topic Re: The problem with cobranded cards... in Credit Cards

The problem with cobranded cards...

thelethargicage — Thu, 27 Nov 2014 19:25:33 GMT

In light of the recent breakup between Amex and Costco in Canada, and the possibility that they might go their separate ways in the US as well, I started thinking of ways cardholders would be affected.

I for one do not want another CO card (if CO wins the Costco bid) because I'm afraid they wouldn't honor the backdating and might even CLD.

I also realized that half of my CCs are cobranded and that the reward structure could change at any moment, especially if the catalog is sold to another issuer. I mean, the Sallie Mae card used to be a 2% card issued by BofA.

Re: The problem with cobranded cards...

chalupaman — Thu, 27 Nov 2014 19:52:34 GMT

I think I've had a lot of success with cobranded cards before. Two of my highest limit cards are cobranded and I never really thought about what would happen if something like the Amex Gold Delta Skymiles card were to be sold off to Wells Fargo or some other lender that's much much stricter on CLs, CLIs and rewards. Just look at what happened to that Dillards Amex card people were talking about on here. I think this is why eventually I might want to invest in getting a Chase Freedom, as much as I've tried like two times this year to get it, next year just in case maybe Chase decides to go crazy and sell off to SW and AARP card brands off.

Re: The problem with cobranded cards...

Burned2manybridgesB4 — Thu, 27 Nov 2014 19:55:10 GMT

Costco business model would most definitely suffer, since crap one isn't typical to a Costco consumer's purchase level spending. Especially the auto, and travel portions.

Re: The problem with cobranded cards...

Anonymous — Thu, 27 Nov 2014 19:55:38 GMT

Thanks for bringing that up. It's something to think about.

Re: The problem with cobranded cards...

Imperfectfuture — Thu, 27 Nov 2014 20:05:16 GMT

Amex is PROBABLY not gonna lose the bidding war. However, a recent chat with US rep says better to have BCE than TE. The store reps are confused, they think the TE card comes with FREE membership, but actually BCE works better in my situation.

Bigger banks may get the inside merchant exchange, so I doubt it's capital one. But AMEX will fight hard to keep the US business. Though inside store, a lot of things take multiple cards already, eye exams, food, etc. Plus the online store takes any card. All this is rather interesting when keeping the inside sales to one bank card.

Re: The problem with cobranded cards...

LexieCat — Thu, 27 Nov 2014 23:48:40 GMT

I'm pretty sure that ANY credit card issuer can change the terms and conditions pretty much as they like. You always have the option to decline them and close the card, still paying off the balance on the orginal terms.

It's happened to me a couple of times whare I flat-out didn't care for the new terms and closed the account. Not that big a deal.

Re: The problem with cobranded cards...

takeshi74 — Fri, 28 Nov 2014 03:05:15 GMT

You could view this as a problem but it's not a frequent occurence. I personally wouldn't fret over it. It's not just cobranding that runs the risk of change.

Re: The problem with cobranded cards...

SunriseEarth — Fri, 28 Nov 2014 06:05:10 GMT

@thelethargicage wrote:
In light of the recent breakup between Amex and Costco in Canada, and the possibility that they might go their separate ways in the US as well, I started thinking of ways cardholders would be affected.

I for one do not want another CO card (if CO wins the Costco bid) because I'm afraid they wouldn't honor the backdating and might even CLD.

I also realized that half of my CCs are cobranded and that the reward structure could change at any moment, especially if the catalog is sold to another issuer. I mean, the Sallie Mae card used to be a 2% card issued by BofA.

If AMEX and Costco were to part ways here, I think AMEX would retain the portfolio. Ever notice how all of the TE cobranding markers are on the back of the CC? Change the back of the CC and this could easily be any AMEX product. But in my ideal world, AMEX will offer an even better TE to retain Costco's business. There are many things that could happen, and it's probably too early to fret over it now.

Re: The problem with cobranded cards...

Anonymous — Fri, 28 Nov 2014 06:06:29 GMT

Any credit card runs the risk of change and its always up to the issuer. I would agree that this isnt an exclusive co-brand problem.

Re: The problem with cobranded cards...

SunriseEarth — Fri, 28 Nov 2014 06:22:49 GMT

@Anonymous wrote:
Any credit card runs the risk of change and its always up to the issuer. I would agree that this isnt an exclusive co-brand problem.

Agreed. Many porfolios have been acquired by other CCCs in recent years. Some have been independent private-label cards like Target or Barney's (now under TD Bank and Comenity, respectively), but some have been large portfolios, like HSBC's being sold to Cap One.

Re: The problem with cobranded cards...

TheGardner — Fri, 28 Nov 2014 12:57:26 GMT

I think it depends on how the contract was written. Most Co-Branded cards belong to the store and transfers to the new managing bank.

Costco is a little different perhaps as they have a network contact and the card isn't a "Costco " card in name. Not sure how it is written.

Re: The problem with cobranded cards...

asot6 — Fri, 28 Nov 2014 13:53:22 GMT

This is huge for me because I have been eyeing the TrueEarnings card for quite some time, just got the Discover IT in October, Sallie Mae World MasterCard in November, and have been anticipating applying for this in December. For me, it's a win-win because I'd like the 2-in-1 deal where I could carry an Amex and also have it be my Costco membership card. I just confirmed with a rep yesterday there that even should the relationship end, I would have the ability to backdate since this would be first Amex card and since it's issued by Centurion. Honestly the rates aren't all that--sure I may use it for the rare occassions I get gas there, and the 2% for restaurants is nice, but the way I look at it it's a way to get my foot in the door with American Express. Also, since I have the Executive Costco Membership, I'm basically doubling the yearly reward I would receive (for free).

The EveryDay as well as BCE just aren't enough for me to move in that direction. I have been looking at opening up a Fidelity checking (free ATMs) and the Fidelity Amex would be 2% cashback on everything, but I've heard it's not issued by Centurion thus would not be a good first Amex card (can't backdate).

Re: The problem with cobranded cards...

Gunnar419 — Fri, 28 Nov 2014 16:31:16 GMT

If it works the same way in the U.S. as it did in Canada, the TE card would (in the words of one credit writer) "become an ice scraper." In other words, the TE would simply go away. However, it seems very likely that Amex, not wanting to lose those millions of cardholders, would offer TE holders a substitute card or perhaps create a new card with similar benefits to the TE.

I don't know this for sure and I've been unable so far to find out what Amex did in Canada, but it seems likely.