Discover IT Converted to Discover IT Miles without Knowledge?

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

I think it's ridiculous to take what a frontline CSR says at face value. We don't know how much the OP was actually using the card. 

I don't think the sky is falling. Disco is just experimenting, something they are known to do. Outside of credit card communities, people don't even know that Disco has the Miles card. It's very well possible they're watching spend on OTHER cards and assuming that the OP might be happier with a general spend card instead. We really don't know what their reasoning is and the frontline CSRs likely don't either. 

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Right, but this wasn't the only scenario that points to CCC looking at cardholders only using highest % categories. 

Before I was on this message board, it was apparent to me that CCC would shut down SUB chasers. That pretty much was a no brainer. People overdid apps, and now most have something in place to curb it. I bet they will put something in place to prevent people from using only the high % reward purchases only. We'll see. 

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They already have caps on the categories to keep the impact to a fixed margin. Any further changes will just kill rewards cards. 

Credit card companies don't like it but they need customers like us who take rewards in exchange for paying our bills and this goes double for the companies like Disco and Capital One who use asset-backed securities models where they sell buckets based on expected performance to investors. A move like this just really doesn't make sense for a company like Discover. They literally make money by moving customers around buckets to normalize the risk to what's most acceptable and thus most profitable. They can't do that without us rewards chasers who PIF. 

Disco still has their BT offers to keep them attractive but once that 5% fee rolls out to all customers, new and old, they become far less interesting to have in the wallet. If they start trying to push people off of rewards, they will get pushback in the form of lots of closed accounts. 

[Anonymous]

That is interesting, I will have to tabs on mine then. All I tend to use it for these days is the BT options which are nice.

[Aim_High]

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@Anonymous wrote:

I can speak from my use of just using the card for whatever it was fit for use at the time of the swipe.  The categories are something to be aware of to get the most back but, in my case the only thing that meshed with the spontaneous change was lack of use overall for 6 months.

The lack of use was due to getting a fistful of new cards and needing to nail down bonuses on them.  Disco overall is a decent enough card but, if my spending pattern changed to maximize 6% with BCP instead of what I had been using Disco for 1%... kind of makes sense to switch cards?  

The moving and swapping of programs abitrarily though is the peculiar part of this post and my thread a month before.  I thought my experience was isolated and now we have 2.  My account is several years old and the OP is ~1.5 years old.  Our spend patterns are probably completely different along with our CR profiles.  There's no TREND to speak of and Disco never really was high on anyones priority list to get one since they don't offer a huge SUB or anything really enticing to sign up for a card.  Most of the perks got nerded a couple of years ago that would remotely interest some people like Disco Deals portal shopping with increased earn rates.  DFS is just experimenting in my book to see if consurmers lacking swipes will use a 1.5% card vs the IT card.  

2 reports though certainly isn't a predictor of what's coming down the pipe from lenders regarding rewards.  There hasn't been a dynamic shift across lenders reducing the amount you can earn from swipes.  Until there's a huge thread with 1000's of posts to it then it's safe to say there isn't a huge change coming or in process. 

Around here we're the canaries in the credit mine.

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Interesting topic and hypothesis about the movement of the financial industry as regards to cash-back cards.  I've been around credit since the 1980's and have seen a lot of evolution in regards to cards and the development of cash-back programs.  They have undergone many changes so it's easy to imagine that the future may hold many more.   I will say that I find it hard to believe the proliferation of credit options that pay 3% to 5% cash-back in the past few years and the market has gotten much more competitive, maybe moreso than can be sustained long-term.  When Discover pioneered the cashback concept in 1986, simply sharing part of the swipe fees helped pay for that 1% (or sometimes less) that people earned on the original program.  Obviously, swipe fees alone won't cover the much higher cash back now, so the money has to come from somewhere to cover those richer rewards.  Banks do use the interest and fees paid by less-savvy (or more financially-strained) consumers to subsidize the rich cashback rewards, but the money also still comes from the swipes, AFs as applicable, or banking subsidies earned from money and fees from deposit accounts.  (We don't think of Discover for its' banking but it's also the 37th largest US bank with $110 Billion in assets.)

In my case, my Discover card is my oldest credit account that is still open on my report at over 26 years.  I've had periods of much longer than six months or even a few years IIRC that I never used it at all but it was never cancelled or PC'd.   In the early days when 1% was a great offer, I used it much more liberally.  Except for some large balance transfers, not so much in recent years.  But it's important for me to keep it open.  As @Anonymous  noted, I also have a large credit line at $50K which I value.  It helps my overall credit utilization and average account credit limits.   Moreover, I want to keep the age for credit anchoring.  I also appreciate having diversity of accounts and banks.  They've given me some great BT offers so that may be an option if I were to need one in the future.  Fraud prevention and customer service have been superb.  I like having access to my TU FICO BK 8 and dark web monitoring through my account.  So there are many reasons not to just SD my card. 

