My Old Credit Card

[TonyDown]

I still have the original credit card account I signed up for when I graduated from college, from one of the big banks.

During the last year, the bank has been encouraging me to switch my account to one of their awards card accounts. 

While visiting to sign up for a CD, the cute young banker mentioned he hasn't seen my old style account for awhile.  He also recommended switching to their rewards card.

What I am curious about is why so anxious to have me switch?

I already have a rewards card from another institution used for most of my spends.

So I hesitate to drop this legacy account.

My question is, what is the benefit for the bank to have me switch?

 

[+ azdr0710]

well, they might? have your best interest (no pun intended) at heart because you're a longtime customer and all that......perhaps they do want to see you start earning rewards, finally.....

however, check if there's an annual fee (now or eventually) on the new card (your current card probably doesn't have one).....or they may think you'll spend more to earn rewards (and they'll get more merchant fees as a result).......or they may have a quota to reach for new card applications......

or, if you're friendly with the bank and they know you and all that, just ask what's in it for them?

[samhexum]

16 minutes ago, TonyDown said:

While visiting to sign up for a CD, the cute young banker mentioned he hasn't seen my old style account for awhile. 

He was trying to be polite and not call you(r account) outdated.   You should have pulled out your flip phone and told him about the deal you get with Consumer Cellular.

[Ali Gator]

11 hours ago, TonyDown said:

My question is, what is the benefit for the bank to have me switch?

 

With a 'reward card', they take out a higher fee on the merchant on each sale. It's usually 1 - 2 % more than they take out on a merchant for a regular CC. (I used to own my own retail business from 1987-2012, so I'm familiar with much of this. One of my best friends worked in the CC processing business and explained all this to me).

Say you went to a restaurant, and paid a check for $50 with a regular credit card (a non-reward card). The restaurant would lose (on average)  2-3% on the transaction to the bank for the 'cc fee'. If you use a 'rewards card' where you get 2% back on the purchase, the restaurant not only loses the 2-3% standard fee, but now has the 2% reward added to it. So now, 5% is going to the bank from the restaurant - not just 2-3%. On $50 it doesn't sound like much, but at the end of the month, if a restaurant processes 1,000 of these $50 checks - they're losing quite a bit in an industry with a thin margin. And the bank is picking up extra profits, which makes their board members rather happy. 

This is why businesses have been battling back by charging customers a 'convenience fee' when using credit cards. They simply can't stay in business with the current structure. 

 

(I could never charge a credit card 'convenience fee' when I was a merchant - I'd risk losing the 'privilege' of accepting credit cards, according to my bank agreement). 

[TonyDown]

Thank you @Ali Gator !

I'm not surprised to hear there is a financial agenda.  I had a hunch, the way they have warned me my "time is running out", to switch to their rewards card. 

I'm anxious to see what they say next.  Probably will offer to extend the deadline.  😁

[Ali Gator]

5 hours ago, TonyDown said:

Thank you @Ali Gator !

I'm not surprised to hear there is a financial agenda.  I had a hunch, the way they have warned me my "time is running out", to switch to their rewards card. 

I'm anxious to see what they say next.  Probably will offer to extend the deadline.  😁

Time is NEVER running out when they benefit from the promo. They will keep contacting you and telling you the offer ends at the end of the new month - and they will continue doing this for the next twelve months. Since you engaged in a conversation with the 'cute young banker' in person, you've been flagged - they now have you marked as someone who 'is interested' (even though you're not). Stand firm. 

[handiacefailure]

A lot of bank employees get a bonus or referal fee type comission for a new account.   The teller may get a bonus for having you sign up for the new card.

I would make sure they keep the account number the same so you don't lose the account history for your fico score and it isn't treated as a new account and make sure they don't do a hard pull.

[BuffaloKyle]

You said you have a rewards card for most of your spending so you're fine then to not switch. The only thing that would make me say you should is if there's a nice incentive you get if you spend a certain amount after you open. Like when I switched from American Express to the Wells Fargo Visa Active Cash Card which earns 2% back on everything and then I got a $200 bonus in cash back after spending $1,000 in the first 3 months.

[TonyDown]

12 hours ago, BuffaloKyle said:

You said you have a rewards card for most of your spending so you're fine then to not switch. The only thing that would make me say you should is if there's a nice incentive you get if you spend a certain amount after you open. Like when I switched from American Express to the Wells Fargo Visa Active Cash Card which earns 2% back on everything and then I got a $200 bonus in cash back after spending $1,000 in the first 3 months.

That is a good point @BuffaloKyle

I'll take a closer look at their incentives.  Thanks!

[BuffaloKyle]

1 minute ago, TonyDown said:

That is a good point @BuffaloKyle

I'll take a closer look at their incentives.  Thanks!

Or I went to Macy's to buy a new bed and the salesman said I would get 10% I believe if I opened a Macy's credit card. I did and just closed it after I paid it off.

[Thelatin]

Credit cards are such a riot, and how they affect your credit score.  Out of curiosity I started playing around, increasing my limits.  Boom - 850 FICO. My ability to get into debt apparently increases my score.  
 

Now it dropped some as one of my providers is going past his limit.  Bad boy. 

[+ bashful]

On 12/26/2023 at 10:09 AM, BuffaloKyle said:

Or I went to Macy's to buy a new bed and the salesman said I would get 10% I believe if I opened a Macy's credit card. I did and just closed it after I paid it off.

Be careful.  Once, several years ago, while Christmas shopping, I was offered extra discounts if I opened a new account for purchase.  I agreed to save some money.  I think it was Penny's, Target, and Sears.  Next thing I know, in spring when my car insurance (State Farm) bill came due, it had gone up more than expected.  The reason given was based on my credit report where new accounts were opened.  

Edited January 2 by bashful

[BuffaloKyle]

1 hour ago, bashful said:

Be careful.  Once, several years ago, while Christmas shopping, I was offered extra discounts if I opened a new account for purchase.  I agreed to save some money.  I think it was Penny's, Target, and Sears.  Next thing I know, in spring when my car insurance (State Farm) bill came due, it had gone up more than expected.  The reason given was based on my credit report where new accounts were opened.  

Oh yes I totally understand that part of it. My credit is good. My oldest credit card I have is now almost 20 years old and I always use it and pay it off so that alone has helped me have my roughly 800 score for quite a long time.