Posted by William Charles on January 4, 2016
Credit Cards

Published on January 4th, 2016 | by William Charles

2

A Look Back At My Predictions For 2015

At the end of December 2014, I made some predictions for the upcoming year. I also made some additional predictions in March as well. Given how poorly fellow bloggers PFdigest & Frequent Miler did, I thought I’d take a look and see how I did last year before making some predictions for 2016 in a future post.

The Predictions

Contactless

Aggressive promotion of near-field communication/contact less payments. We’ve already a seen a bit of this with different card issuers adding bonuses for adding their cards to Apple Pay and Softcard, but 2015 will be a big year in the battle for these new payments. I think we will see some of the following promotions offered:

  • 5% cash back on all contact less purchases under $100 for 3-6 months (new accounts only)

  • $5-$30 for adding a credit card to a contact less solution

The Apple Pay/Discover promotion was extremely aggressive and we did see a lot of card issuers handing out bonuses for adding their cards to the different mobile platforms. I didn’t think mobile payments would get as much boost as they did in 2015, I thought contact less cards would’ve played a bigger part. I’d say I got this one right.

Merchant Payments

Merchants will try to enter the payment game without success. Merchants will be trying to gain some of the credit card market share themselves through applications such as CurrentC which would help them avoid 2-3% in credit card processing fees but I can’t see consumers signing up for it given the following:

  • The technology is subpar compared to the offerings credit cards have

  • It doesn’t provide zero fraud liability

  • Most consumers are already able to get at least 2% cash back by using a credit card, merchants would need to offer more than this in discounts for using the app (although I do think they will offer a 5-10% discount to try and encourage use)

CurrentC were the big player in this field, but they haven’t even really launched yet. I still think this will fall flat on it’s face when they finally do launch. Since no merchant payment systems really entered the market, I’d say I got this one wrong.

Online Payments

Online payments will also be promoted excessively. Traditionally when consumers purchase something online, they enter their card information with each merchant. Not all consumers are comfortable with this (even if their card issuer does offer zero liability protection). In the past Visa has offered verified by Visa and Mastercard has offered secure code which require you to input a password as well as these details. Visa checkout is the latest offering, we’ve already seen promotions for this service (card issuers wanting to be top of the online wallet) but more will come in 2015, as well as competition and lots of it.

This one was spot one, just look at all of these posts on Visa check out. American Express launched Express Checkout and MasterCard launched MasterPass. This one was very right.

Sign Up Bonuses

Sign up bonuses will remain the same relatively. I think that we will see some sign up bonuses increase, especially on credit cards that offer loyalty points but devaluations with these programs will mean that relatively the bonuses are worth the same as they were in 2014.

I didn’t notice any big changes in sign up bonuses, there were some bigger offers than normal (100,000 AA, 150,000 AmEx Platinum & 100,000 Avios come to mind) and I’d say the devaluations counteracted this. I’d say this one is right, although it was a bit of a lame prediction to be honest.

Barclaycard Airline Partner

Barclaycard will secure another airline partner. This will most likely be JetBlue, but maybe Barclay will pull something out of their hat to replace US Airways as their major airline partner.

I was 99% sure they would get the JetBlue contract and it turns out I was right. Go me!

Anniversary Bonuses

Anniversary bonuses will become more common. Because customer acquisition costs are so high, card issuers want to ensure they get good value out of their current cardholders. They also want to charge annual fees (in fact, most co-branded partners require this), annual fees turn off a lot of consumers. One way to balance this is to offer an anniversary bonus, this will become a lot more common in 2015.

I don’t recall any card issuers adding any anniversary bonuses, although retention offers seem to be more common – but I’m not sure if that’s because people are aggressively calling more often. Either way, I got this one solidly wrong.

Targeted Bonuses

Targeted on going spending bonuses will become more common. One thing that card issuers are obsessed with is being “top of wallet”, this is why they won’t charge currency conversion fees (because they don’t want another card to become top of wallet whilst your overseas). One of the easiest ways to bring a card back to top of wallet is by offering a targeted spending bonus, you already see Barclay do this a lot (e.g spend $750 per month for four months and get $200). This tactic will only be used more often in 2015.

Barclaycard and Citi have been especially into these targeted bonuses this year, although both of them were already doing it pre-2015 so that’s not a huge surprise. I’d say I got this one wrong.

