Originally Posted by
am1996
First, let me just say that this is just a friendly discussion. I can't quite tell whether you really are getting agitated or it is the impersonal nature of an online forum that's causing some of your posts to sound that way, but I am not trying to get into a fight here.
As for credit card issuers, I think that they do only want profitable customers, such as those who don't take advantage of rewards and carry balances. The issue for them is that such a business model is unsustainable and is self-limiting, as it's very different to only target those customers. Further, even if a person does not currently fit into the "profitable customer" model, if he/she is not too unprofitable it still makes sense to maintain a relationship with him/her, since things change and a customer who isn't profitable today may end up being very profitable tomorrow, at which point it may be more difficult and more expensive to get that person away from the competition. Also, banks have very diverse financial offerings, so a bank that keeps a customer happy with its credit cards has a better chance of getting that customer to get a mortgage or a personal loan from that bank, etc... This is how the entire financial services industry works.
I agree and I think that we are saying more or less the same thing here. The issue here is that if you use your CC's in a way that maximizes their rewards, you aren't profitable.
I, for instance, use the credit card that pays 5% cashback gas purchases exclusively for gas purchases and nothing else, while I use another credit card that pays out 2%-2.5% cashback on everyday purchases, another credit card when I need to maximize mileage rewards, etc... This is certainly not the way CC issuers hope that you do things, which is the reason that the issuers' and the customers' financial interests are not aligned. From what I've read, Chase is currently having a fit over unprofitable customers and has shut down some CC's for as little as $1,000 in cashback.
Sorry. I'm a little exasperated, because this thread started off what seems like the 20th 'Is Chase going to close my account down?' post in the forum in the last 2 weeks. And it just seems a little nonsensical. So perhaps that is coming across in my writing. I also admit, I am a little frustrated with some of your statements, because they don't appear factual, but rather more based on the gossip-mill and I think that's counter-productive.
Regarding this last post, I think you have some legitimate points. However, I'd point to the fact that Chase has been aggressively, highly aggressively, rolling out generous rewards based cards. And they are advertising them heavily, too.
For instance, you can't walk through Grand Central without seeing a dozen signs for the Hyatt card, or walk through Newark Liberty without seeing a dozen ads for the United Explorer card. Plus, bloggers get commissions for promoting those cards. Its a lot of money and a lot of focus on a specific set of cards--all solid rewards cards.
Some believe it is a tactic to steal them away from Amex. Whatever the reason, it's a pretty strong and committed move and a corporation does not embark on that sort of strategy unless it is profitable. Yes, some of these bonuses have dropped, but that seems to be because Chase has more customers and overall, there are more customers available in the market, so there is less of a demand to grab them.
Now, as for specific cases--yours sounds like you may be unprofitable, but I am unsure of commissions on purchases for credit cards. If you're getting no less than 2 and 2.5 percent/points on each purchase, without carrying a balance, yes--you might be unprofitable. I don't think that's possible solely through Chase unless I am missing something, so it may be through a broad spectrum of companies and cards. But if you're not engaging in egregious abusive behavior--like rampant gift card purchases--you are probably still safe.
I am not sure where I fall in--I'd guess I average somewhere between 2 to 3 points per dollar spent, but
only because of my use of the UR Mall. Which Chase gets commissions on, so they're doing fine off of those. But there are certainly expenses and charges I have--both personal and business--where I get no more than 1 point per dollar spent. On the whole, I am guessing I'm a profitable customer.
Anyway, it's just more helpful to discuss these topics with actual data and rational reporting than unnecessary alarmism combined with very vague assumptions.