THE END of Credit Card Signup Bonuses??

Lots of you guys, it's Graham here. So, you know, unfortunately, I have a little bit of bad news today. You know when you find a way to outsmart and exploit the system for a profit? Eventually, the credit card companies are gonna start to catch on to this, and that's what they have started to do.

And you know what they say: all good things eventually come to an end. You've even seen BitConnect. So with that said, let me explain exactly what's going on. Right after you destroy that like button, let's smash that to the ground! Let's get this video to 50,000 likes! With that said, now for real, let's just get into the video.

But for... yeah, just hit the like button. Many of you guys know I followed the whole credit card reward scene fairly closely, mainly because I have nothing better to do with my time, and I really like getting free stuff. But lately, there have been report after report after report after report of the not-so-good future of credit card churning. It looks as though the golden days of these incredibly lucrative sign-up bonuses for tons of free stuff might soon be coming to an end.

Now for those of you watching right now who have absolutely no idea what credit card churning is, oh, you are in for a treat today! This is basically the practice of opening up credit cards for the sign-up bonus, which usually includes free travel, free hotel stays, hundreds of dollars of cash back, and many, many other perks. You could basically just take advantage of all of these free perks and features that the credit card offers, and then by the time the second year annual fee comes around, you can either cancel the card or downgrade it to something that's free. Meanwhile, you reap all the benefits of all the free stuff you just got.

Now, I'm obviously just simplifying things a little bit because there are some minimum requirements that need to be met. But for anyone with half a brain cell and just a moderate amount of self-control—which might not be as many people as one would expect—the minimum requirements are usually extremely easy to meet. In the amount of time it takes to do this, it’s usually just like 15 minutes. So it's obviously very easy to see how many, many people could easily take advantage of this.

For instance, about two years ago, I signed up for Chase Sapphire Reserve, Chase Fire Preferred, and AMEX SPG card all within the same day—in the same 15 minutes. For me, that meant a net profit of about three thousand dollars worth of free travel and free hotel stays. This is all just really easy profit as long as you don't use your credit card recklessly to buy an excessive amount of avocado toast.

Now, the problem here—if you even want to call it a problem—is that the credit card rewards just got too good. The thing is, after the whole financial crisis, credit card companies began revamping their entire business model to go after Millennials and regain some of their customers that had previously sworn off debt. I mean, we all saw what happened to people who had a lot of debt in 2009.

So now what are the credit card companies doing? They throw us a ton of rewards and make massive moves for the sake of customer acquisition. They even went so far as to increase their spending for credit card rewards from 10 billion dollars in 2010 to now 22.6 billion dollars in 2016. The biggest one that I saw was probably the Chase Sapphire Reserve, which initially offered a hundred thousand bonus points plus a three hundred dollar travel credit when you signed up, along with so many other perks of the card.

All of a sudden, I started seeing nearly all of my friends getting this credit card when previously they had zero interest in getting any sort of credit cards or any features. They had no desire to do that until this card came out. Now, we all knew that a hundred thousand bonus points offer was not going to be around forever. It was unsustainable, and it was unprofitable initially. But we all knew that it was really a move to gain as much traction with the credit card as possible, eventually turning those people into customers of Chase, and then eventually, long-term, they'll start making some money from that.

I got to say, at the time, it ended up working really, really well. I really believe it was that single move by Chase that really set the precedent and began the race to the bottom. From there, American Express began copying this entire business model, first turning their platinum card into a metal card and then offering a fifty thousand points sign-up bonus for the American Express Gold card. And you guessed it, also making that a credit card and also rose gold, which also tends to look a little pink, just FYI.

But something like this is really only sustainable for so long before people start outsmarting a system like what we're doing and begin using their customer acquisition as an exploit for profit. And that then brings us to today.

Really quick, I want to give a shout-out to Ask Seve, who is the first to upload on this topic and really bring a lot of attention to this issue. The video he posted was awesome, and I will link to that in the description for anyone who wants to see his opinion on this as well.

But now let's get to some of these spooky articles that recently came out. Vox.com recently published that sources have told The Wall Street Journal that companies like Citigroup, JP Morgan, and American Express are currently talking about reassessing their credit card rewards program. They realized they've been offering too many rewards. And you know what? They have!

They've been giving too many rewards with some of these recent credit cards; it becomes such a no-brainer to sign up for it that it makes no sense not to sign up for the credit card and get all of the free stuff. One of their complaints is pretty much exactly what I've been teaching all of us to do here on YouTube. I mean, I'd say they should have seen this coming, and maybe they did, but probably not to the extent of which they ended up seeing. Because this is literally what I say in my videos.

Let me read you this, and I don't know whether to do this in like a funny voice or not because some of this is so ridiculous. Like, it's a revolutionary concept and like someone had just discovered this? Like this is all common-sense stuff.

Let me read it in a bit of a funny voice: "Once they meet that minimum spend that earns that bonus, they stop using the card, then pool their points across various cards to redeem free flights, hotel stays, and more. And once the annual fee kicks in, the first year of marquee cards like American Express Platinum Card and the Chase Sapphire Reserve is often free! Many cancel the card altogether or transfer to another fee-free card, leaving the banks high and dry right at the point where they would start making money."

And if that's not just like common sense enough, like you would think, like, duh, you know? But it gets worse! Let me continue reading.

"Read any blog or news site, and you'll find the golden rule is generally the same: only use cards to buy things you purchase anyway and pay off your balance in full each month. After all, perks are rendered pointless if you're paying for them in interest and fees." In other words, the gamble that the generous rewards would make credit card holders spend more prolifically didn't pan out. It just made this subset of card users diversify by signing up for a higher quantity of generous cards.