Nobody has mentioned the Discover IT "CHROME" card.  I PC'd my IT card to CHROME a few years ago when I didn't want to fool with rotating 5% categories (before I broke down and got my Chase Freedom.)    It pays 2% on restaurants and gas but only up to $1K per quarter, which is a pretty paltry cap.  It works out to about $77 a week average before you hit the cap.  The 2% is decent though, so I use it some when I travel for coffees, fast food, etc and keep a little spend going on it.  To me, it's a small sacrifice of cash-back to keep some activity going on an old friend and a long-term relationship.  (I could get 4% on gas with my Costco card and 3% on restaurants with Costco or CSR, so I prefer to just lose the 1% on some selected small food purchases instead of losing 2% on gas.  Plus I usually buy my gas at Costco and they don't take Disco.)   Of course, as luck usually has it, sometimes vendors don't code as we expect, so I end up only getting 1%, which probably keeps them happy even though it's only for a few dollars spend.  Lol.  

If you want to keep Discover (or any minor-player card) open and available as an option, just put a small recurring charge on it with full monthly full autopay and let it self-regulate.  That's always an option that usually satifies the banks. 

"2 reports though certainly isn't a predictor of what's coming down the pipe from lenders regarding rewards ...  Around here we're the canaries in the credit mine."

Remembering we are the canaries, those two reports among My Fico members may equate to hundreds of consumers who are experiencing similar actions from Discover since we are such an exceptional minority of consumers with credit files.  While I don't think it's indicative of a "trend" in the overall industry, it might indicate a shift with Discover itself.  It appears they are tightening their belt a little to tidy up less profitable accounts.

" ... Disco never really was high on anyones priority list to get one since they don't offer a huge SUB..."

Actually, the Discover IT MILES SUB is quite attractive, especially for someone with large spend.  It pays effectively 3% cash back on anything you buy in year one, with no spending caps and no AF.   While you might be able to beat the overall SUB with several AF-level premium travel cards, getting that level of return for one year of spending in cash back is pretty exceptional, IMO. 

Linked conversation to @Anonymous  and  @Anonymous

[Anonymous]

3% for a year is exceptional and seems to be the cap for any ongoing offer.  All of them die off after the first 12 months because they're unssutainable w/o some sort of subsidizing to make them profitable long term.  

If Disco wanted to capitalize on spend / swipes they would attach the 3% offer to the converted cards instead of just putting them at 1.5%.  1.5% isn't going to generate a whole lot of spend increase for their product though if that's what they had in mind with the conversions.  Most of us with Disco have other 1.5% / 2% options in place already with significant limits as well.  

We'll see what happens down the road when they have their next brilliant idea.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

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@Anonymous wrote:

I think it's ridiculous to take what a frontline CSR says at face value. We don't know how much the OP was actually using the card. 

I don't think the sky is falling. Disco is just experimenting, something they are known to do. Outside of credit card communities, people don't even know that Disco has the Miles card. It's very well possible they're watching spend on OTHER cards and assuming that the OP might be happier with a general spend card instead. We really don't know what their reasoning is and the frontline CSRs likely don't either. 

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Right, but this wasn't the only scenario that points to CCC looking at cardholders only using highest % categories. 

Before I was on this message board, it was apparent to me that CCC would shut down SUB chasers. That pretty much was a no brainer. People overdid apps, and now most have something in place to curb it. I bet they will put something in place to prevent people from using only the high % reward purchases only. We'll see. 

---

They already have caps on the categories to keep the impact to a fixed margin. Any further changes will just kill rewards cards. 

Credit card companies don't like it but they need customers like us who take rewards in exchange for paying our bills and this goes double for the companies like Disco and Capital One who use asset-backed securities models where they sell buckets based on expected performance to investors. A move like this just really doesn't make sense for a company like Discover. They literally make money by moving customers around buckets to normalize the risk to what's most acceptable and thus most profitable. They can't do that without us rewards chasers who PIF. 

Disco still has their BT offers to keep them attractive but once that 5% fee rolls out to all customers, new and old, they become far less interesting to have in the wallet. If they start trying to push people off of rewards, they will get pushback in the form of lots of closed accounts. 

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Agreed. They do need cardholders who are reliable and pay on time and in full. Not sure they intended for these card holders to be so unprofitable, but that's not our fault, its theirs. I do expect though that they correct some of this. 

I think we have account bloat. I carry 9 cards, and only recently expanded to 9. Prior to 2013, I had Citi, CO, and BoA. I thought 3 was 1 too many. Then I got 6 more since then. People pair cards from the same issuer. There are some costs to maintain all those accounts (marketing, new card issuance, etc.). I don't think they've looked at it that way, maybe only look at buckets. 

