In recent months, several of the nation's top credit card lenders have begun significantly increasing the value of the introductory offers on airline rewards credit cards, and the people most often taking advantage are those who fly regularly.
Consumers who consider themselves hardcore frequent flyers and credit card users are now taking advantage of the generous offers for airline rewards credit cards being offered by a large number of lenders, according to a report from the Wall Street Journal. By doing so, they can typically earn as much as 100,000 per credit card they open within just a few months.
The most generous of these offers will grant consumers 50,000 just for signing up for the new rewards card, and then an additional 50,000 when they meet minimum spending requirements within the first few months the account is open, the report said. But lenders are being so aggressive in marketing these cards that some consumers with good credit ratings receive multiple offers, and many of them take advantage of all offers they receive. Though these borrowers take a small, temporary hit to their credit score for each new account, they also receive hundreds of thousands of miles in compensation, and they consider it worth the trouble.
"The folks who go after these programs are pretty savvy," Shane Holdaway, a managing vice president at Capital One, which gave away more than a billion miles with this type of offer in March alone, told the newspaper. "They know what they are doing."
Lenders have said that they want consumers to take advantage of these signup bonuses because those that do are typically customers with better overall credit ratings who open the accounts knowing what they're getting into, the report said. And while the companies have no way of knowing if the borrowers will shutter the accounts after the first year (during which their annual fee is waived by the lender), most expect that the "vast majority" will leave their accounts open and active.
Rewards credit cards typically come with higher interest rates and annual fees than traditional accounts, meaning that they'll see greater revenues generated by these consumers, particularly given the level of spending they'll have to achieve to earn all possible introductory rewards.
