Chase has a new approach to credit card bonus offers. It’s been implemented with their Sapphire cards, timed with the launch of the new Chase Sapphire Reserve® (See rates and fees).

Instead of being eligible for a new cardmember bonus every 48 months, it’s just once in a lifetime per card. (Plus, if you have an open card within the Sapphire family, they won’t give you the bonus even if you’ve never received one for the specific product you’re applying for before.)

Instead of turning you down completely for cards if you aren’t eligible for the bonus – either because you’ve had a bonus in the past, have a similar open card, or have opened too many cards in the previous two years (“5/24”) – they’ll tell you that you won’t be eligible for the bonus, but do you still want to apply?

This is all bad news for consumers getting multiple bonuses for the same cards over time! But separating card approvals from bonus eligibility is smart. Sometimes a customer just wants the card! And turning them down is a bad experience – think about a United Global Services customer being told they can’t have a United Visa, or a Marriott Ambassador being refused a Marriott co-brand, despite having the income and credit to qualify. We’ll have to wait and see how Chase’s new approach spreads to products across their portfolio. Technology can be cumbersome at a legacy bank.

Regardless, it’s a huge switch. When I first got involved in rewards there were few limits. You could have multiple open cards of the same type, getting a new one and its bonus every few months. There were no minimum spend requirements to earn the bonus, either. Those gradually crept in around 17 years ago (e.g. $250 at Chase, $750 at Citibank). Of course bonuses were much smaller then. I’d never seen a 20,000 mile bonus offer for a United card until April 2002.

American Express is also in the process of a big change in how they approach cardmember bonus offers. Twenty years ago the rule was one bonus per card in a lifetime, but if you re-applied for a bigger offer they’d honor the difference between that offer and what you’d previously received. So when they re-instituted the ‘once bonus per lifetime’ rule (with lifetime being ‘as long as American Express remembered), it felt like ‘back to the future’.

Over the last decade they’ve been adept at targeting the best bonus offers, although the forumlas for who receives them are opaque and not always well walled-off. Their standard public offers for their own-branded cards (as opposed to co-brands) often haven’t been the best. They’ve made bigger offers through channels that prequalify the customer in some way – such as never having had an American Express before, or some attribute that makes them think you’d be a big spender.

American Express innovated with popups telling consumers they aren’t eligible for a bonus up front and do they still want to apply, that Chase now copies. That gave customers confidence to apply if they were uncertain, and there’s not supposed to be a hard credit pull unless they continue.

Now Amex has an even more refined approach: ‘as high as’ offers. They advertise a bigger number, but you may or may not be eligible for that highest number. You find out your exact offer amount after applying.

This started with The Platinum Card® from American Express, which has now promotes that may be eligible for as high as 175,000 Membership Rewards® Points after you spend $8,000 in eligible purchases on your new Card in your first 6 months of Card Membership.

Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.

175,000 points is much, much higher than the offers they’ve been promoting. That part is great!

And now the approach has exteneded to the American Express® Gold Card which is my favorite points-earning Membership Rewards card (and my wife’s primary card).

The offer they’re promoting had been 60,000 for meeting qualifying spend. Now, you may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. And as with Platinum,

Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.

This card has strong earning in valuable categories: 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year; 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year; 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.

I think this new American Express approach is unwise, though, because it’s a bad consumer experience. Before, there was a clear offer being made. If the customer was approved for it, that’s the offer they received. Now American Express is saying,

• We have best offers, but they aren’t for you
  
• There are better offers out there – maybe you shouldn’t take this one because it isn’t our best!

Nonetheless these efforts are part of a larger industry trend to focus new cardmember acquisition investments only on prospects that the issuer believes are most likely to pay off for them. If they can avoid costly initial bonuses for customers who aren’t likely to keep and spend on the card (like those who keep coming back for bonuses every four years, or who the bank’s model suggests aren’t likely to be heavy spenders or whose spend on a new card might come from the bank’s other products), then the overall card economics are better.

Ultimately, card bonuses are an important tool.

• They make a card focal. It causes a potential applicant to stop and pay attention. Plus, a consumer might even know that it’s the best product for their needs, but there are so many things on their list to do. The bonus moves that up to being one of the top 5 things to do this week.

• They build trust. Customers don’t trust banks or the rewards they offer. By fronting the reward for using the card, the consumer has the points quickly to get value from the product. They can redeem the points, which proves to them they’ve made a good decision getting the card and putting their spending on it. Telling the customer to ‘wait a year’ after changing their behavior up front to see the value doesn’t align with the customer’s desire to get things now.

Several years ago Barclays came out with their ‘Arrival Premier’ card which didn’t offer a bonus up front at all, but gave a bonus every year for meeting spending targets. The whole industry was rooting for them – something you don’t see often among rival banks. Everyone hoped they’d found a way around big marketing spend up front in the form of bonuses – that they could acquire customers without having to spend broadly, instead focusing their investment only on the customers they actually wanted (who stuck around, and used the card heavily).

It didn’t work. Very few customers applied. The value proposition wasn’t strong enough, people didn’t want to give their loyalty first and wait a year for rich rewards. And there was no reason to ‘act now’ out of fear of losing out. When you can get the same card rewards and benefits no matter when you pull the trigger on an application, and you’re busy, you might as well wait until tomorrow – but when each day comes, it’s always today, and you never reach tomorrow.

One upside of this new approach that Chase and American Express are taking is that you’d expect richer rewards and lower annual fees to be the result in a highly competitive industry. In fact we have seen much richer rewards over time – standard bonuses were smaller and points-earning was generally just one mile per dollar when I got started – but fees have also risen. There are also a lot more rewards card issuers than there used to be, and a lot more products, so the customers Chase and American Express are trying to avoid can simply look elsewhere.

For rates and fees of The Platinum Card® from American Express, click here.
For rates and fees of the American Express® Gold Card, click here.