I think that's going to change in the future.

[Anonymous]

I mean I can't really say anything about the account bloat... after my triple play last night I hit 11 accounts since June...

But unless Disco changes their business model away from asset-backed securities, which I have heard nothing to indicate such a change is coming, they need to attract customers that help to normalize their bottom line. They don't have a travel card, they nerfed every single card benefit they had, and they don't have the acceptance of VISA  and MasterCard. Without rewards, they lose the interest of the prime market and without the prime market, ABS models are too risky to investors. 

[kdm31091]

Years ago (and not really even that many years ago) there wasn't much point in having many accounts because most cards were the same and paid 1%. Then issuers started adding categories, and upping the ante. Then they started doing flat 1.5%. As competition increased, rewards got bigger. But as maximizing rewards has become more mainstream, many just use the cards for bonus spending, and that  "everything else" category gets no spend.

I don't think we will drop back to all cards offering only 1% (unless something happens with interchange fees), but I do think the market will shift again somewhat to make up for all the maximizers/churners/etc. 3, 4, and 5% rewards aren't profitable, and if nobody is using the card for 1% swipes, it's a losing proposition on every customer who does not pay interest/fees.

Working in retail, I've seen many, many "regular" Discover cards (i.e. the 5% one) and comparatively very few Miles cards. My guess is they want the product to get more exposure and they want more "base level" spending.

[Anonymous]

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@Aim_High wrote:

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@Anonymous wrote:

I can speak from my use of just using the card for whatever it was fit for use at the time of the swipe.  The categories are something to be aware of to get the most back but, in my case the only thing that meshed with the spontaneous change was lack of use overall for 6 months.

The lack of use was due to getting a fistful of new cards and needing to nail down bonuses on them.  Disco overall is a decent enough card but, if my spending pattern changed to maximize 6% with BCP instead of what I had been using Disco for 1%... kind of makes sense to switch cards?  

The moving and swapping of programs abitrarily though is the peculiar part of this post and my thread a month before.  I thought my experience was isolated and now we have 2.  My account is several years old and the OP is ~1.5 years old.  Our spend patterns are probably completely different along with our CR profiles.  There's no TREND to speak of and Disco never really was high on anyones priority list to get one since they don't offer a huge SUB or anything really enticing to sign up for a card.  Most of the perks got nerded a couple of years ago that would remotely interest some people like Disco Deals portal shopping with increased earn rates.  DFS is just experimenting in my book to see if consurmers lacking swipes will use a 1.5% card vs the IT card.  

2 reports though certainly isn't a predictor of what's coming down the pipe from lenders regarding rewards.  There hasn't been a dynamic shift across lenders reducing the amount you can earn from swipes.  Until there's a huge thread with 1000's of posts to it then it's safe to say there isn't a huge change coming or in process. 

Around here we're the canaries in the credit mine.

---

Interesting topic and hypothesis about the movement of the financial industry as regards to cash-back cards.  I've been around credit since the 1980's and have seen a lot of evolution in regards to cards and the development of cash-back programs.  They have undergone many changes so it's easy to imagine that the future may hold many more.   I will say that I find it hard to believe the proliferation of credit options that pay 3% to 5% cash-back in the past few years and the market has gotten much more competitive, maybe moreso than can be sustained long-term.  When Discover pioneered the cashback concept in 1986, simply sharing part of the swipe fees helped pay for that 1% (or sometimes less) that people earned on the original program.  Obviously, swipe fees alone won't cover the much higher cash back now, so the money has to come from somewhere to cover those richer rewards.  Banks do use the interest and fees paid by less-savvy (or more financially-strained) consumers to subsidize the rich cashback rewards, but the money also still comes from the swipes, AFs as applicable, or banking subsidies earned from money and fees from deposit accounts.  (We don't think of Discover for its' banking but it's also the 37th largest US bank with $110 Billion in assets.)

In my case, my Discover card is my oldest credit account that is still open on my report at over 26 years.  I've had periods of much longer than six months or even a few years IIRC that I never used it at all but it was never cancelled or PC'd.   In the early days when 1% was a great offer, I used it much more liberally.  Except for some large balance transfers, not so much in recent years.  But it's important for me to keep it open.  As @Anonymous  noted, I also have a large credit line at $50K which I value.  It helps my overall credit utilization and average account credit limits.   Moreover, I want to keep the age for credit anchoring.  I also appreciate having diversity of accounts and banks.  They've given me some great BT offers so that may be an option if I were to need one in the future.  Fraud prevention and customer service have been superb.  I like having access to my TU FICO BK 8 and dark web monitoring through my account.  So there are many reasons not to just SD my card. 

