topic Re: What's next for nerfing? in Credit Cards

What's next for nerfing?

Anonymous — Tue, 03 Sep 2013 02:25:25 GMT

Over the past 18 months or so, several cards have been badly nerfed, e.g.:

BCP: $6k cap imposed on 6% spending, reducing rewards from unlimited to $360

US Bank Cash Plus: Removed most profitable (for us!) categories, imposed a $2000 per quarter cap, reduced bonus for $100 redemption to once a year, and removed banking enhancements.

Penfed: Reduced points value on Plat Rewards, reduced discount from 5% to 3% on Cash Rewards, new sig card will offer only 3% on gas.

(Soon): Citi Premier: Removed ALL important features: 15% discount, companion ticket, flight points, reduced travel redemption enhancement from 1.33 to 1.25

I'm sure there are many others, these are just the ones that annoyed me personally. So, any predictions as to the next victim?

Re: What's next for nerfing?

Anonymous — Tue, 03 Sep 2013 02:34:20 GMT

@Anonymous wrote:
Over the past 18 months or so, several cards have been badly nerfed, e.g.:

BCP: $6k cap imposed on 6% spending, reducing rewards from unlimited to $360

US Bank Cash Plus: Removed most profitable (for us!) categories, imposed a $2000 per quarter cap, reduced bonus for $100 redemption to once a year, and removed banking enhancements.

Penfed: Reduced points value on Plat Rewards, reduced discount from 5% to 3% on Cash Rewards, new sig card will offer only 3% on gas.

(Soon): Citi Premier: Removed ALL important features: 15% discount, companion ticket, flight points, reduced travel redemption enhancement from 1.33 to 1.25

I'm sure there are many others, these are just the ones that annoyed me personally. So, any predictions as to the next victim?

Citi prestige is getting nerfed too.

Barclays Priceline has been nerfed for new customers. Customers who were grandfathered in the previous reward structure haven't been switched to the new structure yet, so that's a posibility.

Re: What's next for nerfing?

CreditScholar — Tue, 03 Sep 2013 02:37:30 GMT

@Anonymous wrote:
@Anonymous wrote:
Over the past 18 months or so, several cards have been badly nerfed, e.g.:

BCP: $6k cap imposed on 6% spending, reducing rewards from unlimited to $360

US Bank Cash Plus: Removed most profitable (for us!) categories, imposed a $2000 per quarter cap, reduced bonus for $100 redemption to once a year, and removed banking enhancements.

Penfed: Reduced points value on Plat Rewards, reduced discount from 5% to 3% on Cash Rewards, new sig card will offer only 3% on gas.

(Soon): Citi Premier: Removed ALL important features: 15% discount, companion ticket, flight points, reduced travel redemption enhancement from 1.33 to 1.25

I'm sure there are many others, these are just the ones that annoyed me personally. So, any predictions as to the next victim?
Citi prestige is getting nerfed too.

Barclays Priceline has been nerfed for new customers. Customers who were grandfathered in the previous reward structure haven't been switched to the new structure yet, so that's a posibility.

What's happening to the Prestige?

And add the Chase 10+10 exclusives to that list. No more 10 points per transaction on the Freedom via the trifecta.

Re: What's next for nerfing?

Anonymous — Tue, 03 Sep 2013 02:38:05 GMT

The status of Prestige is unclear. A post here gave some details of what is changing, but "usually knowlegeable" people have said they have been told it is not changing. Time will tell.

Re: What's next for nerfing?

CreditScholar — Tue, 03 Sep 2013 02:45:21 GMT

I think the better question is which cards are clearly unsustainable in the long-run? This will give a good idea as to what might be downgraded in the future.

Re: What's next for nerfing?

Anonymous — Tue, 03 Sep 2013 02:54:11 GMT

The rumor about Prestige sorta came from this thread: http://ficoforums.myfico.com/t5/Credit-Cards/CitiBank-products-ASK-AWAY/m-p/2371489/highlight/true#M670022

I'm interested in the Prestige, but only if it's going to stay the way it is currently. I still got about a month before I apply for anything, so hopefully we will know by then.

I can't really think of any cards that can still be abused to a fairly good extent, except for the Ink Bold / Plus. However, 50k in spending in office supplies / telephone etc, is achieveable and realistic for businesses, so rather than to nerf the card, Chase is most likely going to continue clamping down on people with fake businesses.

Re: What's next for nerfing?

CreditScholar — Tue, 03 Sep 2013 03:04:24 GMT

@Anonymous wrote:
The rumor about Prestige sorta came from this thread: http://ficoforums.myfico.com/t5/Credit-Cards/CitiBank-products-ASK-AWAY/m-p/2371489/highlight/true#M670022
I'm interested in the Prestige, but only if it's going to stay the way it is currently. I still got about a month before I apply for anything, so hopefully we will know by then.

I can't really think of any cards that can still be abused to a fairly good extent, except for the Ink Bold / Plus. However, 50k in spending in office supplies / telephone etc, is achieveable and realistic for businesses, so rather than to nerf the card, Chase is most likely going to continue clamping down on people with fake businesses.

