How to Break Free from Restrictive Credit Card Issuers
The recent Amex shutdowns have gotten attention from many of us. Credit card issuers have slowly but steadily introduced more stringent application rules over the years. And methods for earning and redeeming at high rates and scale inevitably disappear or devalue. When the hobby’s going great, it’s easy to fall in love with a given points currency. In the process, that adoration can turn into an overdependence on said currency for travel. Only subsequently does it seem that the bad news (shutdown, new rules, devaluation, etc) comes. When hobbyists, including myself, get lulled into a content state with any currency, we’re ripe targets. So then, how can we benefit from travel currencies without becoming overly attached to them? Here are just a few areas to ponder.
Move Past Application Rules
Chase’s 5/24, formerly one of the big banks’ very few rules, is still the most draconian, from my perspective. Chase customers, existing and prospective ones, easily talk themselves into turning down other higher value rewards for the chance of maybe getting another Chase card in a couple years. Chase has essentially outsourced their marketing to those consumers with this diabolical rule.
Elsewhere, Amex’s once per lifetime rule paralyzes many consumers. These individuals want new cards but decide to wait since they think the offers could be better later. Never mind that they’re guaranteed to earn nothing now on the cards they don’t apply for. While Amex has unofficially bent it for many, the rule is still alive and well.
I, and many others, have moved past these rules to aggressively pursue alternative offers. We refuse to let banks (overly) manipulate our behavior. We take back more control.
Of course, depending on one’s situation, ceding to a bank’s rule may be worth the effort. I found myself unintentionally eligible for more Bank of America cards and decided to fall within their 7/12 rule. Also, if one is just starting out in the hobby, why not pick up Chase cards first?
Decentralize Rewards
I collect as many different bank, travel, dining, grocery, and other loyalty program currencies as I can. I primarily do this to redeem points for as many rewards as possible, but there’s a secondary reason that’s almost as important to me. By diversifying, I’m mitigating against devaluation, shutdown, and increasingly stringent program rules. If I get shut down in one program, it’s not as big a deal if I belong to a bunch of others. On the other hand, if I put all my effort into a sole currency, my overall rewards can be easily weakened by that one program. More programs is more work, but I find the effort to be easily worth the benefits I receive.
Earn, Redeem, Repeat
I equally love the processes of earning and redeeming points. Perhaps that’s because I think each is of equal importance. Earning is great, but my points are worth nothing until I actually redeem them. Not coincidentally, I try to redeem all of my bank points as quickly as I earn them. I hoard traditional travel currencies (airline miles, hotel/rail points) based on my goal of never substantially paying out of pocket for travel again during my lifetime. That said, I earn a many more bank points than traditional travel currencies. Since I consistently redeem bank points, I’m not apt to lose any of these points as a result of a shutdown.
Realizing Personal, True Value
Generally, I don’t pay much attention to others’ points valuations, although MtM has an excellent resource. Why? Because I primarily tie point value to my goals, travel-related and otherwise. I’ve found I can maximize control over my rewards with this practice. Any loyalty program can manipulate one’s behavior, but I’ve found focusing on my goals can keep this in check. And when the bad stuff comes, it’s a minor disappointment rather than a major disaster.
Another Perspective
I consistently remind myself of the following: my favorite rewards currency is my biggest weakness. By doing so, I periodically review my strategies to ensure I’m not overly dependent on any specific currencies to meet my highest priority goals. I revalidate my contingencies and hedges.
Many look to strike a balance between aggressively earning rewards while also maintaining good behavior (whatever that is) in the banks’ eyes. Many opinions exist here, and we all have different tolerances for risk. On this matter, I live in the now, earn as much as I can, and don’t overly focus on being the optimal customer. Nobody truly knows everything banks consider in their decision to keep or shut down customers. I won’t waste time, mental bandwidth, or lose out on rewards while caring about it.
Conclusion
Over time, banks and companies are increasingly implementing rules and other roadblocks to impede our maximization of their loyalty programs. It’s on us to create our own plans to overcome them. We may not be able to sidestep all negative changes, but it’s worth the effort to try. Indeed, I’d rather do that than be caught flat-footed with a devaluation or shutdown. How do you resist the efforts of credit card issuers and other loyalty programs to limit your rewards?
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Benjy, separate from an outright shutdown, there is a financial review. During the financial review, one’s cards with that issuer are suspended. Even if the financial review ends favorably and one’s cards are reactivated, the financial review can take a couple weeks. For the average person, this is a hassle. For a business owner, this can hamstring one’s company.
Coat-tailing on your suggestion, one ought to identify target airlines and hotel and then diversify among card issuers with transfer partner agreements with those targets.
Reno Joe,
All good points! Financial review can be a hassle but manageable for many. No doubt, it’s a huge burden for others, though. Yes, it’s huge to diversify with one’s favorite programs from different angles!