Stealth Credit Card Devaluations: Is This the New Normal?

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Stealth Credit Card Devaluations

Stealth Credit Card Devaluations

This week we saw something that I believe could become a trend in the credit card industry. Two different banks essentially devalued existing credit card offerings by launching new “prettier” versions of their cards. A devaluation disguised as a new product launch if you will.

Chase IHG Changes

The first bank we saw do this was Chase with their IHG co-branded card. The old card came with a $49 annual fee and a free night at any IHG hotel each year along with a 10% points rebate and Platinum status. Chase decided to split their offerings into two new cards while discontinuing the old one.

Stealth Credit Card Devaluations
Two cards with less benefits are better than one!

The first of Chase’s IHG cards is the lower tier IHG Rewards Club Traveler card. This card comes with a $29 annual fee which is lower than the old card, but gone are Platinum status benefits along with an annual free night. The only thing compelling about this card is the sign-up bonus. (Which is more than can be said about Barclays new card. See below.)

On the higher end, Chase also launched the IHG Rewards Club Premier card. This really is the true successor to the old IHG Rewards Club offering from Chase. This new Premier card has a higher $89 annual fee, Platinum status, a free night each year limited to hotels which cost 40,000 points per night or less and fourth night free benefits.

The True Headline

Ok, so Chase “launched” two new cards, but did they really? No! In my view they essentially raised the annual fee on their old card from $49 to $89 and changed the 10% points rebate to a fourth night free while gutting the free night benefit. At the same time they did launch a new lower tier card. As I said before, a devaluation disguised as a new product launch.

I will say that the old IHG Rewards credit card provided an outsized value with its $49 annual fee and free night good at any IHG property. This was a deal that was almost too good to be true and I am not surprised at all to see it going away. As a long time IHG Rewards Club cardholder I am saddened by these developments, but honestly it is just Chase aligning with the market.

Barclays Devalues Arrival Plus (IMHO)

Stealth Credit Card Devaluations

While I can somewhat explain Chase’s moves as a decision to split their offerings and reign in a card that was perhaps too generous, Barclays moves this past week baffle me. The bank will say they launched a new credit card in their Arrival Premier, but I don’t see it that way. (I won’t argue that they did technically though.) In my view they simply heavily devalued their Arrival Plus card and changed the name.

Don’t believe me? Let’s look at the evidence. First, when the Arrival Premier launched, the Arrival Plus went away. Also, both cards earn 2X miles on all purchases. The new Premier card retains the old card’s redemption scheme where cash redemptions are valued at 1/2 cent each and travel redemptions have to be $100 at minimum with a 1 cent value. Unfortunately the new Premier card loses the 5% rebate that the Plus had.

Yes, the Barlcays Arrival Premier did add in transfer partners and a Global Entry credit, but it also has absolutely no sign-up bonus and a higher annual fee. So let’s see how the Arrival Premier is just a devalued Arrival Plus.

Annual Fee:

  • Arrival Plus – $89 waived the first year typically
  • Arrival Premier – $150 not waived

Sign-Up Bonus:

  • Arrival Plus – 40,000 miles after $3K spend in 3 months
  • Arrival Premier – Nada

Points Redemption Rebate:

  • Arrival Plus – 5% rebate on points redeemed
  • Arrival Premier – No rebate on points redeemed

Points Transfers:

  • Arrival Plus – No transfer partners
  • Arrival Premier – Points are transferable to select partners at 1.4-1.7:1.

Big Spend Bonus

  • Arrival Plus – No big spend bonus
  • Arrival Premier – Spend $15K and get 15K bonus miles. Spend another $10K get another 10K bonus miles

Do you see it now? The Arrival Premier is the Arrival Plus. Instead of announcing changes to their current card they simply changed the name and disguised it as a new product launch. The “new” card has the same miles earning and redemption structure. In two sentences I would put it this way, “The Arrival Premier is the Arrival Plus with a higher non-waived annual fee, no 5% redemption rebate and no sign-up bonus. In exchange they added transfer partners and a Global Entry fee credit every 5 years.”

Considering you could earn 2X on everything before and could get 40K-50K miles as a sign-up bonus on the old card, this is a big devaluation. I do suspect that Barclays will eventually add a bonus to get this card, but for now it represents one of the worst values in the premium travel card space given the high annual fee and lack of sign-up bonus.

Conclusion

This trend of devaluing credit card offerings while disguising it as a new product launch is a troubling one. I honestly don’t blame banks for aligning their products with current market trends and to be honest I think this tactic is probably a smart one. On the down side as a customer I am sad to see both the old IHG Rewards credit card and the Arrival Plus become a thing of the past. I loved them both.

What do you think?


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8 COMMENTS

  1. The IHG bashing is uncalled for Everyone knew that the annual credit card free night was unsustainable. We should be thanking IHG for keeping this benefit around for so long.

    I find the new $89 card MUCH more valuable than the old $49 card. Rather than using Citi 4th Night Free benefit , I will now be using IHG 4th night free ALOT. I expect this to save me a boatload of cash each year. Do the math — you can buy IHG points for about .5 cents each, so on a 4-night stay at a top-end IC, you end up paying about $262.50 per night (including taxes). That’s a pretty sweet deal for NY, SF, Paris, Bora Bora, etc.

    • The 0.5 cent trick doesn’t work 100% and all the time. It’s a one off promo which may or may not come back, so you have to stock up in advance, and hope to god that the hotel won’t play inventory games with you or devalue even more. No thanks.

      Why don’t you look up IC Bora Bora for some random nights in the next 8 months, let me know what you can find. The ICs in cities aren’t all that special. They’re just flashy but provide no substance. I’d honestly rather stay at a nicer Holiday Inn or Express, where at least I can get free breakfast and spend fewer points. As long as location is good.

      There may still be some value in the new card, but it’s not as rosy as you think

    • It could be one of those Marketing ploys. If they get you thinking about the $29 AF one at all, then it’s obviously worth “just” $60 more for the “free” night and the other benefits. Then the $89 looks better than if it was the only choice.

      There’s a Marketing term for it. but I don’t recall it. It gets you more in a comparison mode, rather than should you get it at all.

  2. I am planning on retiring this year, and being able to ramp up travel a lot. Between that, and a nest egg of a little over a million IHG points, the fourth night free looks pretty sweet.

    Let’s hope there’s a bonus for “upgrading” from current card to new Premier card.

    So for my situation it looks be a plus. And yes – I have been violating the earn and burn philosophy, but my free time only allowed for so much reasonable burn.

  3. No way could IHG keep the annual free night when Kimpton was added as a redemption option. Best domestic reason there was to keep the old card.

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