topic Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal? in Credit Cards

Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

TheFIGuy — Mon, 14 Sep 2020 22:33:29 GMT

Curious on if anyone has heard of Charles Schwab and American Express renewing their multi-year agreement? Today I was doing some research around the contract terms and definitions and I'm a bit fearful. But again FEAR = False Evidence Appearing Real so please read below and let me know if this makes sense!

Definition:

Multi-year: "A multi-year contract means a contract for the purchase of supplies or services for more than 1, but not more than 5, program years. Such contracts are issued under specific congressional authority for specific programs."
- Source: https://www.fpds.gov/help/Multiyear_Contract.htm

Timeline:

~ March 2015 - "American Express (NYSE: AXP) today announced a new exclusive multi-year agreement with Charles Schwab & Co., Inc. to create two new premium co-branded cards. With the agreement recently finalized, the cards are expected to be available in early 2016."
- Source: https://www.marketscreener.com/quote/stock/AMERICAN-EXPRESS-COMPANY-4814/news/American-Express-Announces-New-Co-Brand-Relationship-with-Charles-Schwab-20054514/
~ March 2020 - Estimated multi-year agreement with Charles Schwab & Co., to have ended or be up for renewal
~ Q3 2020 - Charles Schwab & Co., acquired TD Ameritrade "We expect the transaction to close in the second half of 2020 with integration efforts to begin immediately thereafter."
- Source: https://www.aboutschwab.com/announcement
TD Ameritrade has a credit card agreement with a visa for it's "client rewards" card which Schwab just acquired.
- Source: https://www.tdameritrade.com/client/creditcard7/index.html

Talking Points:

To those who're way more intelligent than I in the AMEX CC travel game, should we be bracing ourselves?
I haven't noticed any news regarding renewal or termination of the agreement, but seeing the multi-year agreement should be or has already ended what should cardholders expect?
I have been cashing out MR points to Schwab every 10k MR just because of the data points above and my paranoia.

Thanks for the replies and insight in advance!

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

Anonymous — Mon, 14 Sep 2020 22:46:15 GMT

@TheFIGuy wrote:
Curious on if anyone has heard of Charles Schwab and American Express renewing their multi-year agreement? Today I was doing some research around the contract terms and definitions and I'm a bit fearful. But again FEAR = False Evidence Appearing Real so please read below and let me know if this makes sense!

Definition:
Multi-year: "A multi-year contract means a contract for the purchase of supplies or services for more than 1, but not more than 5, program years. Such contracts are issued under specific congressional authority for specific programs."
Source: https://www.fpds.gov/help/Multiyear_Contract.htm
Timeline:
~ March 2015 - "American Express (NYSE: AXP) today announced a new exclusive multi-year agreement with Charles Schwab & Co., Inc. to create two new premium co-branded cards. With the agreement recently finalized, the cards are expected to be available in early 2016."
Source: https://www.marketscreener.com/quote/stock/AMERICAN-EXPRESS-COMPANY-4814/news/American-Express-Announces-New-Co-Brand-Relationship-with-Charles-Schwab-20054514/
~ March 2020 - Estimated multi-year agreement with Charles Schwab & Co., to have ended or be up for renewal
~ Q3 2020 - Charles Schwab & Co., acquired TD Ameritrade "We expect the transaction to close in the second half of 2020 with integration efforts to begin immediately thereafter."
Source: https://www.aboutschwab.com/announcement
TD Ameritrade has a credit card agreement with a visa for it's "client rewards" card which Schwab just acquired.
Source: https://www.tdameritrade.com/client/creditcard7/index.html
Talking Points:
To those who're way more intelligent than I in the AMEX CC travel game, should we be bracing ourselves?
I haven't noticed any news regarding renewal or termination of the agreement, but seeing the multi-year agreement should be or has already ended what should cardholders expect?
I have been cashing out MR points to Schwab every 10k MR just because of the data points above and my paranoia.
Thanks for the replies and insight in advance!

Your definition of "multi-year contract" clearly applies only to those involving agencies of the Federal Government, others do not require congressional approval! So the 5 year max doesn't apply here either. Do you have any reason for believing the contract was for 5 years?

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

TheFIGuy — Mon, 14 Sep 2020 22:52:42 GMT

@Anonymous wrote:

Your definition of "multi-year contract" clearly applies only to those involving agencies of the Federal Government, others do not require congressional approval! So the 5 year max doesn't apply here either. Do you have any reason for believing the contract was for 5 years?

