Do you think AOD card is here to stay?

[Rockysocks]

As the title states, I'm wondering if you all think AOD will alter anything for current card holders? And why? I'm most concerned about a change to the value (to less than 3%). I'm just asking for opinions and gut feelings.

[NRB525]

Outliers in the credit card reward space don't last forever. AOD CU is a relatively small CU, and offered a relatively good CC reward structure to their members. The interweb found it, and will eventually drive it back to either within averages for reward earnings, or to re-restricted membership. 

there are numerous examples over the last several years of this Flavor of the Month phenomenon.  

[UpperNwGuy]

Study the history of the USAA and Alliant high cash back cards.

[Anonymous]

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@UpperNwGuy wrote:

Study the history of the USAA and Alliant high cash back cards.

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Since you mentioned it why not share your insight as this would be a good time to refresh all of us?

[kdm31091]

3% with no cap, no annual fee, no balance requirements at the bank, etc... is unsustainable. If they had been geofenced from the beginning and offering it to a fairly small number of members, it probably would be okay as a loss leader to get people into other products. But as an "open to everyone" offering, 3% cards do not tend to last. My guess is either a cap will be imposed and/or the rewards rate will be lowered, or both.

Enjoy it while it's here and move on to something else when it inevitably goes away.  As mentioned, these "outlier" cards tend to disappear or be nerfed into just average offerings.

[TSlop]

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@Anonymous wrote:

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@UpperNwGuy wrote:

Study the history of the USAA and Alliant high cash back cards.

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Since you mentioned it why not share your insight as this would be a good time to refresh all of us?

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I just Googled the Alliant card now, and it is now at 2.5% with its $99 AF. I think it was at 3% before, with maybe a boost to 3.5% for the first year? I can't quite recall the 3.5%, but something in my memory thinks it had a boost for the first year. Maybe @UpperNwGuy can give a quick rundown for the sake of this topic.

[CreditCuriosity]

They are not approving many people anymore so it certainly could stay at a 3% card or like other cards be nerfed or no longer offeredsuch as the limitless.  Speculating is just that speculation.  Time will be the ultimate factor here in seeing what happens.  They have made this card MUCH more difficult to get than when the masses found out about it.  If not hugely abused think MS by the people that have it already it will probably live on for quite some time, otherwise a cap or a nerf will be put in place.  Regardless still a great card at 7.x apr and 3% as is now, even if they took it to say 2% still be a great card..  Time will tell although as a card holder me being greedy i am glad they tightened up approvals as it is more likely my 3% card will survive!

[longtimelurker]

I think the fate is largely in the hands of the MF members who have it!  I would guess/hope AOD did some analysis of their existing members and their spending habits, and determined that 3% everywhere was sustainable.    Now a bunch of potentially higher spending, more PIF types have got the card, the calculus could change.

If there is nerfing, a good first step would be to simply place a cap on the 3% that can be earned, many cards have this (e.g. BCP/BCE $6K on groceries, Freedom/Discover $1500 per quarter on the 5%). I would think most MFs, with many other cards, would be OK with that, e.g. moving grocery spend to BCE rather than always using AOD.

But other solutions are possible too, such as cutting the rate, or, less popular with CUs I think, closing the cards of high spenders for "abuse"

[PullingMeSoftly]

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@NRB525 wrote:

Outliers in the credit card reward space don't last forever. AOD CU is a relatively small CU, and offered a relatively good CC reward structure to their members. The interweb found it, and will eventually drive it back to either within averages for reward earnings, or to re-restricted membership. 

there are numerous examples over the last several years of this Flavor of the Month phenomenon.  

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@NRB525 While I agree that nothing lasts forever, AOD hasn't shown any signs of pulling back on the earning rate. In fact, if you look at our approval thread, you'll see that we POUNDED them with 66 approvals and those are just the ones who shared their success. During the month of April alone there were 52 approvals, not to mention what came their way through DoC and from YouTubers. That would have been a moment of unsustainability if there was to be a breaking point, but AOD weathered that storm. Granted, their UW slowed and we've seen only 14 approvals since May.

@UpperNwGuy I think a better comparison would be to look at USAlliance and their Visa Signature with a similar 3x earning rate (at $.01 per point, it's a 3% card). USAlliance, unlike AOD, actually changed their tune under pressure and took their card down for a while. But if even they brought theirs back, and AOD continues to march forward, that suggests these smaller credit unions have figured out the sustainability formula. Both AOD and USAlliance drew in a healthy amount of new customers from these products. 

[Aim_High]

I'm confident that the AOD Visa Signature can survive, either as it is now or with some relatively minor caps or conditions. 

There are other examples.  The small People Caring More Credit Union (PCMCU) in Wisconsin offers a whopping 5% back on the first $1K spend monthly on their Platinum Rewards Mastercard.  Membership is tightly restricted, though.  And it's capped at $1K.  But for many households, $1K goes a decent way towards credit card monthly spend, especially if used for uncategorized spending when combined with higher-earning category cards. 

And of course, the 3% card that US Alliance FCU is offering is another example.

Alliant FCU still has their Visa Signature that pays 2.5% indefinitely and 3% in year one.  Yes, starting in year two, you have a $99 AF so the breakeven point with a flat no-AF 2% card is $19,800 annually but that's only $1650 per month.  So higher than 2% earnings are possible if someone were to concentrate spend on the card, which of course is the intent. 

Apparently, USAA is still somehow making the Limitless Cash Back card (2.5% with no AF) continue to work for the members who got it and were grandfathered in. 

If there were some changes to the AOD card, it could still be highly competitive relative to the big banks.  I could see the card being closed to new members (like USAA limitless was), being capped on monthly spending , lowering the flat-rate to 2.5% or 2.25%, or adding an AF to get the 3%.  Even with those changes, it could still beat the 2% earnings rate of a Citi DC, PayPal MC, PenFed PCR, or similar.   Of course, I don't want to see these changes, but I'd rather see these (and have the card remain viable and competitive) rather than having them just close it down!  And those changes may be what it takes to chase away any abusers who would ruin it for the majority.

Meanwhile, I'm not closing all my other uncategorized spend cards to focus on the AOD card.  I'm using it but also planning as-if it could go away.  Same as many other cards in my lineup, having back-ups and back-ups for your back-ups is simply good strategy.

Uncapped and Uncategorized Cash-Back Cards:

3%      

2.625%* *with Platinum Honors

2%

1.5%