bonus makes no sense as you will create more debt to get it...