AOD Visa Siggy Discussion Thread

[Aim_High]

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@Anonymous wrote:

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@kerplunk wrote:

What is the likelihood that this card has the same unrestricted 3% cash back rewards and same benefits by next year? ... Can anyone make a case that this card will be profitable to AOD in some way, or do we all believe it's only going to be temporary and MAYBE they will grandfather people in (like USAA Limitless)?

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I am sure that AOD has done the math and decided they can offer this. ... Keep in mind that even if it's a negative, it's not unusual for CUs to give back to their members and this CU is definitely one of those that do.

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+1.  While you may not ever see Citibank, Chase, or AMEX offer such a card since they are completely about profitability, a Credit Union is all about low-cost and giving back to its' members (instead of shareholders).  And even among credit unions, some are more generous than others.  AOD appears to be very generous with its' members. 

[Aim_High]

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@PrimeInterest wrote:

Combine that with potential new business from mortgages/auto loans and some people who may end up leaving money in the savings account, and it could very well end up being a net positive in the grand scheme of things.

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Perhaps from auto loans or banking, but I noticed when I went to check out their mortgage rates that they apparently only offer mortgage loans for homes in Alabama. (That was the only state in the pull-down menu for the location of the home.)  Maybe they will change that will all the new business this card is bringing, or maybe they offer an exception on a case-by-case basis.  I didn't try calling them yet but I have thought of refinancing while rates are low.

[Anonymous]

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@PrimeInterest wrote:

I could see them making a small amount or almost breaking even.  Aren't most swipe fees in the U.S. between 2.5-4%?

I think the low APRs and cash advance fees may also make people less averse to carrying a balance or doing a cash advance if they need some quick cash to be paid back within a few months.

Combine that with potential new business from mortgages/auto loans and some people who may end up leaving money in the savings account, and it could very well end up being a net positive in the grand scheme of things.

But let's face it: it would probably be in the best interest of both the CU and us legitimate non-MS people if they capped the monthly amount or made it contingent on keeping a minimum amount in the savings.

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VISA Sig fees are around 1.15-2.3%, depending on the business and transaction type and can be even lower. 

I do agree though that people will be more likely to carry a balance on this card and they will recoup quite a bit of swipe fee loss that way. People will use it for CA too. I actually think CA is likely how most CUs make their cards profitable because you'll notice that most CUs encourage the use of them without predatory APRs or high up front fees. 

[longtimelurker]

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@Anonymous wrote:

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@PrimeInterest wrote:

I could see them making a small amount or almost breaking even.  Aren't most swipe fees in the U.S. between 2.5-4%?

I think the low APRs and cash advance fees may also make people less averse to carrying a balance or doing a cash advance if they need some quick cash to be paid back within a few months.

Combine that with potential new business from mortgages/auto loans and some people who may end up leaving money in the savings account, and it could very well end up being a net positive in the grand scheme of things.

But let's face it: it would probably be in the best interest of both the CU and us legitimate non-MS people if they capped the monthly amount or made it contingent on keeping a minimum amount in the savings.

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VISA Sig fees are around 1.15-2.3%, depending on the business and transaction type and can be even lower. 

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Right, and it doesn't all go to the issuing bank.   The network (Visa in this case) and the processor take a share.

[longtimelurker]

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@Anonymous wrote:

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I am sure that AOD has done the math and decided they can offer this. 

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I'm sure that's true, but the question is whether their math was correct!   Big issuers have had to nerf their cards because of faulty assumptions.   If they based this on their typical NE AL members, with some portion of interest etc, that might not scale to a PIF MyFico population, even if these people are good (i.e. no MS, just organic spend).   And from the app numbers, these people might end up as a sizeable fraction.

But issuers have all the tools needed, they can change rewards, close accounts whatever, so just have to see.   I wouldn't be surprised to  eventually see any of:

1) Cap on 3% earning 

2) No new out of area apps

3) reduction in 3%

and with 3) the question is about grandfathering.   In my experience, when a cap is added, it eventually applies to all, but I guess that could be grandfathered as well.

But in the mean time, use it!

[Anonymous]

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@longtimelurker wrote:

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@Anonymous wrote:

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I am sure that AOD has done the math and decided they can offer this. 

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I'm sure that's true, but the question is whether their math was correct!   Big issuers have had to nerf their cards because of faulty assumptions.   If they based this on their typical NE AL members, with some portion of interest etc, that might not scale to a PIF MyFico population, even if these people are good (i.e. no MS, just organic spend).   And from the app numbers, these people might end up as a sizeable fraction.

But issuers have all the tools needed, they can change rewards, close accounts whatever, so just have to see.   I wouldn't be surprised to  eventually see any of:

1) Cap on 3% earning 

2) No new out of area apps

3) reduction in 3%

and with 3) the question is about grandfathering.   In my experience, when a cap is added, it eventually applies to all, but I guess that could be grandfathered as well.

But in the mean time, use it!

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I fully expect a cap at some point. MSers got ahold of this card, there's no question about it. I wouldn't mind a reasonable cap although even if they dropped it to a 2% card after some time, it would still get used by me for misc spend and I would go back to using my numerous other cards that have 3% on certain categories. 

I don't know that I want to really compare efforts elsewhere to this CU though. They seem like they have their stuff together in a way you don't normally see even with the big ones. I am sure they can figure out what to do with abusers without ticking off all of the new members they just got with a nerf. 

[kerplunk]

Can you setup automatic minimum payments from an external account?

[Anonymous]

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@kerplunk wrote:

Can you setup automatic minimum payments from an external account?

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Yep. 

[Anonymous]

@kerplunk 

[kerplunk]

Navy doesn't even have that ability! Thanks for the info.