I don’t know if it’s the best financial advice I’ve ever received, but the most memorable advice I’ve ever had came from a wealthy real estate developer. “Banks are whores!” he explained.This gist of his comment was that you can always find a bank to lend you money–or, in our case, to give you free travel or something else of value. If you don’t like what’s being offered, there will be somebody else in line to cut you a deal.
There has been some doom and gloom in the points-n-miles community lately as folks have fretted that the days of easy first class travel to five star hotels are over. And they may well be–but the question is, what’s next? Banks have to give stuff away–it’s an essential part of their business model. They can’t help themselves.
Gary at View From The Wing makes some good points about why you shouldn’t worry: as he points out, award redemptions are often easier than they used to be, plus points and miles are easier to get. I agree with what he says, and I would add that there are other factors brightening the outlook:
- Other loyalty programs trying to establish themselves. Club Carlson jumped into the fray last year with a solid product offering. The past few months have seen historically good offers from Alaska Airlines and Wyndham. And let’s not forget quintuple points from Best Buy’s revamped rewards program.
- New banks trying to establish themselves. Wells Fargo isn’t new, but their national credit card marketing effort is–hence, they offer 5%. Huntington Bank recently started offering a decent credit card and who knows, maybe Key Bank or PNC will retool their awful rewards programs someday. Oh, and something called Comenity Bank is issuing the new Virgin America card.
- Established banks and loyalty programs fighting back. Instability breeds instability. You think the big guys are just going to sit there and let the upstarts steal market share? Heck no! Hence the 50,000-point Venture offer from Capital One, the first time that bank has had a really good deal in a long time.
- Greedy/stupid execs. *cough cough* AARP credit card *cough cough*. Overly aggressive sociopaths tend to rise to the top of established large companies, and their efforts often lead to actions which gain market share in the short term but lose in the long run. The 2008 financial crisis notwithstanding, greedy and/or stupid actions by large companies very often work in your favor.
- Unexpected gifts from heaven. Remember the U.S. Mint? Something else along those lines is always a possibility. Keep your eyes open!
- Complexity and change. The financial system is more complex than ever and changing faster than ever. Both facts work in your favor: complex systems and recently changed systems are more likely to have loopholes, pockets of extraordinary value, and the like. For example, a lot of the fun people have had the last few years would not have been possible were it not for the rise of prepaid debit cards. Maybe this ArgoPay thing will pan out, maybe it won’t… but something will.
And don’t forget the picture improves if you’re looking beyond just travel–heck, even if you aren’t, 5% cash back can pay for a lot of travel. There’s a big, wide world of great deals out there, financial and otherwise, for those willing to look.