topic Significance of 3 months for SUB in Credit Cards

Significance of 3 months for SUB

SkyCommander — Sat, 21 Apr 2018 07:19:03 GMT

I’m curious as to why when it comes to credit card signup bonuses why do almost all of them seem to be spend x dollars in 3 months for x miles/points. Something special at 3 months that gauges a new card member’s worthiness or just a random month the banks all cling to?

Re: Significance of 3 months for SUB

Anonymous — Sat, 21 Apr 2018 07:30:22 GMT

I think 3 months just feels like a good balance between too short and too long. If it was 1 month for example, people may not feel they have enough time to meet the spend requirement. Also with 1 month it doesn't really cause a person to get in the routine of using that card. With 3 months, someone grows sort of used to using it and in theory would likely have a greater chance of continuing to use it going forward rather than if they only had to use it 1 month. Conversely, a longer period of time say 6 months may seem too long to some people. By extending the time period they'd also have to extend the spend requirement to make it worthwhile for the creditor. Instead of $4k in 3 months perhaps it would be $8k in 6 months. $8k seems a lot less appealing to someone considering a SUB spend and no one really wants to have to wait that long potentially to acquire a SUB. These are just a few reasons I can think of. 3 months just seems to be an all around good time frame.

Re: Significance of 3 months for SUB

sarge12 — Sat, 21 Apr 2018 07:44:08 GMT

@SkyCommander wrote:
I’m curious as to why when it comes to credit card signup bonuses why do almost all of them seem to be spend x dollars in 3 months for x miles/points. Something special at 3 months that gauges a new card member’s worthiness or just a random month the banks all cling to?

In my opinion, they are probably hoping the cardholder believes they must carry a balance to receive the SUB, which you don't. They also probably do not want to give you any longer to combat churners who would be getting 3 SUB's at a time if given a long time to satisfy minimum spend. For whatever reason 3 months does seem to be the standard, but if one issuer changes it and starts gaining market share, that too could change. I still remember the days there were no SUB's or even cash back rewards...it is all about market share. With the recent trends of buying everything online the market is growing very fast for credit cards. Brick and Mortar stores are simultaneously dying a slow death and only the bigger chains which also offers online orders will likely survive for non perishable goods.

Re: Significance of 3 months for SUB

Anonymous — Sat, 21 Apr 2018 15:21:41 GMT

Through my studies of economics and finance, businesses usually form contracts in terms of 3 months and also give each other payment windows of three months when settling their accounts. It might just be following this as an industry standard, but this is really just a shot in the dark as not all businesses follow these rules of course. Nevertheless, big firms certainly do play by these rules.

Re: Significance of 3 months for SUB

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Re: Significance of 3 months for SUB

Anonymous — Sat, 21 Apr 2018 17:26:31 GMT

It's an interesting question, as the other part (the needed spend) varies all over the place, from "make a purchase" up to several thousand. And even the "make a purchase" ones still want it to be within 90 days.