+1. This is the better way to do it.

5 UR points per dollar isn't sustainable from a pure mathematics perspective, but the idea was that as a business card there would be a variety of business expenses put on there. While some would be in the bonus categories, others would clearly not be. As such, they would be able to offset their losses in the 5x categories that way.

I don't think it was their intention for people without "real businesses" to be using it for bonus categories only. Using Ink products as part of a rotation of cards for 5x personal spending clearly isn't what Chase had in mind. These people need to be eliminated in order to keep the overall program viable in the long-term.

Re: What's next for nerfing?

Anonymous — Tue, 03 Sep 2013 03:55:18 GMT

I'm always curious about the 40K signup for CSP, with the first year AF waived. I guess that enough people keep the card, rather than cash out the points and downgrade before the AF comes due. Same applies for things like Arrival. But changing sign-up bonuses is less troublesome I would assume, new people lose out, but no-ones reward structure is changed like in the other examples.

Re: What's next for nerfing?

Open123 — Tue, 03 Sep 2013 04:32:30 GMT

I would suspect to see the Ink's 5X Office/Cell reduced at some point. Unless they have a way of purging those who use the card solely for VR loading and GCs, I don't see how it could be sustained. In general, I don't think any unlimited 5X rewards can be sustained in this day and age; hence, the reduction in 5% gas cards.

I always though the Fid Amex would reduce the 2%, much like Schwabb did. However, I think in this case, given the higher Amex merchant fees, 2% is likely sustainable, whereas it would not be for Visa/MC.

Currently, with everything else, I can't think of anything else that would at great risk of being nerfed.

Re: What's next for nerfing?

Anonymous — Tue, 03 Sep 2013 12:22:32 GMT

@Open123 wrote:
I would suspect to see the Ink's 5X Office/Cell reduced at some point. Unless they have a way of purging those who use the card solely for VR loading and GCs, I don't see how it could be sustained. In general, I don't think any unlimited 5X rewards can be sustained in this day and age; hence, the reduction in 5% gas cards.

I always though the Fid Amex would reduce the 2%, much like Schwabb did. However, I think in this case, given the higher Amex merchant fees, 2% is likely sustainable, whereas it would not be for Visa/MC.

Currently, with everything else, I can't think of anything else that would at great risk of being nerfed.

Re unlimited 5x. I guess I forgot Citi Forward, I've been expecting that 5x to go away, especially with the new "enhanced" version on the TY Pref and TY Premier, where they offer 2x and 3x on dining/entertainment. Makes no sense for a lower level card to have 5x...

Re: What's next for nerfing?

Open123 — Tue, 03 Sep 2013 13:53:18 GMT

@Anonymous wrote:
Re unlimited 5x. I guess I forgot Citi Forward, I've been expecting that 5x to go away, especially with the new "enhanced" version on the TY Pref and TY Premier, where they offer 2x and 3x on dining/entertainment. Makes no sense for a lower level card to have 5x...

Right, I forgot about this one. I had thought the 5X dining on this card would already have been nerfed by now. Since it's been limited to students only now (verification process, unlike before), there's a chance they may keep it.

I can't see them removing the 5X from existing Forward holders.

Re: What's next for nerfing?

iDShaDoW — Tue, 03 Sep 2013 14:46:52 GMT

Well, that sucks.

PenFed does show the change to 3% after October on their Cash Rewards card for gas...

Only had the card for about half a year too.

Now I'll probably have to use my BCP to buy cards to use on gas until I hit the cap (among other purchases) and decide whether I want to use BCP or PenFed as they both have 3% on gas. Might just end up using the PenFed anyhow to continue building the relationship so I can ask for CLIs when the time comes.

Disappointing to say the least and there was no communications stating the changes like for people who had the points card.

Re: What's next for nerfing?

CreditScholar — Wed, 04 Sep 2013 02:24:40 GMT

@Open123 wrote:
@Anonymous wrote:
Re unlimited 5x. I guess I forgot Citi Forward, I've been expecting that 5x to go away, especially with the new "enhanced" version on the TY Pref and TY Premier, where they offer 2x and 3x on dining/entertainment. Makes no sense for a lower level card to have 5x...
Right, I forgot about this one. I had thought the 5X dining on this card would already have been nerfed by now. Since it's been limited to students only now (verification process, unlike before), there's a chance they may keep it.

I can't see them removing the 5X from existing Forward holders.

+1. I think the original idea was to get students connected to Citi as their first card/bank, with the hopes that they'd continue to use them after graduation when their incomes were higher.

What Citi didn't intend was for people who weren't students (and who had decently high incomes) to use this card frequently. Students typically have limited incomes, so they'd be able to take a small loss for future business. However as the card expanded to non-students on higher incomes, their losses magnified, hence the changes.

There are 2 different aspects to whether a program is unsustainable, and we've only been looking at one part of it so far which is point acculumation. The other question is what kind of value do you get when you actually try and redeem those points for something of monetary value.

