Oh the drama!
Everyone knows the term “earn and burn” but a large subset of credit card customers prefer “churn and burn”. The term is just how it sounds. Get a credit card and with an enticing sign up bonus, cancel the card, get the bonus again. U.S. Credit card companies have taken action in recent years to reduce customers ability to “churn and burn”, restricting most credit card sign up bonuses to once a lifetime, per card. As if that wasn’t enough, American Express has just fired a further shot across the bow, with wording suggesting that abusers may lose out on future sign up bonuses, even if they’ve never had a card before.
Doctor of Credit unveiled new language in the American Express (US) terms and conditions for card bonuses. The new language states “Welcome offer not available to applicants who have or have had this Card. We may also consider the number of American Express Cards you have opened and closed as well as other factors in making a decision on your welcome offer eligibility.” One could roughly translate this to: if we think you abuse the system, we’re within our rights to withhold a card bonus from you, even if you’ve never had the card. What’s perhaps most interesting is that American Express will look not just into cards you have open, but also cards you’ve closed to determine bonus eligibility.
In practicality this won’t affect 95% of people reading this. But with that said, welcome bonuses are one of the greatest customer acquisition costs for credit card companies, and eliminating the need to pay out lucrative bonuses to people who’ve already had cards would greatly improve any balance sheet. For that reason, it’s blatantly obvious why the intent to further restrict customers from receiving these points treasure troves exists. This new bonus rule seems intentionally vague, simply paving the way for American Express to take action against extreme abusers. Could future, more concise language follow? Of course it could. This may not mean the churning game is over, but only a fool would ignore the obvious implications of the warning.
American Express has taken a far more liberal approach to repeat sign up bonuses in the United Kingdom. Customers are able to close any given card, such as the wildly popular British Airways Premium Amex, and receive a new sign up bonus after just six months. It was reported earlier this year that American Express was strongly considering an end to the “churnability” of their cards. Today’s news only lends fuel to that fire. On a positive side, the end of churning may stop airlines from continuously devaluing their points charts. Only time will tell.