NO AMEX Sign Up Bonus for previous card holders

[scenery_guy]

I think they (banks offering reward credit cards with bonuses) need to move in a different direction. Sure, signup bonuses are intended to LURE new customers to the bank. They hope or plan and forecast that the sheer greatness of the product will keep us with them long term. Sometimes it works as in my case 15 years ago. One BofA card no rewards ever with a $100K limit that I carried and used for what seems like eternity. But eventually I found better offerings like ANY card that offered ANYTHING for usage.  

The change should not be 2 years before the reset happens to receive bonus again, it needs to be rewarding the loyal customers for not leaving to start the reset on the 2 year clock. As a business owner I can promise you it's cheaper for me to keep existing customers happy then find a new one to replace one I lost. The banks should put more effort into retaining customers. Call it retention offers or call it annual bonus.

There are several cards out there that offer yearly bonuses. The IHG card (formerly Priority Club) offers one free night at renewal. Club Carlson offers 40,000 points at renewal. Marriott Premier offers 1 free night at renewal. All of those examples make the AF worth it as the reward is equal to or greater than the fee (YMMV). All of those happen without any usage on your part, it's just free. I call them passive retention offers. I am sure there are more examples but those 3 have a permanent spot in my wallet and I have no intention to ever close those cards. 

My airline of choice offers a similar annual bonus but it's earned based on spend so it's an active retention offer. I get redeemable miles and points that go for airline status based on yearly spend. I also get a yearly companion certificate. Thant's enough for me to plan on never dropping this card despite the hefty AF. The card? A Delta Reserve by Amex. The signup bonus was fair but not so great I would ever consider letting the card go to reset the clock if that was even an option now. I spend big and I am rewarded with miles and a companion certificate plus a big boost on airline status. You may hate Delta but I don't. Flights on time, plenty of options, hard product great, service past my expectations. I would not have that loyalty if it were not for the Amex offerings for me to stay and spend money. Without the Reserve card status would be harder. 

Message to banks? Stop or drastically reduce signup bonuses completely and focus on keeping me. The points you saved by offering me little to no signup bonus can be given to me as milestones of my spend with you. Reward me for using your product and make me want to stay. Give me something each year at renewal. Amex just did this with their new Everyday card, think about it. It's MR points but you only get 10K to 15K for new card. They took the rest of the points and spread them out like a roulette wheel and are letting  you spin for more points with 2x and 3x bonuses plus a promise from you to swipe 20 to 30 times a month. I am sure someone has done the math but what's better - a gold charge with a fat signup bonus or the Everyday card with smaller bonus but 2x or 3x categories? How about with 100K spend per year? I think the new card showed us that we can expect smaller bonuses in the future but a more aggressive earning potential on spend. That model of reward is clearly geared to keep you coming back every month just like the Reserve does. 

[longtimelurker]

I mainly agree with scenery_guy, but the problem is that the issuers have to attract people initially.   And my guess is that not everyone (in fact very few!) do a very careful analysis of the type "Even though this bonus is smaller, the earning rate and the intrinsic value of the points is such that given my spending pattern, this card is a better deal than the other."   More, "Wow, 40K points and IT'S METAL!!!!"

So it's going to take almost cartel behavior to decide to reduce bonuses, and even then some bright spark at bank X will, from time to time, come up with "I know how we can gain market share, let's double our bonus".

We've seen some attempts to do some of this, e.g. Citi Premier offering a large part of the bonus in the second year, cards with extra bonus for meeting spend targets.   But with so many cards out there, and a lot of users not doing a whole lot of analysis, big bonuses will still be a major marketing tool IMO.

[Open123]

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@longtimelurker wrote:

So it's going to take almost cartel behavior to decide to reduce bonuses, and even then some bright spark at bank X will, from time to time, come up with "I know how we can gain market share, let's double our bonus".

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If Amex analyzed the data for existing cardmembers, have no reason to believe they haven't, they'll notice in my case that I will deviate my spending from them when there's a compelling sign-up bonus from the other issuers.  However, the moment I've met the spend, I return to spending primarily on my Amex cards.

So, in my case, while their competitors may continue to offer and allow the churning of sign-up bonuses, Amex would realize that in my case, there's no risk of losing me as a customer, since I'll just go apply for a Citi card, spend the minimum required, then stop and close the card.  I suspect Amex believes many of its cardmembers will primarily spend in their Amex cards when there are no longer any sign-up bonuses.

With rates set to rise in early 2015, the sign-up bonuses should revert back to historical norms, which were always at or about 10,000 points.