Nobody has mentioned the Discover IT "CHROME" card.  I PC'd my IT card to CHROME a few years ago when I didn't want to fool with rotating 5% categories (before I broke down and got my Chase Freedom.)    It pays 2% on restaurants and gas but only up to $1K per quarter, which is a pretty paltry cap.  It works out to about $77 a week average before you hit the cap.  The 2% is decent though, so I use it some when I travel for coffees, fast food, etc and keep a little spend going on it.  To me, it's a small sacrifice of cash-back to keep some activity going on an old friend and a long-term relationship.  (I could get 4% on gas with my Costco card and 3% on restaurants with Costco or CSR, so I prefer to just lose the 1% on some selected small food purchases instead of losing 2% on gas.  Plus I usually buy my gas at Costco and they don't take Disco.)   Of course, as luck usually has it, sometimes vendors don't code as we expect, so I end up only getting 1%, which probably keeps them happy even though it's only for a few dollars spend.  Lol.  

If you want to keep Discover (or any minor-player card) open and available as an option, just put a small recurring charge on it with full monthly full autopay and let it self-regulate.  That's always an option that usually satifies the banks. 

"2 reports though certainly isn't a predictor of what's coming down the pipe from lenders regarding rewards ...  Around here we're the canaries in the credit mine."

Remembering we are the canaries, those two reports among My Fico members may equate to hundreds of consumers who are experiencing similar actions from Discover since we are such an exceptional minority of consumers with credit files.  While I don't think it's indicative of a "trend" in the overall industry, it might indicate a shift with Discover itself.  It appears they are tightening their belt a little to tidy up less profitable accounts.

" ... Disco never really was high on anyones priority list to get one since they don't offer a huge SUB..."

Actually, the Discover IT MILES SUB is quite attractive, especially for someone with large spend.  It pays effectively 3% cash back on anything you buy in year one, with no spending caps and no AF.   While you might be able to beat the overall SUB with several AF-level premium travel cards, getting that level of return for one year of spending in cash back is pretty exceptional, IMO. 

Linked conversation to @Anonymous  and  @Anonymous

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Well said. Totally agree. And totally agree we are such a small sample that if something happens to 2 of us, very possible its happening to a lot other cardholders.

My first rewards card was the Citi platinum select card. I remember getting a call from Citi asking me if I would like to make my card a rewards card. I told them no lol. I'm good with the way it was. I'm not sure, but they may have made it a rewards card anyway. 1% back on all purchases. Over time, I accumulated  a bunch of points and noticed them on my statement that had a value of about $200. I was excited to look more into rewards cards. Eventually converted it to a TYP card that offered 2 pts for dining and 1 pt for everything else. Thought that was a blockbuster. 

[Anonymous]

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@Anonymous wrote:

I mean I can't really say anything about the account bloat... after my triple play last night I hit 11 accounts since June...

But unless Disco changes their business model away from asset-backed securities, which I have heard nothing to indicate such a change is coming, they need to attract customers that help to normalize their bottom line. They don't have a travel card, they nerfed every single card benefit they had, and they don't have the acceptance of VISA  and MasterCard. Without rewards, they lose the interest of the prime market and without the prime market, ABS models are too risky to investors. 

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Wow, that's apps on steroids. I'm thinking Sammy Sosa and Barry Bonds territory. I'd do more, but I don't want to spread out the spend so thin that they all get a trickle. I like to put some spend on every card.

I think it was a mistake for DISCO to nerf their benefits. Made me not want to buy merchandise with their card. They boxed themselves into 5% categories and some 1% spend,  at least on my end.

[Anonymous]

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@Anonymous wrote:

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@Anonymous wrote:

I mean I can't really say anything about the account bloat... after my triple play last night I hit 11 accounts since June...

But unless Disco changes their business model away from asset-backed securities, which I have heard nothing to indicate such a change is coming, they need to attract customers that help to normalize their bottom line. They don't have a travel card, they nerfed every single card benefit they had, and they don't have the acceptance of VISA  and MasterCard. Without rewards, they lose the interest of the prime market and without the prime market, ABS models are too risky to investors. 

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Wow, that's apps on steroids. I'm thinking Sammy Sosa and Barry Bonds territory. I'd do more, but I don't want to spread out the spend so thin that they all get a trickle. I like to put some spend on every card.

I think it was a mistake for DISCO to nerf their benefits. Made me not want to buy merchandise with their card. They boxed themselves into 5% categories and some 1% spend,  at least on my end.

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That's exactly the problem with Disco right now. If they still had Discover Offers, I would probably use the card more. I know NFCU has gotten a lot more business as a result of Member Deals.

And yeah... let's not go into how bad I am about impulse control.