What’s with all the mega bonuses that Credit Cards doling out? They seem to be handing out tens of thousands of miles to new customers like drunken sailors on shore leave in Jamaica or a Fed Chairman trying to revive a country’s economy. Here are some examples of recent offers:
- British Airways – 100,000 miles
- Capital One Venture Card – upto 100,000 points
- American Express Membership Rewards card – 50,000 points
In this article, I will explore two areas – one, why are companies doing this? And two, what does it mean for us, Frequent Travellers who are mileage and point junkies.
Why are Credit Card companies doing this?
Simple, Airline miles and other award points are cheap rewards to dole out that do result in people signing up for cards. I will analyze these specific three mega rewards in detail in my next article. But, for a typical credit card that offers Airline miles of other award points, the card vendor – the bank is buying the miles up front from the Airline program. Airlines, eager to raise money, give these miles to the credit card vendors at dirt cheap prices. The card vendors them award them to customers as they please – for getting the card, charging certain amounts to the cards, etc. It is a win-win for all. Or, is it?
What is the impact on Frequent Fliers?
The main impact on Frequent Fliers is devaluation of their miles, just like the Fed printing up Billions of Dollars devalues our Green ones (think $1,500 for an ounce of Gold!) As I explained on my earlier post on this very topic of devaluation of airline miles, as more and more miles enter the marketplace, there are more and more people trying to redeem them for awards and upgrades. This makes getting awards and upgrades more cumbersome for travelers like us who actually flew the miles. The only redeeming factor will be the Elite Status we get, but in most cases, it does not give us an edge while trying to redeem. If award seats are all booked, they are all booked for everyone – Elites and non-Elites.
In all, for someone who earns his or her miles the hard way – flying them, these mega bonuses are bad news. In order to earn a 100,000 miles, I have to take 18 to 20 trans-continental trips across the US or take over ten trips to Asia from the US. Another armchair mileage hoarder can make the same by simply having a good credit score and internet access. When it comes time to redeem, we will both be in the same boat, fighting for the same award seats. Not my best case scenario.
In the second part of this article. I discuss these few really large mega-bonuses and their impact on the mileage marketplace in more detail.
Share your thoughts on these mega-bonuses by leaving a comment.