Cash Bonuses

Cash sign up bonuses to become more relevant. I’m a big fan of cash sign up bonuses rather than loyalty points, mostly because I’ve already got a big enough stash. As loyalty programs have been continually devalued I think you’ll see more and more consumers opt for cash bonuses instead. This also allows card issuers to gain market share even if they don’t have any co-branded partners in the travel space (e.g Wells Fargo). Historically they have offered points which can be redeemed for travel expenses (e.g Barclay & Capital One), but I think 2015 will see cash become king once again.

I’d say more people are interested in cash bonuses, but not by a big margin. We didn’t really see any new issuers get into the cash bonus game and the devaluations to loyalty programs didn’t make cash that much more relevant. I got this one wrong.

Relationship Bonuses

Relationship bonuses will change. In 2014 Chase removed their 10% bonus on all points earned on the Chase Freedom card if you held a Chase checking account and Bank of America introduced their Preferred Rewards program. I think relationship bonuses will increase, but the focus will be on how much money you have deposited with that card issuer, rather than having a checking account open.

I don’t think anything really happened in this area at all. Still surprised we don’t see more of this. Wrong again!

Chase Amtrak

Chase Amtrak. This card will come back running on the Visa network rather than the Mastercard payment network it previously ran on. Miles remaining also predicted this. Chase is slowly shifting all of their MasterCard’s to Visa’ (IHG is the other main partner with Mastercard and they shifted from Visa in 2014 which is against the grain, but keep in mind the co branded partner has some say when it comes to these agreements as well). The reason this is happening is simple, Charlie Scharf (current CEO of Visa) used to work at J.P Morgan Chase as the CEO of Retail Financial Services. In early 2013, Chase signed a deal with Visa that involved Chase shifting more spending over to the Visa payment network. As Chase’s contracts with co-branded partners have come up for renewal, they have slowly been shifting them over to Visa. Chase Amtrak becoming a Visa card is simply a continuation of that. You can read more about this on the Chichago Tribune “Chase replaces more MasterCards, discontinues Blink“.

I’m starting to think that I might be an idiot, this one is of course wrong as Bank of America now manages the Amtrak portfolio.

Chase IHG

Chase IHG. As mentioned above the Chase IHG card with MasterCard. I’m predicting that Chase will issue multiple different tiers of this card with different card benefits. This is based on two facts:

Wrong again, they still have the no annual fee card and the regular card but there isn’t a third card or a way to apply directly for the no annual fee card.

Platinum Benefits

American Express Personal Platinum will add new benefits. These should be released pretty soon, won’t say too much more.

Cardholders now get Hilton gold status (plus something else I feel like I am forgetting). Not huge, but still right.

Churning Business

American Express will move to a once per lifetime bonus for American Express business cards. This has already occurred with personal cards. Business cards typically have a much higher average spend per cardholder than personal cards, as such it’s easier to recoup the cost of the sign up bonus through interchange fees for the card issuer. The downside is that business accounts are less likely to pay interest/fees than consumer cards. Not overly confident on this prediction and I hope it’s wrong.

Finally, something I’m happy to be wrong about!

Barclaycard After AA Merger

Barclaycard American Airlines will be available for new sign ups after the merger. I’ve heard a bit of chatter about this (they are new sources so not sure how much faith to put into it) and I don’t think Barclaycard’s strategy to offer four different cards makes a lot of sense unless they are able to issue these cards.

I think applications were available for a little bit after the merger, but it obviously wasn’t what I was talking about. So have another wrong!

Final Thoughts

I got 5/14 of these right or 35.7%. That being said the ones I did get right were either obvious directional changes (e.g there were always going to be a lot of contactless and card storing promotions as it’s a new field and the companies launching have money in the bank) or I had inside knowledge (e.g JetBlue/Barclaycard deal and American Express benefits).

Apparently I’m not very good at making predictions, although it was still a fun and interesting exercise to see what direction I thought certain things would take. I’ll get working on my predictions for 2016, if others want to make some predictions as well I’ll create a separate post and then we can see how you do!

 



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Carlos
Carlos

Thats ok, not everyone can be perfect but you have made a ton of people a ton of money and I thank you gor that.

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