There has never been a better time to have a credit card than right now. That’s how it appears to those seven in 10 Americans that own at least one. And why is that? The amazing deals, of course.
Credit card companies across the nation are bringing the heat with all the deals they’re offering their customers.
But they’re also taking notice of all the great benefits, and realizing that they might be spending more than they’re gaining. Some companies are boosting their minimums to earn sign-up bonuses, and even removing benefits altogether. So, getting a rewards credit card as soon as possible would be a good idea.
Making It Tougher To Earn Big Bonuses
Companies like Chase, for instance, are starting to slash their sign-up bonuses, like the Sapphire Reserve Card. Last year, they slashed the bonus in half and dropped the points from 100,000 to 50,000. The reason for the cut? A loss of up to $300 million in profits.
What Does That Mean For The Future?
Michael Taiano, Director of the Financial Institutions Group at Fitch Ratings, believes that the future of more “generous” rewards is a big mystery.
“The assumption for many banks is that if they offer these rewards they can retain that customer and perhaps make money in other ways like cross-selling them on mortgages or big deposit accounts,” Taiano says. “Of course, one increasing concern [is] gamers. These are people who jump from card to card to get the rewards, which companies are trying to avoid.”
As a result, more companies are designing terms to promote loyalty and avoid or discourage “gamers.” This includes Bank of America’s Premium Rewards Card, with which cardholders are rewarded proportionally to the size of their deposits in the bank. The more users deposit, the more they earn.
Other companies are coming up with inventive, almost non-rewards, to retain their customers. Like a Social Security Alarm system, which gives cardholders a notification if their SSN is used on a risky website. Discover is the company that is offering such a service.
Maureen Powers, vice president of rewards at Discover, said that she expects these reward types to become more common place.
“While I can’t accurately predict what the credit card landscape will look like in five years, I would imagine that not only rewards, but also added benefits and features will gain the interest of customers,” Powers says.