MilesBuzz! - Charter One acquired by RBS - End of Gift Cards?

NEW YORK, May 4 (Reuters) - Royal Bank of Scotland Plc (London:RBS.L - News) on Tuesday said it agreed to buy Charter One Financial Inc. (NYSE:CF - News) for $10.5 billion in cash, the largest step yet in an aggressive U.S. expansion by the No. 2 U.K. bank.

RBS's acquisition is being made through its U.S. subsidiary, Citizens Financial Group, which I believe is considered fairly consumer friendly. In any event, this is the type of deal that will take months to close, followed by months of integration, so it should be a long time before any changes kick in.

gee, I wonder if the buyer used ebay, and earned a TON of ebay anything points in the process!

That would convert into a gazillion AA miles right now if you examine this:

« First Miles&Points > Airline Programs > American AAdvantage >

Get "UNLIMITED" AA miles for less than $0.01 per mile

http://www.flyertalk.com/forum/showthread.php?t=312953&goto=newpost

;)MM

this will take plenty of time to close. but, once it does close i could see an end of this largesse.

I don't think this makes any difference at all. Either Charter One makes profits on this deal (more people pay fees or lose the balance) or they do not. If there are more people like us, who minimize the fees, they lose money on these guys. If there are more people who use them the way they planned (for gifts) then they make money on them.

Charter One is certainly smart enough to be monitoring the numbers and to know if this program is profitable to them. If it is, it will continue, no matter who is the owner and management. If it doesn't make as much money as their alternatives, they will cancel it. It doesn't matter who owns them.

Now I may be biased... note my location and infer what you will...

but Citizens has a history of maintaining local management... and continuing successful programs ... among the dozens of banks it has acquired over the past decade...

And yet the cynic in me wonders whether their generous gift card program was at least in part aimed at boosting revenues over the past several months, making Charter One's numbers look attractive to potential suitors, and to justify the ~23% premium over Tuesday's closing price that Citizens offered... :D

And yet the cynic in me wonders whether their generous gift card program was at least in part aimed at boosting revenues over the past several months, making Charter One's numbers look attractive to potential suitors, and to justify the ~23% premium over Tuesday's closing price that Citizens offered... :D

You mean we could be responsible for bringing extra Scotish dollars into the U.S.? Cool.

You mean we could be responsible for bringing extra Scotish dollars into the U.S.? Cool.

Truly "Miles and More" (more foreign direct investment, that is)! ;)

And yet the cynic in me wonders whether their generous gift card program was at least in part aimed at boosting revenues over the past several months, making Charter One's numbers look attractive to potential suitors, and to justify the ~23% premium over Tuesday's closing price that Citizens offered... :D

I suspect RBS didn't plunk down $10 billion without doing a little diligence first. And while I'm not an expert on the banking industry, I don't think it's one in which revenues matter all that much if they're not profitible revenues. (I can see the conversation between RBS and Charter One management in which Charter One management explains that "we lose a little bit on each transaction, but we make it up on volume.")

I have to imagine that the gift card racket is profitible, even with many of us figuring out ways to cash out of them without fees. The bank is making money in at least the following ways:

-- It earns interest on the "float" on your money. You pay them when you buy the card, and the bank gets to keep the money until you cash out, which typically is a minimum of several week, during which time the bank is earning interest on your money. It's no coincidence that Charter One doesn't mail out cards until a couple of weeks after you place your order. If you do the math, you'll find that the interest they're earning on a $500 card for one month is not all that great, but when you consider the number of cards in circulation at any time, I would suspect this contributes millions of dollars of revenue annually.

-- It earns fees from the various charges that we all are familiar with, including ATM fees, PIN fees, renewal fees after six months, etc.

-- It gets to keep your money when you lose your card and forget or don't bother to call them to make a claim. Even if you do call them, I suspect there's a fee associated with it.

-- It gets to keep the money of all those people who just abandon the cards when they're not fully used. I suspect there are lots of people who forget about the cards when there's still a couple bucks left on them.

When you think about it...they have lots to gain form all of the posts ahead of me....making lots of money.

I get gift cards all the time and then they sit forever to certain stores. Until you decide to use them. Gift cards in general are a gem for the business...you get the money up front.

The visa/mastercard gift cards are even better. They can be used everywhere. Yes, people lose them (fee's to get hem back), fee's for ATM's and people foregt aboout them (pure profit) ect.

My questions is why aren't more banks doing this for free like charter one?

BofA bought Fleet bank which is located all over New England. Fleet had no miles gig going but BofA does and I dont see any changes with either bank or BofA's miles gigs (like their debit visa check cards and related programs) since that buyout. Granted, THEY bought Fleet, but when banks change like this, it is not always a bad thing.

I suspect Citizens wont change CO gift card gigs too much, although I wonder if I will still be able to cash them AT my local Citizens bank? They too are already all over NE and I have my acct there for checking/savings.

we will see, but now we have 3 --count em--GC threads.

Is this meant to confuse or throw off the WSJ Ron Liebers of the world or draw them closer? That reporter could decide to revisit this gig and who knows what happens then. The blame game would begin, right?

All I know is that this is very much like using a fake ID in college to get into bars when under 21. It works, it works, it works, and then one day at one place it just does not get you in and it fails. Maybe they dont take it away from you but the bouncer does not let you in and you wonder what happened... You THINK you are entitled--I mean, hey, you have been getting in everywhere else all this time so what happened?!! My friends are all in there! BUT one needs to remember, that fake ID, like this GC run, is a mere priveledge...at a time in your life when that matters above all else, and so it is something that MAY play well for you for a long long time, but it could also end any day. And so if you are lucky, when they DO take it away from you some day, you dont lose anything but the ability to continue the game... Think about this every time we get these cards and then earn our miles. They should never be EXPECTED, rather, we should treat them like skiers treat snow storms: The godz have smiled upon us... let's not piss the godz off. College kids with fake IDs think like this a lot too. Well, they sure did at UMASS, Amherst, but hey, that's where many forms of Acid was invented so maybe I am somehow suffering a flashback on something I never took. ha ha ha.

yeah, maybe I am talking smack here, but it IS like that. Change happens. We have to roll with it and hope for the best. When CO is bought out, I actually have faith--and a feeling--that it will be just FINE! Let this fine GC storm continue for us all!

;)MM

thanks for the post