Originally Posted by
Explorer789
If the goal is to set the spend limit so high to prevent people from cashing in on that 15k/10k bonuses, then yes, this will keep churners away from gaming the bonuses.
But the question you have to ask here is what will be the draw to get people to even apply for this card in the first place when there's a $150 AF and nothing special about it. Why not just go for Sapphire Preferred which only has $99 AF or Citi Preferred for $95, both of which offer 50K signup bonuses and strong categories?
Granted we still don't know which airline partner this could have, but other cards offer ways to purchase award tickets directly/indirectly for your preferred airline.
My thoughts on this are: CC companies usually buy miles for a penny. Credit card companies make around 2.5% per dollar on spending. By keeping the spending threshold high (and poor gift card, etc. redemption), Barclays is hoping to keep the rewards payout to 2.5 cents. They will probably make $100 from $150 AF.
My bet is that this card comes with travel insurance which is at least as good as CSR and maybe in line with Prestige. To do this, they would also need some help from MC. This is also where the higher spending threshold comes in -- MC would be willing to pick up bigger portion of the travel insurance cost.
Barclays will make another few hundred bucks on average per cardholder every year on interest income -- higher spending here helps here again as if you have more outstanding balance, Barclays will likely make more in interest income.
Net net, Barclays wants to reduce its upfront marketing cost by no signup bonus so that they could pass on the entire transaction income to cardholders in form of rewards. They make between $300 to $400 per card per year in annual fee and interest income less credit loss write offs. Also, this card will have far less churn than most other higher end cards. If they get 100,000 cardholders, this could be around $40 million a year profit for Barclays. They key for them is to keep/maintain the integrity of there transfer partner platform i.e. 1:1 transfer for unique airlines and hotel chains!