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When miles are cheap, why not offer them to everyone?

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myjourney
Super Contributor

Re: When miles are cheap, why not offer them to everyone?


@wasCB14 wrote:

@myjourney wrote:

Lets see can I make it simple 

Why would banks offer a no AF with points say for a person like me who redeems for no less than 2.2

When cash back can be paid out in most cases for .01 cents or less over the course of months due to redemption thresholds

Out of money I made millions on which means basically it was free to me (banks)

 

Did I miss something?

I'm always willing to listen and learn now Smiley Wink

 

As it stands tho personally I would love to abuse points for 2.2 due to cash back being switched over to a point system with no AF

Certainly banks will make even less profit because of a move in this direction Lol


Because the bank buys the points for much less than 1 cpp from the hotel or airline. Why would the bank care how efficiently you redeem the points, so long as the bank can buy the points at a deep discount from the hotel/airline?


I understand your point truly 

However you have to remember it's an alliance and both parties want to make money bank and or airline/hotel 

When the hotel sells the lots they also have a plan for how they can profit from the sell I think this point is forgotten 

Before you app think...
Have you done your research of the CC?
Does it fit your spending?
Do you have a plan for the bonus w/o going into debt?
Can you afford the AF?
Do you know the cards benefits? Is it worth the HP?
Message 11 of 15
Anonymous
Not applicable

Re: When miles are cheap, why not offer them to everyone?

I think the amex everyday was great for consumers but a terrible idea for AmEx. By having a card that can freely transfer to partners without an annual fee, there is a disincentive for consumers to a) be engaged with the mr program (no need to be when you have an anchor that lasts forever) and b) pay annual fees to maintain transferability like the green. Paying annual fees encourage spending in that program, in order to justify keeping it. If the cards get cancelled, that consumer probably wasn't making the bank enough money to begin with

The number of people who maintain an ink plus or sapphire preferred to keep transferable points partners may well be more than the savings they would get from selling cheaper points and miles

Banks can reduce the statement credit liability down to below 1 cent per point.

Membership rewards points are already below one cent each, so that does not cannibalize the blue cash everyday

Using ultimate rewards or Mr at Amazon have both been devalued below the 1 penny per point threshold.

Points for merchandise is marked at msrp, which I doubt a bank would pay. Their net cost per point would be less

When I used to work for an independent hotel, it would cost us 25 percent to sell a room on expedia or most other online travel agencies. Since Chase and amex run their own booking portals, a consumer redeeming at 1 or 1.25 or 1.5 cents per mile for hotel rooms may not cost Chase and amex that much because they make some back on the backend.
Message 12 of 15
Anonymous
Not applicable

Re: When miles are cheap, why not offer them to everyone?

Speaking of cannibalizing other products, a freedom or freedom unlimited would render all the partner cards obsolete if it had full transfers to partners with no annual fee.

Hyatt, IHG, Marriott, United, all have annual fees. The few grandfathered cards that don't earn less than one point per dollar
Message 13 of 15
longtimelurker
Epic Contributor

Re: When miles are cheap, why not offer them to everyone?


@myjourney wrote:

@wasCB14 wrote:

@myjourney wrote:

Lets see can I make it simple 

Why would banks offer a no AF with points say for a person like me who redeems for no less than 2.2

When cash back can be paid out in most cases for .01 cents or less over the course of months due to redemption thresholds

Out of money I made millions on which means basically it was free to me (banks)

 

Did I miss something?

I'm always willing to listen and learn now Smiley Wink

 

As it stands tho personally I would love to abuse points for 2.2 due to cash back being switched over to a point system with no AF

Certainly banks will make even less profit because of a move in this direction Lol


Because the bank buys the points for much less than 1 cpp from the hotel or airline. Why would the bank care how efficiently you redeem the points, so long as the bank can buy the points at a deep discount from the hotel/airline?


I understand your point truly 

However you have to remember it's an alliance and both parties want to make money bank and or airline/hotel 

When the hotel sells the lots they also have a plan for how they can profit from the sell I think this point is forgotten 


But that is was capacity management is all about.    I sell 100M of my airline;s miles to Bob's Credit Card for 0.75c each, and my frequent flyer program is already built so that I make enough profit.   I keep capacity control so that the important flights are filled with paying passengers.  Yes, lots of complaints from Bob's users about just how hard it is to get decent award travel on LTL Airline, but hey, they're all a bunch of whiners.   But then there are all those great posts of people redeeming at 3, 4 or 5c per point, which is fine for me as I make a profit on that too.   That 1st class flight doesn't *really* cost $20K, I get a handful of people who pay that (or their businesses do), the rest would be empty seats if I didn't "allow" those clever redemptions.....

Message 14 of 15
wasCB14
Super Contributor

Re: When miles are cheap, why not offer them to everyone?


@Anonymous wrote:
I think the amex everyday was great for consumers but a terrible idea for AmEx. By having a card that can freely transfer to partners without an annual fee, there is a disincentive for consumers to a) be engaged with the mr program (no need to be when you have an anchor that lasts forever) and b) pay annual fees to maintain transferability like the green. Paying annual fees encourage spending in that program, in order to justify keeping it. If the cards get cancelled, that consumer probably wasn't making the bank enough money to begin with

The number of people who maintain an ink plus or sapphire preferred to keep transferable points partners may well be more than the savings they would get from selling cheaper points and miles

Banks can reduce the statement credit liability down to below 1 cent per point.

Membership rewards points are already below one cent each, so that does not cannibalize the blue cash everyday

Using ultimate rewards or Mr at Amazon have both been devalued below the 1 penny per point threshold.

Points for merchandise is marked at msrp, which I doubt a bank would pay. Their net cost per point would be less

When I used to work for an independent hotel, it would cost us 25 percent to sell a room on expedia or most other online travel agencies. Since Chase and amex run their own booking portals, a consumer redeeming at 1 or 1.25 or 1.5 cents per mile for hotel rooms may not cost Chase and amex that much because they make some back on the backend.

Green hasn't been very appealing for a long time, and Gold hasn't since they nerfed the roadside assistance on it. PRG and Platinum aren't bad at all, for the right customer. Maybe Amex was worried that too many people would switch away from Green/Gold to no-AF 2% cards?

 

With ED, Amex doesn't need to pay a big bonus, and Amex maintains a good gross margin on spending (merchant fees less rewards paid). When I had EDP, the 50% bonus definitely made it my primary card.

Personal spend: Amex Gold, Amex Schwab Plat., BofA PR+CCR(x2), Costco
Business use: Amex Bus. Plat., BBP, Lowes Amex AU, CFU AU
Perks: Delta Plat., United Explorer, IHG49, Hyatt, "Old SPG"
Mostly SD: Freedom Flex, Freedom, Arrival
Upgrade/Downgrade games: ED, BCE
SUB chasing: AA Platinum Select
Message 15 of 15
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