For example one thing that worries me about the US Bank Club Carlson Visa is the last night free benefit when redeeming points. By having the last night free, it greatly increases the value of each additional point (perhaps beyond what Club Carlson will be able to tolerate if enough people use this benefit). In this respect, it may not be sustainable in the long-run.

While that may not trigger an actual change to the cards, it may push Club Carlson into a devaluation of their points and program overall, much in the way Hilton did with all of the Citi/Amex churning going on. While that won't technically be a "nerf" to the card perse, it would be a "nerf" to the redemptions. The net result though remains the same - lower value for cardholders.

Re: What's next for nerfing?

Open123 — Wed, 04 Sep 2013 04:10:50 GMT

@CreditScholar wrote:

There are 2 different aspects to whether a program is unsustainable, and we've only been looking at one part of it so far which is point acculumation. The other question is what kind of value do you get when you actually try and redeem those points for something of monetary value.

For example one thing that worries me about the US Bank Club Carlson Visa is the last night free benefit when redeeming points. By having the last night free, it greatly increases the value of each additional point (perhaps beyond what Club Carlson will be able to tolerate if enough people use this benefit). In this respect, it may not be sustainable in the long-run.

Precisely.

Case in point, Amex's MR First points confer a 20% bonus when used for travel redemptions. However, starting in October, this benefit will be eliminated for the Amex Personal Platinum cards, and will only be offered for the Business Platinum cards. I can only assume this has become necessary because of the prodigous number of sign-up bonus points Amex has offered the past couple of years.

Re: What's next for nerfing?

Anonymous — Wed, 04 Sep 2013 06:52:06 GMT

Really hate that I have 3 out of 4 of the cards you mentioned. Really ruined my reward structure.

Re: What's next for nerfing?

CreditScholar — Wed, 04 Sep 2013 07:04:34 GMT

@Anonymous wrote:
Really hate that I have 3 out of 4 of the cards you mentioned. Really ruined my reward structure.

Well, at least that means you're good at picking out the good ones.

Re: What's next for nerfing?

Anonymous — Wed, 04 Sep 2013 07:19:17 GMT

@CreditScholar wrote:
@Anonymous wrote:
Really hate that I have 3 out of 4 of the cards you mentioned. Really ruined my reward structure.
Well, at least that means you're good at picking out the good ones.

The only positive is that they basically can all have no AF.

Re: What's next for nerfing?

navigatethis12 — Wed, 04 Sep 2013 11:54:16 GMT

@CreditScholar wrote:
@Anonymous wrote:

I can't really think of any cards that can still be abused to a fairly good extent, except for the Ink Bold / Plus. However, 50k in spending in office supplies / telephone etc, is achieveable and realistic for businesses, so rather than to nerf the card, Chase is most likely going to continue clamping down on people with fake businesses.

+1. This is the better way to do it.

I don't think it was their intention for people without "real businesses" to be using it for bonus categories only. Using Ink products as part of a rotation of cards for 5x personal spending clearly isn't what Chase had in mind. These people need to be eliminated in order to keep the overall program viable in the long-term.

In my opinion, this is Chase's fault. You see posts on flyertalk with people saying they told the analyst that they sold one thing on ebay a while ago, or they sell something a few times a year and the analyst takes that as an answer. When I applied for the first Ink card I had to answer a series of questions that dealt with expected revenue, what I was buying, where I was selling, and other things. Bank of America was the same for the first business card. However, Citi, US Bank, and American Express didn't speak to me once before approving. Anyway, I believe it would be pretty easy for them to determine if the person is using it for legitimate business purchases. If they see you are only spending in the bonus category they should ask for receipts(which would show the giftcards), and if you say no they close the account.

Re: What's next for nerfing?

ztnjpv — Wed, 04 Sep 2013 13:08:30 GMT

Open123,

I think the Fid Amex survives because of the combo of Amex fees and, just as importantly, the fact that Fidelity uses it as a tool to get more customers for its brokerage biz. Fidelity probably probably foregoes its much of its profit margin on that card in exchange for simply bringing in new customers.

Amex gets their cut, FIA gets a piece for managing the card and Fidelity prolly makes very little. But yes, those Amex fees allow it to continue in a sustainable fashion. Notice that the Fidelity Visa is 1.5% on the first 12,000 or 15,000 and THEN in goes to 2%. That's the difference between Visa fees and Amex Fees.

Re: What's next for nerfing?

ztnjpv — Wed, 04 Sep 2013 13:19:01 GMT

crashem said:

"Really hate that I have 3 out of 4 of the cards you mentioned. Really ruined my reward structure."

--------------------------------------------

Tell me about it. Had Amex delayed their announcement of the BCP reductions a little longer, I would have that card too right now.

Still, I have no regrets. The two we have in common carry no AF and they are still useful. Cash+ isn't the bill paying juggernaut it used to be but it's still 5% on selected stuff. It's still my restaurant card and whatever else looks good for the quarter. PenFed is still the best card for Walmart SC grocery shopping....or any SC shopping. And the gas still works out great as 4+%. Ofcourse, at 3-2-1, all bets are off. PenFed will be nearly useless outside of credit scoring.