Card Rewards at ‘Inflection Point’ as Companies Court Ultra-Rich

Have you found yourself struggling to make the most of your credit card rewards?

According to a Sunday (Aug. 17) report by The New York Times (NYT), you aren’t alone, as banks and airlines have grown more savvy about limiting perks and ending loopholes.

That means some travel cards now come with steeper annual fees and benefits that industry experts say make it difficult to tap into premium services like business class seats.

“We are at some kind of inflection point,” said Clint Henderson, a managing editor at The Points Guy, a website focused on helping consumers capitalize on cards and loyalty programs. “It’s getting harder and harder for consumers to win. That’s true of the credit cards, that’s true of elite status, that’s true of loyalty.”

As the report noted, loyalty programs have gone from serving as marketing tools for airlines to a way for more businesses to bring in revenue. Delta Air Lines last year made $7.4 billion from selling loyalty points to American Express (Amex), with American Airlines and United Airlines similarly making billions from their arrangements with Citibank and Chase. Card companies, meanwhile, give customers miles for making purchases with their cards.

“It’s like drinking from a fire hose,” Evert de Boer, managing director at consulting firm On Point Loyalty, told NYT. “There is so much money coming in.”

Some bank cards are not tied to specific air carriers, such as the Chase Sapphire Reserve and Amex Platinum card, the report added. These cards, NYT said, have become more and more alike as banks and airlines target wealthier customers who spend freely on dining, hotels and air travel.

“The competition for premium customers, while always intense, has been especially heated for over a decade,” Steve Squeri, Amex’s CEO, said on an earnings call last month.

Meanwhile, research by PYMNTS Intelligence finds that 48% of credit cardholders point to rewards or discounts as the chief reason they chose the card they use most often.

For Gen Z and millennials, this percentage is more consequential, considering how much they lean on their top-of-wallet cards. Members of Generation Z use an average 30% of their available credit on their main card, with millennials at 27%.

“Compare that to older generations, who spread their spending across multiple cards or lean more on debit and checking accounts,” PYMNTS wrote earlier this month. “For financial institutions and FinTechs, this presents an opportunity to deliver smarter, targeted rewards to not just gain customers but, potentially, lifetime advocates.”