And people are mad…

Contrary to popular opinion, points aren’t free. Just like any business, there’s a cost to acquiring a customer in the form of marketing, ads, and in the case of credit cards – points bonuses. Points bonuses are the free donuts left out on the table, aimed to lure in wary customers, but with huge bonuses sometimes over 50,000 points, credit card companies are getting a lot tighter about who they’re giving free donuts to. In the last year, there’s been more red tape added than any other recent year, and reports signal it’s getting tighter…

Profitable Customers

At the end of the day, this is hardly surprising. Travelers have racked up millions, billions and probably trillions of points over the years by signing up for credit cards, meeting the spending requirements to get the bonus points and then putting the card in the sock drawer. What do they then spend on? The next card offering a big bonus. This quite often means that banks are paying up to $1000, the minimum cost of 100,000 points, to acquire a customer who never becomes profitable. That’s changing. In fact, even if you’ve never had a specific credit card, you may no longer be eligible for the sign up bonus, based on other activity.

New Restrictions

Each bank has set forth new restrictions, steps or methods to weed out customers who “churn and burn”. In other words, customers who get a credit card, cancel it, and then sign up again at a later date. Chase has a 24 month restriction on receiving a repeat bonus and also denies people who have opened 5 or more cards within the last 24 months. Amex has a “once per lifetime, per card” rule. Bank Of America limits customers to four cards at a time and Citi has a 24 month rule, where you must not have had the card for at least 24 months to receive a new bonus.

Going Further

Amex recently introduced a beneficial tool which allowed prospective customers to see if they’d receive the sign up bonus for a given card. The idea was that if someone wasn’t sure if they were eligible, because they’ve perhaps held a card before, or a similar card – they could find out before applying. The logic was that only customers who previously held a card would be denied a bonus. Amex appears to have gone further here, now limiting bonuses from customers they deem to be gaming the system or flat out unprofitable, even if they’ve never had a specific card. Leading blog One Mile At A Time shared incredible responses from prospective Amex cardholders, with their specific denials.

Sign Of The Times

Are credit card sign up bonuses going away forever? No, of course not. Are they going to become increasingly limited? Yes. Will churning exist forever? No. The language each credit card company is putting forth is a clear indication that there must be accountability for the bonuses we all seek. They are making no mistake in letting customers now that the rules are headed in one direction, and that’s tighter. Credit card companies make money off of customer swipes (how much you spend), balances and annual fees. Spending billions of dollars on rewards programs for travelers who do their very best to contribute to none of the above was never sustainable, no matter how much many people would like it to be.