That just described everything I've—I've always said on this entire channel, like at least like 20 or 30 times. That I literally have said that word for word. And I'm sitting there reading this thinking, like, this is common sense! It's like what I read—that it's like they're saying we've just discovered that one plus one equals two. We've just discovered that people are figuring this stuff out; they don't need to pay interest on credit cards! And I'm like, do people not know this? They don't! They obviously don't! Like, this is news! Like, that is a revelation to somebody.

But I digress; let's continue. But here's what I realistically think is what's going to happen and what's going to be the future of all of these credit card rewards sign-up bonuses for everyone who loves them as much as I do, and also whether or not this is really going to be coming to an end. All of these recent massive moves by credit card companies to offer new features of cards and your sign-up bonuses and all of this glam and glitz and stuff like that is really just for the sake of customer acquisition.

Same thing like Robinhood offering that bogus 3% checking and savings again—I mean cash management, I think cash management, with what they're calling it again. It's all bogus! But all of that is really just meant for customer acquisition. Even if they take a loss up front, in the long term, they hope to make a profit.

Credit card companies really want to get people in the door and eventually becoming their customers for a long time. And of course, they're also hoping—wishful thinking—that most people are just gonna be too lazy to cancel after the first year. They're gonna pay the second-year annual fee, they're never going to redeem their points, and then they're going to accrue a little bit of interest along the way.

Over the long term, the credit card company is hoping that they're gonna be able to turn that customer into some profit. And also, credit card companies only make a very small percentage of their overall profits from credit card interest. In fact, credit cards like American Express are really meant to be paid off in full at the end of each month.

They then make way more money from merchant transaction fees instead! So for all the people who just stopped using the credit card after meeting the minimum spend and then they just use up all the points—that's obviously not profitable for the credit card companies.

Unfortunately, the reality is that many credit card companies will prey on an uneducated clientele base who they hope will spend more money because they have a credit card. And then they hope that they might carry a large balance on that and pay some interest. Then they hope that that person might not actually use any of their points and rewards that they were given.

Credit card companies hope that they can get enough of those people to pay the profit to everyone else who uses the credit cards correctly. After all, these credit card companies will not be offering these perks and features if they didn't feel it was going to be profitable to them long term.

But given the recent race to the bottom and all these credit card companies competing to see who could gain the largest customer base possible and who can offer the most rewards to attract that type of person, I do think, given all of that, the golden era of credit card churning is likely going to be coming to an end in terms of insanely good bonuses.

Now, obviously, credit card sign-up bonuses aren't going to be gone entirely; they're always going to be offered. But I do think that credit card companies are gonna be changing up how they offer rewards to their new clientele and how they reward brand loyalty. And already, we've started to see this happening.

The Chase Sapphire Reserve was reduced from a hundred thousand points now to fifty thousand points. Chase is also only allowing one Sapphire card now per customer. Other Chase cards gave up price protection. They began limiting how many guests you can bring into the Priority Pass lounge.

We've also seen a change in the Sapphire Reserve where instead of the travel credit being issued per calendar year and many people trying to game the system and get the bonus December 31st and again on January 1st, now it's issued on the anniversary year. Personally, I think we'll continue to start seeing fewer and fewer rewards going into the near future.

However, the good news here is that I highly doubt any of this is going away entirely. Even though they may have gone from offering too many rewards, I think they're gonna be starting to scale back and offer something. It just might not be as good as what we've been accustomed to.

I think we also might start to see some changes that reward long-term loyalty and long-term spending versus just meeting a minimum spend after the first three months. For instance, they might offer you 20,000 points when you sign up and then another 20,000 points when you spend $10,000 over the first year, and maybe another 30,000 points after you spend an additional $10,000 over the second year, and so on.

Maybe more like a tiered system where the longer you use the card and the more you spend on the card long-term, the more points you end up getting. I also have the feeling that we're gonna start to see a lot of these companies offering bonuses on other banking services as well, which is really where they start to make a lot of their profit from.

So anyway, summed up, yes, I do think that we're slowly coming to an end of all of these insanely good credit card sign-up bonuses that we've really seen over the last three or four years. Of course, it's not gonna be gone entirely; it's not gonna be gone forever. You're still gonna be able to buy your avocado toast on your AMEX Platinum while traveling first-class.

It's just not gonna be as profitable as it once was. And I probably venture to guess here that the next big churning opportunity is instead of credit cards, it's going to be checking and savings accounts. I have a feeling that's what's next. I have a feeling that banks are gonna start to offer like 500 bucks, a thousand bucks, $1,500, $2,000 when you move a certain amount of money into a new bank, and you sign up as a new customer.

And I have a feeling, again, if you have cash sitting on the sidelines, you can take advantage of hopefully some upcoming really good deals with banks. But anyway, let me know your thoughts down below. Let me know what you think is going to happen.

As always, I read every single comment that any of you guys post. I read 100% of them. And also, if you just want to comment down below for any sort of engagement, again, believe it or not, a little trick here: it does dramatically help with the algorithm of YouTube. The more comments I get, usually those videos end up getting pushed, and if you have seen recently, I've been getting a lot of these on my videos, and that generally means I'm getting more comments on those videos.

So if you're not, that does tremendously help. And that's it! So, as always, you guys, thank you so much for watching. If you haven't already smashed that like button already and destroyed it, like I’d mentioned in the beginning, make sure to destroy that like button!

Make sure to destroy that subscribe button! Make sure to destroy that notification bell so YouTube notifies me any time I post a video. Also, feel free to add me on Instagram. I post it pretty much daily, so if you want to be a part of it there, feel free to add me there! Thank you again for watching, and until next time.