Amex Adds New Warning Regarding Welcome Bonuses

Over the past several years we’ve seen credit card companies largely crack down on those applying for cards exclusively for the welcome bonuses. Credit card companies often offer huge welcome bonuses to lure in customers, but of course they do so with the hope of customers being loyal in return.

American Express, Chase, and Citi, have all added new restrictions the past few years to encourage profitable behavior, or at a minimum, restrict some common ways that they saw people take advantage of welcome bonuses. Just to give a few examples from the three biggest issuers:

  • American Express has “once in a lifetime” language, where they typically won’t approve you for a card if you’ve had that card before
  • Chase has the “5/24 rule,” where they won’t approve you for many of their cards if you’ve opened five or more new card accounts in the past 24 months; furthermore, they’ve started to restrict welcome bonuses in the same “family” of cards, like how you can’t get the Sapphire Reserve if you have the Sapphire Preferred, and vice versa
  • Citi typically won’t offer a welcome bonus if someone has opened or closed a card in the past 24 months, and this now also applies to many “families” of cards

Over time I suspect we’ll continue to see more restrictions added. The problem with these restrictions is that sometimes they may prevent genuinely profitable customers from applying for cards, but I’m guessing the credit card companies get things right more often than not.

We’ve now seen one issuer add a further warning to card applications. American Express has added new language regarding welcome bonuses on many card applications (the bolded part is new):

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.

So they’re saying that they may consider the number of American Express cards you’ve opened and closed when deciding whether you’re eligible for the welcome bonus.

I’m not sure we can draw too many conclusions based on this yet. It sounds to me like this is intended to be more of a warning than a hard-and-fast new rule. It has always been within American Express’ right to shut down points accounts if they feel people are abusing the system, and it seems that this is an extension of that.

So we’ll have to wait for some data points to see if this actually represents a change in policy from the current situation, or if they’re just doing this as a warning.

My guess is that a vast majority of people won’t be impacted by this, and that this is more targeted at those who have extreme behavior.

What do you make of this new welcome bonus language on Amex card applications?

(Tip of the hat to Doctor Of Credit)

Comments

  1. @Lucky – Amex business cards are considered a totally different product in terms of welcome bonus, correct? ie if I have a personal platinum but would like the business I’d still be eligible for the business welcome bonus?

  2. So basically they are saying:

    “We might or might not give the bonus. Just sign up and see after you wasted an inquiry and pay the annual fee.”

    Lol

  3. @ Joe S — I think the intention is that if you’re repeatedly applying for cards and canceling them within months (even if you only get each card once), that’s not behavior they like.

  4. They will make yours and other bloggers jobs much more difficult. That is my take.

  5. I’m curious @Lucky, you have many credit cards, but how often have you ended up cancelling them? I know that you keep most of them long term, but at what point do you decide to “dispose” of them?

  6. To add a data point: I signed up for the Gold Delta AmEx last year and have had to fight with AmEx over the missing SkyMiles in my account. They still haven’t posted.

  7. Amex should chill out. The churners are doing an immense job in promoting AMEX credit cards to non-churners

  8. To @Ben Holz’ point, Lucky, it has been a while (I think anyway, sorry if I missed it) since you’ve done a post outlining your cards, what you plan on keeping cutting etc. Itd be great if you did that again, and as Ben Holz points out, to add in what your strategy is for keeping cards over time, when you decide to cut, why and how long and average you keep a card. Would be very interesting insight that I think a lot of us would enjoy. Thanks.

  9. The problem with the credit card companies is they expect you to remain loyal, but then many of their cards have terrible category bonuses that don’t make them worth keeping. Especially the cobranded airline and hotel cards. It’s ironic when people most loyal to a brand (and thus have status from flying/staying) are least likely to benefit from the cobranded card.

    For example, what Delta elite flyer is going to keep the Delta Gold Amex? They already have free bags, priority boarding, etc. There are no spending bonuses except on Delta spend, which is ludicrous when the minimal card in that lineup, the Delta Blue Amex, has 2x on dining, and not to mention you could get the Amex PRG for the same effective annual fee as the DL Gold, but get 3x on airfare, 2x groceries/gas/restaurants.

    Then the Delta Platinum and Reserve cards are good if you can put a lot of spend on them to earn the MQM bonus, but there is a huge opportunity cost to putting $25k, $30k on those cards…all because the category bonuses are garbage.

    I think Amex and all the credit card companies would be wise to step up their category bonus game if they want people to stay loyal.

  10. I surprised this hasnt happened earlier. Amex thinks they can save money by limiting their signup bonuses. Churners gonna churn as long as there are points to be had. I do wonder if this will end up working out the way many cable TV/internet/mobile phone outlets work:

    Amex: I’m sorry sir, but we are not going to give you the signup bonus
    Customer: Really? Is there nothing you can do?
    Amex: No. You’ve already had it.
    Customer: OK, then please just cancel my application. If I cannot get the signup bonus, I dont want the card.
    Amex: Is there nothing else I can do to convince you?
    Customer: No. If I cannot have the signup bonus, I dont want the card.
    Amex: … let me hand you over to Customer Retention Service.

  11. It really does seem that they’re missing the mark with the cobrand airline cards. At least the citi aadvantage cards have increased the return for categories that would at least make it somewhat competitive for those who really value aadvantage points. Right now, the delta gold is really great for those without status, because it rather approximates silver medallion. What would be innovative is something that tied better card benefits with elite status to ensure relevance for a wider group of customers.

  12. I’m certain their flaky IT department will still happily show you upgrade and signup bonus offers when you log in to your account that Amex’s own anti-churning brigade will decide later you aren’t eligible for.

