3 ms·
The entire point behind reward cards, is to track every purchase you make. They're the original evil tracking device, so the airline makes money with those poi
by b112 1y ago
The entire point behind reward cards, is to track every purchase you make. They're the original evil tracking device, so the airline makes money with those points.
They do it by selling data, by points expiring, and by often only allowing points when seats would be empty otherwise.
And often retailers pay more at POS terminals!
This all ties into any rewards program. It's part of the package, even if points are granted for use.
- margalabargala 1y ago> And often retailers pay more at POS terminals! This is really the whole point. The sale of data is much less lucrative than the purchases by the customers themselves, especially for the "nicer" cards. If you are a CC company with wealthy clientele, they tend to spend more. This means that retailers are willing to offer deals/rewards to attract those clients, and also that you want to offer rewards to keep those clients. This is why e.g. American Express has cards with great rewards, high annual card fees to keep the riffraff away, and retailers willing to take a larger % cut in order to have those cardholders shop at their store where they presumably purchase more.
- JumpCrisscross 1y ago> high annual card fees to keep the riffraff away It’s more a sunk cost/commitment thing. Their approvals department keeps away low and inconsistent spenders.
- arcticbull 1y ago> This is why e.g. American Express has cards with great rewards, high annual card fees to keep the riffraff away, and retailers willing to take a larger % cut in order to have those cardholders shop at their store where they presumably purchase more. At the high end it actually diminishes. Rewards cards targeting middle of the distribution are more lucrative, generally. Citi Double Cash gets you 2% cash back on purchases whereas the Amex Platinum gets you 1X on all spend worth at most 1.25% (and 5X on airfare).
- ghaff 1y agoFor most purposes, a free 2% cash back card is probably optimum. I have another relatively low fee card for various reasons. If I still traveled enough to justify an airline club card (as I used to), I might have that.
- arcticbull 1y agoI would say unless you find playing the miles and points game to be very enjoyable, which I do, you're better off with a cash-back card. For most people the Citi Double Cash at 2% is a great bet, if you have $100K in investments with them, you can get 2.625% back via Bank of America's Unlimited Cash Rewards card.
- devin 1y agoNot saying you're wrong exactly, but https://www.bitsaboutmoney.com/archive/anatomy-of-credit-card-rewards-programs/ https://www.bitsaboutmoney.com/archive/anatomy-of-credit-car... does a good job of explaining the mechanics of rewards programs. It is more complicated/interesting than what you describe IMO.
- Zak 1y agoEvil tracking is half of it, but the nominal "loyalty" benefit is there too. If I have a bunch of points with one company, I'm likely to accept a slightly worse deal from them relative to a competitor where I have none in the hope that I'll acquire enough for an award.
- Retric 1y agoNon rewards credit cards also track purchases. It’s a revenue stream few companies are just going to leave sitting around.