Credit card bonuses playing hard to get
Sign-up gifts come with harder-to-satisfy barriers to earn
After months of offering generous sign-up bonuses,
credit card issuers have started dialing back on the reward points they're
including with new cards -- or making big points bonanzas harder to earn.
Their tactics include increasing the amounts customers must
spend to qualify for the most points and building in incentives that encourage
cardholders to hold onto and use their cards for longer periods than in the
The changes suggest that card issuers are growing weary of
trying to poach some of their competitors' best customers by dangling attractive sign-up bonuses. That practice has created roving bands of reward mercenaries,
who quickly jump from offer to offer to maximize free trips and other perks.
"Everything is tightening up a little bit," says Rick Ingersoll,
who blogs about reward travel on the site Frugal Travel Guy. "I realistically
accept that the bonanza days of 2010 and 2011 seem to be past us. We're now in
a more moderate sign-up bonus period."
Of course, there remain plenty of ways to continue to
collect sign-up bonuses of tens of thousands of reward points and
frequent flier miles, which can be worth a few hundred dollars or more by
obtaining just a single card and spending a certain amount in an initial period.
Cards linked to airlines and hotels generally offer enough for a free flight or
a night or two in a hotel, while cards affiliated with the banks' own reward
programs (such as Citi's ThankYou Rewards or Bank of America's WorldPoints
Rewards) typically offer between 10,000 and 40,000 points, which can generally
be redeemed for travel, cash or merchandise at a rate of 1 percent, or $1 per
But recent credit card offers indicate that huge points
giveaways are becoming harder to get:
- In 2011, the Chase British Airways Visa Signature card
offered 100,000 British Airways miles for spending $2,500 in the first three
months. This year, the card is still offering 100,000 miles -- but the
cardholder receives the miles in chunks after spending more: 50,000 after first
use, 25,000 after spending $10,000 in a year, and another 25,000 after spending
a second $10,000 in the first year.
- Also in 2011, the Chase Ink Bold business card offered 50,000
points for spending $5,000 in the first three months. Now, to receive the full
50,000 points, cardholders must spend $10,000 in three months.
- Capital One ran a successful 2011 promotion on its Venture Rewards
card offering 100,000 miles for new customers who could show they had accrued
100,000 miles in a frequent flier program and spent $1,000 in the first three
months. It returned for the spring of 2012, still worth up to 100,000 miles, but
to receive that full amount, cardholders had to prove they spent $50,000 on a
competing travel rewards card in 2011.
- Also in 2012, Citi's ThankYou Premier card bumped up the
number of points offered but made them harder to earn. In 2011, the card
offered 50,000 points for spending $2,500 in three months. The 2012 offer:
30,000 points for spending a total of
$2,000 in months one, two and three of card ownership, plus another 30,000
points for spending totaling $2,000 in months 13, 14 and 15 of card ownership.
Sean O'Reilly, general manager with Chase Card Services, says
Chase wants to attract loyal customers, and it tries to create cards that will
appeal to customers over the long term.
"In the industry in general, as acquisition incentive offers
have gotten larger, the requirement for more loyalty has also gone up
commensurate to that," he says. "We let the customers know what is required of
them so they can make an educated decision."
The less-generous sign-up terms show how card companies are
responding to an economy that seems to be recovering, says Ron Shevlin, senior
analyst with research and advisory firm Aite Group.
"The economics of the business is allowing them to not have
to sweeten the deals to the extent they have in the past two to three years,"
he says. "They're feeling less of a need to throw in everything but the kitchen
Shevlin says many cardholders have already switched cards in
the past few years in response to the sign-up deals, and card issuers are
finding new successes in marketing more entry-level cards to younger consumers.
Revenue from those cards takes pressure off from trying to steal competitors'
reward-savvy customers, who tend to be more established big-spenders who are
less prone to pay interest or late fees, he says.
He foresees sign-up bonuses continuing, but not at the
levels of recent years, he says.
Brian Kelly, who blogs about reward travel on his site The Points Guy, says that while there might be less
of a "free for all" on sign-up bonuses nowadays, cardholders should still keep
in mind that those bonuses are just one way to earn points for free travel and
other rewards. For instance, many cards now offer bonuses for spending on
categories such as gas or groceries or restaurants, so consumers should ensure
they're using the right card at the right place.
"Opening up credit cards is a great way to get points and miles,
but you also need to maintain a relationship with the bank," he says. "If you
keep closing accounts, the door could close in your face ... Don't just think
about credit card sign-ups. You have to have a whole strategy."
Even with the cutbacks, consumers can still save hundreds of
dollars, he says. Other advice he offers includes shopping at card companies'
online malls and signing up for card dining programs that offer bonuses for
eating at certain restaurants.
But Kelly is optimistic. He says his gut tells him that the summer of 2012 might be slow, but that better promotions are coming in the fall and
into the holiday season. But, he acknowledges: "The crazy thing about the
credit card game is no one knows."
See related: 8 credit card strategies of frequent flier mile pros, Compare top frequent flier credit cards
Published: June 7, 2012
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