Right now, 2% catch all cards is the norm. Yes, there are 3%, but there is always a catch or extra signup or minimum requirements. Do you all gurus think no frill 3% catch all will be available soon?
Anyone think we'll ever see 3% catch all be the norm?
byu/deejayv2 inCreditCards
Posted by deejayv2
24 Comments
I don’t see where the money is there for 3% cash back. Much of the 2% now is from merchant fees, with the rest subsidized by people who carry a balance and pay interest. The extra 50% of 3% would require even more people to carry a balance.
Chase probably loses money on me because I don’t carry a balance and I rarely use my card for anything but the 5% cash back for Amazon purchases.
No. Considering how many flat cards that offered higher than 2% flat with very easy requirements have folded and / or changed terms. Its not sutainable on a large scale without tying in heavy restrictions or some kind of other relationship requirement.
No. There’s a reason why boa keeps their highest tier at 2.626% for catch all cards, US banks smartly’s 4% died, and Robinhood’s 3% cash back has restrictions. It eats too close to the revenue the cc companies are getting from swipes.
If anything it’s looking like the margins will be more compressed and rewards will get worse over time
No, because 2%/2x points is already eating up the majority of interchange fees, and 3% would be a loss for most companies. Look how RH did the gold card, where 3% isn’t valid on things like tax payments.
Every 3% catch all card that’s ever existed has gotten nerfed or severely restricted. They’re just not profitable for lenders. As you noted, some lenders can offer them if there’s some other mechanism ‘attached’ that generates revenue, but a true unlimited and flat uncategorized 3% card isn’t sustainable.
The only ones that go above 2% that don’t require crazy hoops to jump through or have substantial caps are the RHG and the Ollo Optimum. The AODFCU has a cap of I think $1,500/month at 3% then drops to 1%, Smartly and BoA requires significant ecosystem investments and even the RHG requires a $50/year membership. I mean it’s not difficult to make it well worth the $50/year, which is why it’s the best card. The Ollo Optimum is only 2.5% but it’s completely uncapped and doesn’t require any kind of investment. Outside of some crazy nich credit unions that have crazy strict membership requirements, to my knowledge that’s it for the >2% cards.
There are many 3~5% category cards that are profitable.
Would it be feasible to **make a flat 3% card, as long as it’s the only card for a person**?
In other words, you are qualified for the 3% cashback if you don’t have any other credit card on your credit report.
This prevents adverse selection problem where the profitable categories (dining and travel) are charged on other cards.
You’ll only see this if they up the fees against the merchant.
No especially with merchants constantly fighting the swipe fees
Plus there continues to be a push from old people in congress to tax or even get rid of cc rewards
I think 1-1.5% is more sustainable. Even at 2% there are restrictions or fees on a number of those credit cards.
Fidelity has the 2% card that’s Visa, no annual fee and no foreign fee. Even with that one their website and app aren’t great. Also since it’s a broker they’re maybe tempting people in to try and get them into managed accounts I think (with eye watering AUM fees).
I think a similar thing is happening with BofA Preferred Rewards. They want to lure people in and then sign them up for accounts with management fees.
Every year it gets harder and harder for card issuers to offer large bonuses. So if 3% for everything hasn’t already become the norm by now, it isn’t ever going to.
3% does exist, my Robinhood Gold card does that, but it remains to be seen whether or not they nerf it after a while. One thing seems certain though: other issuers sure don’t seem to be chomping at the bit to compete with it.
To be honest, I think credit card cash back is useless unless you’re a major spender that can easily clear out SUBs at a whim whether there’s an AF or not to the card. More and more businesses will just upcharge you for using a card or “force” a tip. Technically, any businesses aren’t allowed by most credit card companies to add a type of fee that would negate the cash back like a 3% convenience fee where we can report it but it’s just not the hassle.
No. Unless banks start charging the merchants like 4-5% to use a credit card. Then that cost will be passed onto the consumer with higher prices for everything.
“We lose money on each customer with our 3% catch all card, but we make up for it with volume!”
– someone about to be fired at their bank for losing a lot of money on a credit card they issue
You see, banks actually hire people who can do math… “oh hey, it costs the bank money every time someone uses our credit card”, that’s a firing.
Nope. In fact, it’s going to go the other way.
There will be limits on interchange fees, either imposed by the government or otherwise. Or merchant credit card surcharges will become more widespread.
Either way, as interchange fees go down, so will rewards. We have probably already seen peak no strings rewards. The new thing will be coupons or rewards for directed spending, as with travel portals and bank partners.
BofA PR with Platinum Honors is as close as it gets. I’m racking up a shit ton of points
Given the pressure being put on credit card processing fees, I highly doubt it.
I think 0-1% will be the norm soon personally. Regulations are coming and when they came for debit cards, they killed debit card rewards programs.
No honestly if anything we’ve reached the peak of rewards cards. Some businesses are implementing 3% fees to take cards. Legislation keeps coming up that would cap merchant fees and thus very likely nerf rewards for consumers. They have become more popular in general and no longer a niche thing, so they became less profitable for banks, leading to more and more restrictions and hoops to jump through with rewards. In short, no simple 3% across the board with zero requirements or hoops will become the norm IMO.
Possibly doable with a quarterly cap.
As long as Robinhood is in hyper growth mode and is most interested in bringing people into their platform, their 3% card lives large
There’s the Aven card but they have a 1,000 International limit. And only pay 3% on the first 10k per year.
Love my Robinhood gold 3% catch all card