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The retail credit card landscape: more changes coming!

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Yesterday’s WSJ article, “Credit Card Firms Reap Rewards of Consumer Brand Loyalty,” had some interesting nuggets in it–some of which I’d heard, some of which I hadn’t:

  • BP’s credit card is switching from Chase to Synchrony this week.
  • Bed, Bath, and Beyond is ditching U.S. Bank and is currently looking for a new issuer, and U.S. Bank is no longer accepting applications for the BBY card. I checked the U.S. Bank website, and sure enough, that card does not show up. There is still a site for the card, but I don’t see an “apply” button.
  • Some retailer I’ve never heard of called Forever 21 wants to issue a co-brand card.
  • Verizon has looked into issuing a card, but it’s not clear whether or not they’ll do so.
  • Charles Schwab will launch a new card with Amex next year.
  • Discover is sitting out the grab for retail cards, deeming the market overheated.
  • Commerce Bank is going after the affinity market, particularly college & university cards, which were apparently abandoned by B of A after shelling out big bucks to acquire them in the MBNA deal:

Affinity cards were particularly popular in the 1990s but fell out of fashion after MBNA Corp., which had thousands of affinity relationships, was acquired by Bank of America Corp. in 2005. The Charlotte, N.C., bank eventually dropped many of those card deals after the financial crisis when it overhauled its consumer-lending businesses.

The Verizon thing was news to me, and after seeing the new AT&T card from Citi, I’m curious to see what Verizon would offer. And I didn’t know about Bed, Bath, and Beyond either–that one has potential to get interesting as well.

Citibank acquires Brooks Brothers credit card

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Citibank’s credit card unit, which has been tearing it up as of late, has added another card to its lineup. I received the following email yesterday:

Your Brooks Brothers Credit Card account currently issued by Synchrony Bank is being acquired by Citibank, N. A. on June 19, 2015. Effective June 19, 2015, Citibank, N. A. will become the owner and issuer of your Brooks Brothers Credit Card account, including all balances due on your account.

I recently wrote up Citi’s retail and store-branded credit cards here, so add another one to that list. Interestingly, Citi seems to be copying some of Synchrony’s retail card marketing techniques. In February, I received a Best Buy credit card offer of a $20 reward certificate in exchange for using my credit card three times. This is the sort of offer I’ve seen on things like the Banana Republic card, but never before on a Citi card.

Incidentally, the Dillard’s credit card recently changed hands from Synchrony to Wells Fargo. Is Synchrony in an Amex-like state of decline right now, or are the big banks just paying too much for credit card portfolios?

 

Citi Thank You Cards Review

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If you’re trying to figure out whether or not you should apply for a Citi ThankYou card, the answer is probably not. If you know what you’re doing with credit card rewards, you can do pretty well with these cards, but the rest of you would be better off with a simple 2% cashback card (i.e. Citi DoubleCash or Fidelity Amex). Allow me to explain.

As credit card loyalty programs go, Thank You Points have long been a distant third to Chase’s Ultimate Rewards and Amex’s Membership Rewards. After some recent changes, Citi remains in third, but they’ve narrowed the gap. You can get some value here, but you need to know what you’re doing.

There are three TYP cards: ranked in order from least to most prestigious, they are the Preferred, the Premier, and the Prestige. (If you sometimes get these three names mixed up, don’t feel bad because I do as well.) The more typical redemption options for TYPs are not particularly enticing–you can get one cent per point by getting gift cards, less than that if you’re redeeming for statement credits.

Where it gets interesting is with air travel, and I’m drawing here from an excellent Devil’s Advocate piece at Travel Codex which you should read if you’re interested in more details. If you have the no-annual fee Preferred, you can redeem TYPs for one cent each on airfare. If you have the Premier ($125 annual fee, supposedly going to be reduced to $95, waived the first year), you can get 1.25 cents per point. If you have the Prestige ($450 annual fee, though that includes statement credits and other benefits), you can get 1.6 points for AA/USAir flights. All the cards earn 2X points on dining. And starting April 19, the Premier will offer 3X points on gas, so you’d effectively be getting almost 5% back on gas purchases if you redeem for an AA ticket, plus you get the miles on top of that.

The other air travel angle is transfers to airline programs. Travel is Free has a great rundown of the options, though note that Citi has added Virgin Atlantic since that post was written.

Finally: note that there is a fourth TYP-earning card, the AT&T Access Card (which I wrote about here), which you can probably ignore as it has a weak sign-up bonus and weak earning power. Its only distinction is 2X TYPs for online spending.

In conclusion: there is potentially some good value in the Thank You Points ecosystem, but you have to know what you’re doing or else be willing to put in the time to understand the nuances. 

Credit card rewards analysis: how much are BBVA Compass points worth?

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UPDATE: Doc pointed out that the NBA card uses a different reward scheme called TripleDouble Rewards, which is apparently different from the other BBVA rewards. The website for that rewards scheme doesn’t let you see what’s going on, so we’re all in the dark on this one. That 5X may yet actually turn out to be 5%.

Doctor of Credit recently brought news of an interesting new card from BBVA Compass. I was absolutely thrilled to see this, in part because the card (the app is live here) is interesting but mostly because I wrote about a different product from this bank a over a year ago and just last week I was racking my brains trying to remember what bank it was. My memory kept saying “CSFB! CSFB!” and I was unable to convince it that Credit Suisse First Boston does not have any interesting credit card deals. So thanks, Doc, for helping an old man having a senior moment. And if anybody from BBVA Compass is reading this, can you please lobby for a name change? Four letters is a lot to remember.

Getting back to the point: the new card offers 5X points on all spending during the NBA finals. One lingering question from the review was, how much are BBVA Compass’s points worth? Does 5X really mean 5%? After digging around a bit, I found a rewards catalog here. And the answer to the big question is that unless you go big, 5X will not mean 5%.

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