  13. Wait….your first bullet point says that Amex won’t approve you for a card if you’ve had that card before. Is that really true? Or they’ll approve you for the card just without the bonus?

  14. @Robert D: AFAIK, you are correct. AMEX will give you a card you have had before with no problem. Then after you pay the AF and meet the min spend, they won’t give you any bonus at all. It’s only when you complain at that point that they will tell you that you don’t qualify.

    IMHO they should tell you upfront ‘you won’t qualify for a bonus’; then if you still want the card, fine. But to let you pay the AF and make the spend without knowing you ‘don’t qualify’ seems very unfair.

  15. Kind of a long time coming. I think the only sensible way to read Amex offers at this point is that they are saying “we reserve the right not to give you the bonus, so don’t apply if you have a problem with that.” I think they are sick of churners and others treating the entire matter as one of contract and finding better offers than they intend to give through incognito or whatever and then cancelling. They are saying, “fine, we’re changing the contract. We have discretion.”

    The question is whether this will hurt their business. I suppose that all depends on how they enforce it.

    I’ve generated millions of points worth tens of thousands of dollars through credit card sign ups over the last several years. I don’t carry a balance and I tend not to pay any annual fees unless I get retention bonuses or unless other benefits of the card offset the fees. It’s highly unlikely that the swipe fees on these cards have come anywhere close to paying for the bonuses I generate, and I never use any card for a swipe unless I’m optimizing my points on the purchase. With some cards now offering 2x and 1.5x for nonbonus spend, this has narrowed the number of cards that are true everyday cards for me and certainly leaves in the drawer most of the cards I’m using to get sign up bonuses.

    In short, I’m pretty much like everyone who reads this blog and who has been in this game for the last decade. And we are expensive for banks. It stinks that it’s getting harder. But can any of us be naive enough to think this or something like it wasn’t coming eventually? And it will get worse. Really, I wonder why it took so long.

  16. @Lucky , this raises an interesting question, which is, on an individual basis, how do the CC companies determine whether or not a cardholder is profitable for them or dead weight? I recently thanked an Amex agent for providing good services and quickly reinstating an Amex Offers credit that had been pulled due to a technicality. She said “you’ve been with us since 2000, you have great credit and my job is to keep you happy.” Wow. I got the clear impression that she has some sort of a “score” or some other data that shows my relative profitability and therefore how accommodating she should be. Is there any truth to this? Do you know how this works? Would love to better understand that aspect of the credit card biz as it relates to the hobby.

  17. @Robert Hanson

    It is not only unfair, it is SLEAZY, DECEPTIVE practice.

    Chase obviously have poached the best management staff from AMEX as evidenced by the idiotic practices AMEX has been engaging the past few years. They dont know how to manage their card business and consider the card business is its bread and butter…
    They should just take the 5/24 approach in whatever variations that are out there now.

  18. Who will want an AMEX card, with its quirks and limited acceptance outside the US without the incentive of welcome bonuses ?

  19. @Lucky – So if you’ve had the Amex Platinum before as an authorized user, are you allowed to apply for it later as an individual cardholder?

  20. Does anyone know why Citi Prestige is not offering any welcome bonus, this is the second time this year they have done this. Seems like they have zero interest in promoting be card.

  21. Amex already only allows you to have 5 credit cards, so it seems like you’d really have to be opening and then closing a lot of cards for this to affect you.

  22. I wonder if I should even apply for an Amex. I had a Delta Amex in 2005-2007. I was thinking about getting a signup bonus in 2019. I wonder if 12 years is too soon or if I am banned for life?

  23. Personally, I think the root cause lies not with the users (churners or not) but with how loyalty is punished and signing up (rather than staying) is so richly rewarded.

    I mean, I understand if you don’t want to drop a large chunk of reward every year or other year. However, every 3 years? 5 years? 10 years?

    The system works out that the more loyal you are as a customer, the less rewards you receive. After all, you can always drop Amex for a year or 2, use someone else, then return. Or not. You are neither loyal nor profitable, but much better rewarded.

  24. @bossman Amex used to look at the following parameters in 2007 in India. A friend used to work in their corporate sales team so I got the info from there
    1. Length of membership
    2. Timely payments
    3. Putting EMI charges on the card. As the issuer earns interest on this, you become a more valuable customer automatically
    4. Total spend

    Considering the years that have passed, I not sure if these are still valid, and what the weightage for each would be.

  25. Lucky, Thanks for all the great information. Just wondering. Is there an easy way to find out which credit cards I have had and cancelled and when they were cancelled. I know I should keep better records but I don’t so applying for a new card is a risk. Thanks

  26. For Rick:
    If you are referring to Amex cards, you can “chat” with them and ask them which Amex cards you’ve had. They’ll tell you what their system shows. It *seems* to only have a 7-year timespan though as I’ve had a bunch (that have been closed) that they don’t show me as having.

    For the others:
    I wonder how the disclaimer may “jive” with any state AG offices with vague terms like that? I vaguely recall Comcast got in trouble for having vague TOS regarding data useage. Guess we’ll find out, LOL!

  27. @747 thanks, that is helpful (and very logical). I am only guessing, but I always got the sense that those data points are somehow boiled down into a “score” and if that score is high enough they will override rules and restrictions, issues credits and generally do what they can to make you happy. Amex, in particular, I’ve found seems to do this, but they also seem to have better customer service overall to begin with.

  28. It’s not the consumer’s fault that people took advantage of generous bonuses. The idiots in marketing screwed up, like they did with the unlimited American Airlines pass for a million dollars back in the 80s. No reason why consumers should be punished for it.

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