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Global markets are as volatile as ever. As uncertainty looms large, many are asking the pertinent question. What’s going to be the future for the whole miles and points game? What’s going to happen to some of our favorite miles and points credit cards?
Miles & Points Credit Cards
When times were great for the travel industry, we were all frequently hitting the road for business and leisure. Trip reports were frequent and banks were constantly extending lucrative offers to earn our business. Needless to say, the situation has changed within a matter of weeks. What’s going to be the new normal going forward? Here are a few projections.
Minimum Spend Requirements
Not too long ago, we saw banks gradually increase the spend required for a welcome bonus. Amex quietly increased the spend requirement on the Gold Card to $4,000. Chase followed a different pattern and instead offered higher bonuses, but with tiered spending requirements.
As people’s disposable incomes shrink, travel will not be top of mind in the near term. I expect banks to either keep spend requirements the same or reduce them, albeit slightly. Even if they decrease, I don’t see them decreasing these requirements by more than $1,000 in most cases.
Also, as Frequent Miler points out in this post, I expect banks to send out spending offers to existing cardholders in order to generate more spend from current customers.
I don’t expect banks to offer higher than usual welcome bonuses. By that, I don’t see them beat historical records while offering these bonuses. Also, as Amex recently did, we may see other banks incentivize other channels like refer-a-friend links in the short term.
Banks would rather keep existing customers instead of spending heavily to acquire new ones. As consumer spending slows down, banks would be more willing to offer incentives to customers in order to retain their business. In my experience, Amex has been quite generous in offering these retention bonuses. Chase has already offered an automatic $100 credit to certain Chase Sapphire Reserve cardholder. I won’t be surprised if other issuers follow suit with similar offers and incentives.
JP Morgan Chase CEO Jamie Dimon recently opined that we’re set for a “bad recession”. Banks are extremely wary and concerned about risk. I expect banks to make application restrictions stricter. Also, as Doctor of Credit points out in this post, banks will definitely tighten lending to small businesses in the near term.
Also, in certain cases, there’s a good chance banks may ask you for more documentation for proving any claims you make on credit card applications. If you’re applying for a small business credit card merely as a sole proprietor, expect more scrutiny than usual.
If you already have more than one card from an issuer, expect your bank to offer a lower credit limit the next time it approves you for a card. As elaborated in the previous point, banks will err on the side of caution before they see any credible signs of markets bouncing back.
The Pundit’s Mantra
While credit card offers many not completely dry up in the short term, they could well remain stagnant. With unemployment at record highs, travel isn’t on most people’s minds currently. As I highlighted in this post, I plan to go lean with my credit cards and watch as this plays out. Once markets bounce bank and regular travel resumes, we’ll not only see better offers but also have a lot more options to plan and book travel.
Have you applied for a credit card in the last few days? What was your experience like? If not, are you looking to apply for one soon? Let us know in the comments section.
This card is currently offering a 50,000 points bonus and a 0% Intro APR for 1 year, with a $0 annual fee!