Negative just looked up multiple definitions of "multi-year agreements" via google. I was unable to find any additional information concerning the Charles Schwab and American Express agreement term length. Good point regarding Federal Government contracts! So you believe it could be for a longer-term?

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

Anonymous — Mon, 14 Sep 2020 23:05:22 GMT

@TheFIGuy wrote:
@Anonymous wrote:
Your definition of "multi-year contract" clearly applies only to those involving agencies of the Federal Government, others do not require congressional approval! So the 5 year max doesn't apply here either. Do you have any reason for believing the contract was for 5 years?
Negative just looked up multiple definitions of "multi-year agreements" via google. I was unable to find any additional information concerning the Charles Schwab and American Express agreement term length. Good point regarding Federal Government contracts! So you believe it could be for a longer-term?

It could be longer, or shorter and already renewed, just thought your concern seemed predicated on the 5 year cap!

Presumably term length is a balancing act between the parties: you don't want to be stuck too long in something that isn't profitable for you, but if there are sufficient start up costs, you want a minimum term to give you a chance to recoup those costs.

But some platinum partnerships DO end, e.g. Mercedes-Benz, so it might be interesting to see when that started! (Ended in 2018)

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

Brian_Earl_Spilner — Mon, 14 Sep 2020 23:16:11 GMT

I remember not too long ago, people weren't able to transfer their MRs. Wonder if that was because they were negotiating. 🤔

I hope the deal doesn't end. I was planning on getting a Platinum in the next month or so to dump these MRs I can't use for travel at the moment.

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

TheFIGuy — Mon, 14 Sep 2020 23:19:53 GMT

@Anonymous wrote:
It could be longer, or shorter and already renewed, just thought your concern seemed predicated on the 5 year cap!
Presumably term length is a balancing act between the parties: you don't want to be stuck too long in something that isn't profitable for you, but if there are sufficient start up costs, you want a minimum term to give you a chance to recoup those costs.

But some platinum partnerships DO end, e.g. Mercedes-Benz, so it might be interesting to see when that started! (Ended in 2018)

I was using the 5-year term length because that would be the longest term length stated by the definitions I found. Exactly, the problem is how is Charles Schwab profiting from the AMEX partnership currently. I sometimes forget this forum isn't the world, and how many people actually have the CS Platinum and are cashing out their points into a Schwab account and keeping them there, etc.

But now that Schwab acquired another company that has a visa credit card infrastructure and customers I'm curious if they're re-thinking the agreement between American Express.

~ August 2011 - Mercedes Benz & American Express Deal "Premium credit card provider American Express has inked an affinity deal with equally upscale automaker Daimler AG, the maker of Mercedes-Benz products."
- Source: http://www.thedetroitbureau.com/2011/08/mercedes-does-deal-with-american-express/
~ March 2018 - American Express and Mercedes Benz cancel contract together
- Source: https://thepointsguy.com/2018/03/american-express-to-discontinue-mercedes-benz-platinum-card/

So the Mercedes-Benz and American Express deal lasted about ~7 years.

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

wasCB14 — Mon, 14 Sep 2020 23:25:27 GMT

I've not investigated your concerns, but if the agreement were to end...I'd just get a regular Platinum.

I got tired of all the tax forms and basis updates from moving shares around to chase brokerage promotions. But if I do resume bonus chasing, a good bous is worth a lot more than the annual CS Plat loyalty credit.

Given that I have a lot of miles and little upcoming travel...I would be tempted to cash out some MRs before the agreement ended. But I'll keep them as flexible MRs for now and intend to use them for travel.

I'm already set up with a 2.625% Premium Rewards and a 5.25% WWFCR. I might get a plain or MLB BofA CR, too. So cash back is a ready alternative for me.

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

TheFIGuy — Mon, 14 Sep 2020 23:30:18 GMT

@wasCB14 wrote:
I've not investigated your concerns, but if the agreement were to end...I'd just get a regular Platinum.

I got tired of all the tax forms and basis updates from moving shares around to chase brokerage promotions. But if I do resume bonus chasing, a good bous is worth a lot more than the annual CS Plat loyalty credit.

Given that I have a lot of miles and little upcoming travel...I would be tempted to cash out some MRs before the agreement ended. But I'll keep them as flexible MRs for now and intend to use them for travel.

I'm already set up with a 2.625% Premium Rewards and a 5.25% WWFCR. I might get a plain or MLB BofA CR, too. So cash back is a ready alternative for me.

