I receive compensation for content and many links on this blog. You don’t have to use these links, but I am grateful to you if you do. American Express, Citibank, Chase, Capital One and other banks are advertising partners of this site. Any opinions expressed in this post are my own, and have not been reviewed, approved, or endorsed by my advertising partners. I do not write about all credit cards that are available -- instead focusing on miles, points, and cash back (and currencies that can be converted into the same).
Credit card company acquisition offers are expensive. While with co-branded products it’s not always the bank buying the entire bucket of miles they’re offering you — acquiring new customers can be profitable over time both for the bank but also for the airline or hotel — this up front cost only gets paid back when customers use their new cards, keep them, and continue spending over time.
Years ago banks would give the same bonuses to customers for the same cards over and over. They got more sophisticated by introducing spending requirements to earn a bonus, thinking if they could get customers using their cards they’d stay in the habit. Those spending requirements started out at $250 and $750 but gradually increased — and often the biggest offers have the highest spend requirements, banks want to make sure it’s people who spend a lot of money on a card that they’re acquiring with the bonuses that cost them the most.
Not every customer becomes profitable, but banks are happy if customers are profitable on a portfolio basis. More customers are profitable than not, and the profitable ones far outstrip new loss-making customers.
They can improve their overall economics if they can weed out the least profitable customers on the front end. Each of the major banks has a strategy for doing this.
- American Express. One bonus per card per lifetime (which in practice means ‘for as long as Amex systems show you’ve had the card). They sometimes send out targeted offers without this restriction.
- Citibank. One bonus per card family (eg the standard and premium personal American Airlines cards are treated as the same family, but the personal cards and business American cards remain separate) every 24 months — the clock starting over if you cancel a card (‘open or closed within 24 months’).
- Chase. Many – though not all – of their cards restrict approvals to customers with fewer than 5 new credit card accounts in the past 24 months. This is colloquially referred to as ‘5/24’.
American Express has added new restriction language about initial bonus offers. (HT: US Credit Card Guide)
Welcome offer not available to applicants who have or have had this Card. We may also consider the number of American Express Cards you have opened and closed as well as other factors in making a decision on your welcome offer eligibility.
Doctor of Credit calls this rule regarding ‘other factors’ along with ‘the number of Amex cards’ you’ve had “exceptionally vague.”
One Mile at a Time says “It sounds to me like this is intended to be more of a warning than a hard-and-fast new rule.”
I disagree with Lucky that this is ‘a warning’ but agree that “a vast majority of people won’t be impacted by this.”
It strikes me as language added by American Express lawyers to cover the scenario where they decide not to award a bonus to a customer in an extreme case, or claw back a bonus (perhaps even when shutting down a new account). Perhaps it’s meant to cover existing American Express actions, and is written as a catch all, after dealing with cardmember disputes.
I suspect the language is vague on purpose. If it were a warning the message would be clearer, and perhaps not buried in fine print. At this point there’s little reason to think anything about American Express offers has changed, and no reason at all to think they’ll change for most people. Still it will be useful to watch.