Category Archives for Credit Cards.
Delta’s CFO acknowledges SkyMiles members taking “a little hiatus when people aren’t going to travel,” but that the program still continues to motivate spend because it gives people “something to look forward to [the] prospect of saving up for something.” Then he offers insight into how the Delta portfolio is performing relative to American Express’s other products.
Spending on Chase credit cards fell 8 times as much as average credit card spending during the start of the global COVID-19 pandemic according to the J.P. Morgan Chase Institute. A new study using anonymized transaction date from 8 million customers found that spending on Chase cards dropped 40% year-over-year between March 1 and April 11.
I have a wallet chock full of cards. I have a card for each kind of spending. I want to earn 5 points per dollar on my airfare, 4 points at restaurants and supermarkets, 5 points at office supply stores, etc. I also have a huge stack of annual fees, that only make sense if I’m getting a lot of value out of each card and spending a lot of money in each category I’m maximizing.
For most people the 10 credit cards in my wallet is too many. And that doesn’t count the cards in my desk drawer.
Earlier in the day Citibank shared that the companion tickets earned from their American Airlines co-brand business card (after $30,000 spend in purchases each cardmembership year, at card renewal) that expire in 2020 will be extended to June 30, 2021.
Barclays has shared that their American Airlines companion tickets – offered as an initial bonus on new consumer cards, and earned from spend on their Red, Silver, and Business cards – will have their expiration extended as well.
We’re in a recession. We’re not traveling. Rewards credit cards that are optimized for travel may not be top of wallet. Cards that are optimized for heavily travel customers may also not match current spending patterns. We’re beginning to see brands and issuers adapt.
Discretionary spending is down by a third, driven by a drop in travel spend which is down 95% – 99%. Amazingly travel and entertainment was nearly one-third of American Express charge volume.
A month ago I wrote that credit cards might soon become tougher to get as banks tightened lending standards. In a down economy there’s more risk that banks won’t get paid back, so it’s logical they’d become careful about extending credit. Already we’ve seen what appears to be a tougher approach to new small business cards at Chase.
When banks expect an increase in defaults, they take steps to limit their exposure. During the Great Recession we saw banks unilaterally cut credit limits, especially where cards were going unused or underutilized.
Citi has added Emirates Skywards as a points transfer partner for its Citi Premier and Prestige cards. Emirates is now a partner of Citi, Chase, American Express and Capital One – this strikes me as a problem for Barclays which is rolling out an Emirates credit card in the U.S.
Emirates offers great award availability from a variety of U.S. destinations, however fuel surcharges (which depend on the destination flown) are often very expensive and premium cabin awards are priced at 2x coach for business class and 3x coach for first class.
In the years following 9/11, as airlines struggled, and again during the financial crisis airlines pre-sold miles to their credit card partners at a discount in order to raise cash quickly. United and Delta each pre-sold miles, the former for about $500 million and the latter twice totaling about $1 billion. American did it too with Citibank. These ‘cheap miles’ paved the way for banks to offer big bonuses to consumers both for acquisition and for ongoing spend.
These conversations have started again as a way to raise cash.
Citi is revamping its Premier and Preferred cards. Citi Premier gets new earning categories, and spending points on paid travel will no longer be as lucrative (making points-to-miles transfers the only good option). Citi Preferred is getting new bonus categories.
Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »
