We live in a very different credit card world than just a few years ago. Not that long ago, people were churning through the awesome AA 100K card offer and racking up hundreds of thousands of miles in a short time. People had also been able to churn through Alaska cards and accrue hundreds of thousands and even millions of miles that way also. But, things are not that easy anymore. Banks have tightened up quite a bit and we are left to find other avenues of point generation. In this period, there is one smart way that Chase and Amex are offering great value to cardholders while also helping themselves.
One Smart Way Chase & Amex Are Offering Great Value to Cardholders
Cardholder Retention = Value
For all the issuers, they have made it clear that they do not want the customer that just rips through credit cards for the sign-up bonuses. To stop rewarding those customers (like us!), the major issuers have put anti-churning rules in the place.
- American Express – one bonus per card per lifetime
- Chase – most cards not accessible if you have 5 or more new accounts (any bank) in the last 24 months
- Citi – only one sign-up bonus per card family in 24 months
The issuers prefer to keep customers and have a long-term relationship with them. Of course, they also prefer for the customer to use the card in normal spending (which is why they offer category bonuses). “Long-term” translates to repeat annual fees which the issuers also love (though you can always call and try to get a retention offer).
The Credit Card Referral Offers
To the end of encouraging customers to retain their card accounts, one of the things that Chase and Amex have done is to provide very lucrative referral offers for current cardholders when getting others to sign-up through their links. These referral offers are almost always around but this year, they have gotten quite a bit richer! Consider just a couple of these offers:
- 25,000 Membership Reward points for each successful referral (Amex Business Platinum card)
- 25,000 Hilton Honor points for each successful referral (Hilton Surpass card)
- 20,000 Ultimate Reward points for each successful referral (Chase Ink card)
- 10,000 United miles for each successful referral (Chase United MileagePlus Explorer card)
Even though there are caps in place, these are still some incredible offers and can easily make the annual fee on the card worth it. Just this year, my wife and I have picked up 55,000 Membership Reward points, 160,000 Hilton Honor points, 40,000 Southwest points, 20,000 Ultimate Reward points, and 90,000 SPG points from referrals – in 4 months! In each case, it completely wipes out the annual fee and ensures that those cards stay in our wallet/drawer for another year (which is what the issuers want).
Why Cardholder Referrals Are So Smart
So, how can the issuers offer such lucrative referrals, especially when tied to big sign-up bonuses? It is a very easy, smart decision for two reasons:
- They don’t have to pay publishers (blogs) actual cash for referrals
- It encourages current cardholders to do the advertising for them to the people that trust them the most – friends and family
Affiliate Referrals Cost More
On the first point, whenever you see the offer in points for a referral offer, just know that the issuers are actually paying out much more if they have to pay a blogger cash for the referral. For instance, with the American Express Business Platinum card which was offering 25,000 points per referral. The cash payout to affiliate on that offer could easily be over $300 in real money that Amex would have to pay the affiliate! With the Chase Sapphire Preferred, they are paying well over $175 to the affiliate so giving out their own currency in increments of 10,000 points is much better for them.
Rather than have to pay out cash, they are able to offer regular customers their own reward currency in return for successful referrals. This saves them the affiliate money plus there is always a chance that the customer may forget the points or use them on something that of low value – win/win for the issuer.
Real Life Testimonials – More Than the Sign-Up Bonus
Bloggers (like myself) obviously do not have every single reward credit card out there. In fact, there are some bloggers that may sing the praises of a particular card (for affiliate reasons) that they themselves have never had/would never get. Sure, the issuer is going to get new customers from that regardless of whether the blogger has the card themselves.
But, there is greater value to the issuer when a regular customer that is a cardholder is talking to friends/family and telling them what an incredible card they have. This means more to get it from a known individual that if someone reads it on a random website, for many people. Not only that, different cardholders have different value incentives for a particular card. For some, it is the sign-up bonus.
But if they are still holding on to the card, it has some kind of retaining offer that makes it valuable to that person – beyond the sign-up bonus. In those cases, that person is telling a co-worker, for example, about the great tickets they were able to obtain for some sold out show because the Amex Platinum concierge hooked them up.
Another example would be something like a companion ticket (Alaska Airlines, for example) and how a couple is able to travel for about half the cost on their yearly vacation. Their friends love that idea and want to get the card too.
For those customers, it is not about the sign-up bonus and cancelling – it is the perks they receive yearly that they tell others about and those others may sign-up.
While I wish the issuer would lighten up a bit on their issuing policies, I am very thankful that Amex and Chase choose to reward current cardholders who sign-up others as well. It is definitely something that keeps those cards in my account and lets me realize true value each year.
Thanks to credit card referral offers, I have earned hundreds of thousands of points and that is one of the main things that keeps me as a loyal customer with those particular cards.
What cards do you keep because you get value from the referrals?