I receive compensation for content and many links on this blog. Citibank is an advertising partner of this site, as is American Express, Chase, Barclays and Capital One. Any opinions expressed in this post are my own, and have not been reviewed, approved, or endorsed by my advertising partners. I do not write about all credit cards that are available -- instead focusing on miles, points, and cash back (and currencies that can be converted into the same). Terms apply to the offers and benefits listed on this page.
What 2018 Taught Us
What to Expect in 2019
The Future of Credit Card Rewards
There’s a reasonable risk of recession some time in 2019. The Federal Reserve has been raising interest rates. Together that means higher cost of capital for banks and greater repayment risk on the credit they extend. As a result I see approval standards for premium rewards cards tightening.
Initial cardmember bonuses remain crucial to attracting customers and demonstrating to them that the card has value quickly, in order to encourage moving a new card top of wallet. The fact that Barclays wasn’t successful with Arrival Premier moving consumers to a model of rewarding them after they’ve proven their value to the bank means that issuers can’t move away from big up front rewards.
I continue to be impressed by how competitive the market is for the business of prime customers attracted to rewards. American Express continues to invest heavily in products like Platinum and their Gold Card which gives 4 points per dollar on US restaurants and on the first $25,000 spent each year at US grocery stores. Chase has been at the top of the industry investing in rewards for their own branded cards and renewing pricy travel co-brands. Capital One has newly come on making their Venture product more valuable for consumers with several new benefits. Citibank is even improving the points-earn on their Prestige product while reducing the cost of some of the benefits the card provides.
I do think though that we’ve reached a point where cards cannot be even more rewarding than they are today overall. As a result beyond 2019 we’ll see more targeted use of investments so that they’re relevant to individual consumers rather than spending money in ways that may or may not resonate with any given cardmember. In other words banks will need to make more effective use of the investments they’re making in rewards spend.