Churning is dead. Long live Churning.

As the blog world has resoundingly noted in the last 48hrs American Express has massively sharpened the rules on getting sign up bonuses on their suite of UK credit cards. The TLDR version is that if you held any card in the previous 24 months you are stuffed and won’t receive any bonus. Also as they are the only real issuer of rewards cards in the UK so essentially – churning cards appears to be dead – which is very bad news for the points and miles community in the UK. And for me personally, the ability to do the trip outlined in the previous post is substantially limited…

However I see a slight chink of light that may end up saving us slightly. The news will still be bad but perhaps it is not quite as fatal as first thought. Whilst the precise details are of course industry secrets there are strong rumours that for card issuers, working from the opening/closing dates of accounts and the spending on cards their ability to determine who is a churner and who is not a churner is, in two words, not good. Consequently the restrictions that issuers use to try and stop people taking them for a ride are somewhat blunt instruments. Chase’s 5/24 rule and Amex’s once-per-lifetime rules certainly fit this description.

Clearly Amex’s UK have decided to change their sign up bonus rules in order to cut their losses to churners. In deciding to do this (I assume!) they have worked out how many churners they think they have, and how much spending is run through their network by people who churn and how profitable those customers are. Hopefully they have also modelled how these people will react and are happy that Amex will be the winner from the change. However, given that they are trying to guess how many there actually are of the churners, which we know is difficult – they could easily be wrong.

Moreover, there are people who gently churn cards, and could still easily be profitable to Amex who are affected by this too. People will spend less on Amex cards as a result of this and, Amex will be expecting a drop in volume through their network. But it is possible that their expectation of by how much it drop is an underestimate, particularly if they have underestimated the scope of the gentle churners who simplify their card portfolio – particularly if they start using one single Mastercard or Visa instead, particularly as in the UK acceptance of Amex’s is weaker than the others.

Why does this lead to light at the end of the tunnel?

In my opinion there is a non-zero chance that a similar situation ends up arising to the way the Amex runs its once-in-a-lifetime scheme in the US. Yes – the sticker says that you can’t have it – but they will send you targeted offers anyway. It seems to be relatively common that targeted offers get sent out. Particularly for the Platinum card where they would love that sweet sweet Annual Fee, my hope is that despite the rules saying otherwise, if the models are wrong on how many people drop their volume on Amex cards then it would make sense that Amex tries a similar sort of strategy here. In fact – it may already be in the plans to use targeted offers on customers who drop their spending substantially.

So whilst the overall picture is still pretty terrible, and the restrictions do massive kill the plannable game for most of the churners, there is at least a fool’s hope that Amex will offer targeted bonuses to save us.

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