In the US we’ve seen all the major credit card issuers add restrictions in order to encourage profitable behavior from consumers. This has come in many forms, and it’s something that seems to evolve over time.
The US is the most lucrative credit card market in the world, and that’s both due to how widely accepted credit cards are, and due to the lack of caps on interchange fees. This creates a market where credit cards can be mutually beneficial for consumers and banks (if used correctly).
It’s interesting at times to look at how credit cards in other countries differ. The UK, for example, is a country with high credit card usage, but it has caps on interchange fees, so the credit card market isn’t nearly as lucrative. In other words, issuers have to rely more heavily on annual fees and other fees in order to make the economics of cards work.
With that in mind, Amex UK has just made some massive changes to how they award welcome bonuses, and this is something that will impact a lot of consumers. First note that this doesn’t impact whether or not you’ll be approved for a card, but rather only impacts whether or not you’re eligible for the bonus on a card.
Head for Points has the rundown on the changes. To summarize, previously Amex grouped cards into families (Amex Membership Rewards, British Airways Avios, Marriott Bonvoy, etc.), and your eligibility for a bonus depended on whether or not you had a card in the same “family” of cards. You were only eligible for the welcome bonus on a card if you didn’t have a card in that family open within the past six months.
With the new rules, you’re generally not eligible for the welcome bonus on a personal American Express card if you’ve had any personal American Express card within the past 24 months. We’re not even talking about having opened or closed a card in that period, but even just having it.
So for example, if you’ve had a Marriott Amex in the past 24 months, you generally wouldn’t be eligible for a British Airways Amex welcome bonus.
Just to give an example of the American Express Preferred Rewards Gold Card in the UK, the bonus restrictions are as follows:
The 20,000 Membership Rewards bonus points will be awarded onto your Account once you have been approved and you have spent and charged £2,000 within the first three months of Cardmembership. Cardmembership begins from Card approval. All introductory offers are subject to change, can be withdrawn at any time and are not available if you currently hold or have held any personal American Express Card in the past 24 months.
There are a few specific exceptions to this rule, but it is interesting to see restrictions this severe.
The UK credit card market has never been as lucrative as the US market, as there’s not as much upside for credit card issuers. So I wouldn’t at all take changes in the UK to mean that we’ll see similar changes in the US.
But that doesn’t make it any less interesting to compare practices in different markets.
Will this likely dissuade some people from applying for some credit cards in the UK? Yes. But I guess Amex has decided that it’s a worthwhile tradeoff.
To readers in the UK — will you be impacted by these changes?