Nice! I'm not deeply rooted in the BofA family but those are good redemption values! Thank you for the input!

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

kdm31091 — Mon, 14 Sep 2020 23:38:47 GMT

It's anyone's guess how long the contract truly was for. Cobranded cards do occasionally change hands (or the partnership ends). The Schwab cashout may have become too popular in reward communities when obviously Amex would prefer you redeem for lower value rewards. But that doesn't mean the contract is or will be ending soon.

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

TheFIGuy — Mon, 14 Sep 2020 23:39:10 GMT

@Brian_Earl_Spilner wrote:
I remember not too long ago, people weren't able to transfer their MRs. Wonder if that was because they were negotiating. 🤔

I hope the deal doesn't end. I was planning on getting a Platinum in the next month or so to dump these MRs I can't use for travel at the moment.

I love Schwab and AMEX, and the 1.25% cashout rate is steller, so I too hope it doesn't end anytime soon! Hopefully, it's like the AMEX and Costco agreement that went on for 15+ years!

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

TheFIGuy — Mon, 14 Sep 2020 23:43:21 GMT

@kdm31091 wrote:
It's anyone's guess how long the contract truly was for. Cobranded cards do occasionally change hands (or the partnership ends). The Schwab cashout may have become too popular in reward communities when obviously Amex would prefer you redeem for lower value rewards. But that doesn't mean the contract is or will be ending soon.

I agree; my opinion is the contract renewal agreement is more in Schwab's hands than AMEX. I'm guessing, but the 1.25% cashout is probably coming out of Schwab's pocket more than AMEX. It's all speculation, but I wanted to see if other's on this board had additional information regarding the partnership agreement terms/length.

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

Guyatthebeach — Tue, 15 Sep 2020 02:51:47 GMT

Thefinancehobbyist,

You bring up some extremely valid points.

Personally I think it's going to depend on CS's profitability on the Amex agreement. When the contract is up for renewal, will Amex lower it's costs and vendor funding requirements or will CS use TD's credit card platform? I hope it stays with Amex, but Amex doesn't have a great track record with co-branded cards. Remember Costco and Mercedes Benz?

We will have to wait and see.

Guyatthebeach

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

sammydavidjr — Tue, 15 Sep 2020 04:11:41 GMT

Cobranded agreements come and go all the time, but I don't think we should be worried yet. Here is a collection of data points that I believe is relevant to those wanting to place bets on this particular partnership.

- In 2010 Charles Schwab cancelled a contract with FIA Card Services for the old 2% cash back card. The deal was only two years old -- launched in 2008 -- and CS paid a $20M penalty for that early termination. The Company said it was losing a lot of money in the deal because of the recession.
- FIA continued to operate the card as a straight-up 2% cash back card. Worth noting that at the time FIA (a BoA subsidiary) also operated the Fidelity 2% cash back card.
- I believe Fidelity and FIA discontinued their partnership in 2015-2016. FIA actually supported two cards -- a Visa and an Amex. When Fidelity's portfolio was picked up by Elan, Amex had been dropped.
- Also in 2015, Amex lost two significant cobranded partnerships: Costco* and JetBlue. The former being a highly coveted deal (40M Costco members nationwide).

By the end of 2015 many analysts thought Amex was in trouble after losing so many partners. My bet is that Amex had a strategy of refining its targeting: instead of competiting to retain Costco and JetBlue, they probably aimed for smaller portfolios but with higher average income.
If the deal with Schwab has already lasted 5 years, I suppose it's likely that it made sense for both parties: the recession could change this, but I think the signs point to a mutually productive relationship between the parties.

* Costco's new deal with Citi is 10 years long (from April 1, 2016), but Costco has the unilateral right to extend it by 3 years (the original agreement has already been amended several times, though none of the amendments impact the duration of the deal). For comparison, TD Bank's deal with Nordstrom is 7 years long (renewable in two year terms). TD Bank's deal with Target (originally from 2012) has been extended to 2025.

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

TheFIGuy — Tue, 15 Sep 2020 05:21:02 GMT

@sammydavidjr wrote:
Cobranded agreements come and go all the time, but I don't think we should be worried yet. Here is a collection of data points that I believe is relevant to those wanting to place bets on this particular partnership.

