Being profitable for the bank is a totally different question than being credit worthy. I've gotten eleventy-seven cards from Citibank over the past 10 or so years. A number of those had 100,000 mile sign up bonuses, and I was able to avoid paying any AF at all. I'm clearly not profitable for them, but they still find me credit worthy, and issue me new cards, the one this last week having a $16,500 credit line. In fact I get an email every week encouraging me to up my CL on my Prestige and Premiere cards, which I have sitting at $4k, reduced by me from their original @$16,500 level they gave me. I'm guessing why this works for Citi is that for everyone like me, there are lots of folks who end up carrying interest charging balances, and paying late fees, which more than makes up the difference.

I know Chase and Barclays are trying not to let churners like me get new cards. But there's a downside to this as well. I used to make sure to put regular monthly spend on my Chase/Barclays cards, hoping to have this help get me approved for new cards in the future. Now that it's clear that won't happen any more, I only spend where the ROI on that spend is worth it to me. So DW and I put a cumulative $6K each month on our HHilton cards, as that gets us 6X points on GCs at grocery stores. And $6K yearly "grocery" spend on each of our Everyday Preferred cards, as that gets us 4.5 points per $. But now our Chase cards, with the exception of the quarterly bonus on the Freedom card, only see a few small charges a year, just to make sure Chase doesn't close them for lack of activity. The ROI on our IHG cards, which we keep just for the annual free night certificate, is just not good enough to reward spending any significant amount on.

The question with the airlines and hotels is quite different. They are not paying for the sign up bonuses that churners get. Au contraire, they are selling those miles and points to the cc companies. AA's last quarterly report stated that they are actually losing money on their aircraft operations, but making money on selling FF miles, mostly to banks I assume, but of course at least some to their FF members too. To the extent that having their co-brand ccs encourage folks to patronize them to take advantage of free checked bags, priority boarding, etc that does help their bottom line profits. They could care less how churners get their miles and points, they just want the banks to keep buying as many of them as possible.

Every time DW and I fly FC TATL on AA, which has been every year for the last 10 years, especially now that we can't get Saver awards anymore, and have to book Anytime Awards, AA sells Citi bank 560,000 miles. We are of course an exception, most folks don't know how, or don't bother to learn, how to play this GAME at a semi-professional level. So they end up getting one AA card, and the sign up bonus is just enough for an Economy award, which AA only gives out when they are pretty sure that seat would have gone out empty otherwise. Ordinary "normal spend" Muggles are a small profit maker for the Hotels and Airlines, whereas Wizard churners are a huge profit maker for the Hotels and Airlines.