Banks Preparing Reward Changes

[blindambition]

Happy New Year to the MF family! Hope you enjoyed your holidays.

We've seen changes in lending, preparing for a recession. Less lending and stricter qualifications.

I just read this article that appeared on WSJ. The big lenders are looking to change reward structures, most likely in their favor. It also looks like you shouldn’t be counting on SUB. We’ve seen this with Chase, Amex, and CO.

Heres a link to the article. Brief, but you get the gist.  https://finance.yahoo.com/news/big-banks-look-cut-back-alter-credit-card-223353876--sector.html

[Anonymous]

Thanks for posting. I hope the "possible recession" does not happen. But it's wise to be prepared, just in case.

[Anonymous]

The writing has been on the wall for rewards cards for awhile now I think. Too many consumers are becoming hip to the game. 

They have to be careful though - those of us who know how to maximize our rewards are also the ones who don’t need credit cards in the first place (PIFers) so if they make the rewards not worth the effort, they’ll lose more cash than the 15% growth in rewards costs. 

[gdale6]

Their greed knows no bounds, any cuts and that bank is immediately cut from my pocket and the card(s) are closed. I too can play their game.

[Anonymous]

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@gdale6 wrote:
Their greed knows no bounds, any cuts and that bank is immediately cut from my pocket and the card(s) are closed. I too can play their game.

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Understand a consumer's frustrations with the financial credit games played by lenders but, remember to not: "cut off your nose to spite your face" ...

[Revelate]

From the article and my own limited insight and knowledge, I suspect SUB's will go first.  

More and more abuse, and policing it is a problem.  Fact is SUB's are marketing, and really that isn't needed for savvy credit card users.  My CSR isn't going anywhere until either there's a materially better credit card for me... I didn't even get the signup bonus for it, but it's still far and away the best card for me.  Credit cards aren't going away, but the rewards structures will probably narrow.  Considering we got nothing for our spend even in our lifetimes previously, I'm not going to be too broken hearted if rewards get nerfed, ultimately it's in the margins of my financial life anyway.

Anyway, I don't see it necessarily as flat greed, if you're spending money and not getting what you want (long term credit card users rather than churners) then you need to change up your strategy.  It really is that simple: banks aren't our friends to be clear, but in a competitive market they can't all be out to screw us either, for all that it looks surprisingly collusive if you look at the historical record but things are changing in the financial markets for the better imo.

[blindambition]

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@gdale6 wrote:
Their greed knows no bounds, any cuts and that bank is immediately cut from my pocket and the card(s) are closed. I too can play their game.

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Very true! Consumers are very shrewd these days. Consumers will revolt against bait and switch practices.

The full WSJ article is worth reading. I posted just a snippet, due to the pay wall.

[kdm31091]

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@blindambition wrote:

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@gdale6 wrote:
Their greed knows no bounds, any cuts and that bank is immediately cut from my pocket and the card(s) are closed. I too can play their game.

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Very true! Consumers are very shrewd these days. Consumers will revolt against bait and switch practices.

The full WSJ article is worth reading. I posted just a snippet, due to the pay wall.

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I don't think there is going to be a bait and switch. I just think banks may steadily reduce SUBs and possibly narrow ongoing spend rewards a bit. Something has to give; too many customers sign up and don't keep cards long term. I'm not siding with the banks per se but it is obviously costly for them.

CC rewards have been around for a long time. It's only within the past decade or less that things have really heated up. I think we will just see rewards stabilize/decline a bit.

[Anonymous]

I think this is really only going to hurt the small fish that do not put much spend on thier CCs, and who used the SUBs to pay for Air and Lodging they otherwise might not afford. 

Because most of the people who PIF and run large amounts through their CC obviously don't truly need the SUBs, as the build the points fairly quick via normal use. Perhaps the SUBs may have been an attempt to lure more average consumers to them, as opposed to certain people that knew how to game it.

When it ends, the PIFers will continue on as before the SUBS were even a thing. But I suspect the other crowd will symply stop applying, or cut back drastically. They surely weren't losing that much Money on SUBs with lower spend CC users, as most of them were unaware of how th system truly worked.

[wasCB14]

I can think of two ~$200k earners who will occasionally get a card for a $50 savings at checkout or $200 worth of miles. A lot of people will settle for less than I would.

Or at least as I would now.