Retention Offers as Spending Offers

Retention offers are a great way for a bank to demonstrate that they want to keep you as a customer and have you avoid closing the card. There are many credit card customers (especially in the miles and points world) that watch for the anniversary date of the card to approach so they can call in to cancel their card to avoid the fee. Many times, there is not a real desire to cancel the card but a real desire to avoid the annual fee! Will banks let you go so easily?

Making a reason to keep a card

Credit cards are great for the bonuses – no arguing that. The sign-up bonuses on many cards are fantastic and give the user a chance to pad their miles and points account. But, for many customers, once the bonus is met, the card may lose its place as a permanent resident in the wallet of the user. This is because it may not offer the best spending bonuses for the customer in the day to day spending.

One such card is the Chase Hyatt card. As hotels go, it offers one of the better offers out there – 2 free nights at any Hyatt hotel in the world. With the recent Hyatt devaluation, that card gained a little more value in the sign-up bonus (as many high-end Hyatts went up beyond the old 22,000 point per night cost). So, a customer spends the required amount ($1,000 in three months) and receives the sign-up bonus. But, after the bonus is received, there is not much incentive to consider using the card for anything other than Hyatt stays. The only bonus it gives (other than Hyatt charges) is 2X points on restaurants, airline tickets, and car rentals – the same things that are included in the category bonuses of the Chase Sapphire Preferred card. The problem with that is that the Chase Sapphire Preferred earns Ultimate Reward points that can be transferred to Hyatt – but you receive a 7% rebate on all points earned in a year! So, you will actually be able to get more Hyatt points by using your Chase Sapphire Preferred than you will from using your Chase Hyatt card.

So, why keep that card? Because Hyatt gives two valuable perks – Hyatt Platinum status as long as you hold the card and a free night at a category 1 – 4. Those benefits, specifically the free night, are worth the $75 annual fee, so many hold on to it.

The retention offer

But what about other cards that do not offer an anniversary deal to get you to hold the card? There are many cards that may lose their appeal by the time the annual fee is due. What to do? Call to cancel. If you are serious about not wanting to pay the annual fee and that is the only thing that is making you want to close the card, banks will often give you some type of offer to get you to keep that card open and pay the annual fee. These offers range from issuing a statement credit that compensates for the annual fee or offering some bonus points/miles that make it worthwhile to keep the card open.

I have had retention offers range from the statement credit to offering 20K Ultimate Reward points, 30K Membership Reward points and everything in between. The common is around the 10K point mark (for cards like the Chase Sapphire Preferred or the Chase Ink products).  These offers are great because it helps the bank keep the customer and helps the customer keep the card.

Retention offers as spending offers

We have seen banks move more to a model for their cards that tries to make the customer not only keep a card but use a card more throughout the year. Examples are like the US Airways credit card – offers typically float around for people who do not use the card that often to spend a certain amount of money on the card in the space of three months to earn a certain bonus in miles. Another example is the Chase Hyatt card – I have received two offers this year to spend $2,500 on the card to earn an addition 5K Hyatt points. These offers help the banks by encouraging the customer to use the card that may not otherwise have an appeal.

Retention offers have become similar now. There are many reports of customers who call in about an annual fee and they are offered a chance to spend X amount of dollars in 90 days and receive a bonus.  This works great for the banks as it forces you to keep the card open past the 60 days you have to cancel and receive a refund on the annual fee (since the points are not supposed to post until after that) and it make the customer use a card that otherwise may have been lying dormant.

I received such an offer yesterday – I called in on my Chase Ink Plus card as the annual fee was coming up. I have both the Chase Ink Plus and the Chase Ink Bold and honestly told them that since the cards are fairly redundant and I do not max out the category bonuses, I would prefer to not have to pay the annual fee. I was prepared to close the card since I do not max out the categories (such as the 5X categories – max of 250,000 points bonus in a year) and I can just as easily use the Chase Ink Bold instead. The rep came back and said there was an offer tied to my account to spend $5,000 on my card in 90 days and receive a 10,000 point bonus. I took it and began to do my spending right away!

Is it worth it?

Even with the recent Hyatt and United devaluations, I still believe that 10,000 Ultimate Reward points are worth quite a bit more than the $95 annual fee tied to the card. Not only are they worth it in actual value but they will help me reach another level of miles for an upcoming redemption. Besides, I use my card anyway – why not get some bonus points for doing it!

I am curious if other Chase Ink cardholders have been receiving similar offers or if Chase is still giving the points with no spending required. What have your recent retention offers been like and do you find them enough to keep the card open?