- In 2010 Charles Schwab cancelled a contract with FIA Card Services for the old 2% cash back card. The deal was only two years old -- launched in 2008 -- and CS paid a $20M penalty for that early termination. The Company said it was losing a lot of money in the deal because of the recession.
- FIA continued to operate the card as a straight-up 2% cash back card. Worth noting that at the time FIA (a BoA subsidiary) also operated the Fidelity 2% cash back card.
- I believe Fidelity and FIA discontinued their partnership in 2015-2016. FIA actually supported two cards -- a Visa and an Amex. When Fidelity's portfolio was picked up by Elan, Amex had been dropped.
- Also in 2015, Amex lost two significant cobranded partnerships: Costco* and JetBlue. The former being a highly coveted deal (40M Costco members nationwide).

By the end of 2015 many analysts thought Amex was in trouble after losing so many partners. My bet is that Amex had a strategy of refining its targeting: instead of competiting to retain Costco and JetBlue, they probably aimed for smaller portfolios but with higher average income.
If the deal with Schwab has already lasted 5 years, I suppose it's likely that it made sense for both parties: the recession could change this, but I think the signs point to a mutually productive relationship between the parties.

* Costco's new deal with Citi is 10 years long (from April 1, 2016), but Costco has the unilateral right to extend it by 3 years (the original agreement has already been amended several times, though none of the amendments impact the duration of the deal). For comparison, TD Bank's deal with Nordstrom is 7 years long (renewable in two year terms). TD Bank's deal with Target (originally from 2012) has been extended to 2025.

Mr. Anderson, you're the "one" I have been looking for! -- (Matrix Reference)

Thank you for the detailed information and data points!

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

TheFIGuy — Tue, 15 Sep 2020 05:22:15 GMT

@Guyatthebeach wrote:
Thefinancehobbyist,

You bring up some extremely valid points.

Personally I think it's going to depend on CS's profitability on the Amex agreement. When the contract is up for renewal, will Amex lower it's costs and vendor funding requirements or will CS use TD's credit card platform? I hope it stays with Amex, but Amex doesn't have a great track record with co-branded cards. Remember Costco and Mercedes Benz?

We will have to wait and see.

Guyatthebeach

We shall see!

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

NRB525 — Tue, 15 Sep 2020 10:21:59 GMT

For the "Brokerage Co-Brand" Platinum cards that recently were discontinued ( Morgan Stanley? Ameriprise? Goldman Sachs? ) were those offering any redemption rate for MR through the brokerage account cash-out?

Goldman Sachs is heading in a different direction with Marcus and Apple Card, so that explains the break with AMEX Platinum.

Not sure about reasons for the other two to opt out of extending AMEX Plat co-brand.

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

sammydavidjr — Tue, 15 Sep 2020 14:19:43 GMT

A little more information, directly from Amex's annual K-10 filing with the SEC.

"Cobrand arrangements are entered into for a fixed period, generally ranging from five to ten years, and will terminate in accordance with their terms, including at the end of the fixed period unless extended or renewed at the option of the parties, or upon early termination as a result of an event of default or otherwise. We work with our cobrand partners on an ongoing basis to demonstrate the value we deliver and evolve our relationships for the benefit of both parties.

We regularly seek to extend or renew cobrand arrangements in advance of the end of the contract term and face the risk that existing relationships will be renegotiated with less favorable terms for us or that we may be unable to renegotiate on terms that are acceptable to us, as competition for such relationships continues to increase. We make payments to our cobrand partners, which can be significant, based primarily on the amount of Card Member spending and corresponding rewards earned on such spending and, under certain arrangements, on the number of accounts acquired and retained. The amount we pay to our cobrand partners has increased, particularly in the United States, and may continue to increase as arrangements are renegotiated due to increasingly intense competition for cobrand partners among card issuers and networks."

Re: Question: Charles Schwab AMEX Platinum Multi-year agreement renewal?

notmyrealname23 — Wed, 16 Sep 2020 03:43:25 GMT

@NRB525 wrote:
For the "Brokerage Co-Brand" Platinum cards that recently were discontinued ( Morgan Stanley? Ameriprise? Goldman Sachs? ) were those offering any redemption rate for MR through the brokerage account cash-out?

Morgan Stanley is still offering AMEX cards, so I don't believe they were "recently discontinued".

https://www262.americanexpress.com/dapply/partner/msb/msb-ms-1/cshop/cshome#/cshop

The MS Platinum is still offering 1 cent per point cashout, as does the no annual fee card. There's also ways to get the $550 MS Platinum fee waived, with the right combination of MS accounts and assets under management.

(I have a company stock account with ETrade so in a year or three when the Morgan Staney acqisition of Etrade is complete that no-AF card or Platinum that allows 1cpp cashout is on my radar.)