here's an article (aimed at the capitalist/investor class) about what they call "co-branded" cards and their "value"
https://www.tdsecurities.com/ca/en/co-brand-implications-for-airlines-credit-card-issuers
Airline co-brand credit cards have become increasingly more important to the airlines, which appear to have more leverage than the card issuers. The economics to the airlines from these programs are also typically based on revenue sharing, which is in their favor.
We believe airline loyalty and co-brand credit card programs are undervalued in the market. One U.S. airline has disclosed that their co-branded card contributed U$6.8B in 2023 revenue; and the company management believes this can grow to U$10B by 2030. We expect to see other airlines making earnings contributions from co-branded credit cards available during investor days later in the year.
here is a nerdwallet review with recommendations for 5 different credit card lines offered by United Airlines (scroll to the recommendation after the Chase Sapphire card)
https://www.nerdwallet.com/best/credit-cards/united-airlines-cards
the value proposition, as i understand it, is loyalty within an airline network. the cards generally come with travel perks, like access to swank dining lounges in certain airports where there are tons of comfortable seats with chargers, free food and drinks. i traveled with someone who had one and they could get us all in with their membership. it was ridiculous. all i could think was how the entire airport could be like that, except they make the rest of it shitty on purpose.
and of course the "points" towards travel and upgrades, which are often 2-5x when spending money at the airline. the first article discusses in more detail what the airlines get out of it, but generally rewards programs tend to induce more frequent purchasing especially because points can expire. not to mention, they can be shifted to induce making reservations during times where demand has slacked. and the very "best" cards have annual fees, which more or less offset any of the costs of the perks for a typical traveler.
you have to be a pretty hardcore, big spender to really churn the shit out of those programs to make your money back... and at that point, you're probably exactly the kind of customer the airline wants to lock in. not to mention, you'll push others who travel with you be on your flight, probably, if its family etc.
thanks for the explainer. do you think the average person is supposed to understand this? or is the whole idea to confuse people so they get ripped off?
revolving lines of credit are generally rigged so that the user pays extra for the convenience or the perception of convenience. for every one user that is getting the most out of the deal, there are probably 9+ that are getting screwed.
especially in an economic downturn when more people tend to start carrying balances of unsecured debt at high interest.
it's so easy to slip off of good discipline and end up in crazy debt with these credit lines.
literal credit cards.
here's an article (aimed at the capitalist/investor class) about what they call "co-branded" cards and their "value"
https://www.tdsecurities.com/ca/en/co-brand-implications-for-airlines-credit-card-issuers
here is a nerdwallet review with recommendations for 5 different credit card lines offered by United Airlines (scroll to the recommendation after the Chase Sapphire card)
https://www.nerdwallet.com/best/credit-cards/united-airlines-cards
the value proposition, as i understand it, is loyalty within an airline network. the cards generally come with travel perks, like access to swank dining lounges in certain airports where there are tons of comfortable seats with chargers, free food and drinks. i traveled with someone who had one and they could get us all in with their membership. it was ridiculous. all i could think was how the entire airport could be like that, except they make the rest of it shitty on purpose.
and of course the "points" towards travel and upgrades, which are often 2-5x when spending money at the airline. the first article discusses in more detail what the airlines get out of it, but generally rewards programs tend to induce more frequent purchasing especially because points can expire. not to mention, they can be shifted to induce making reservations during times where demand has slacked. and the very "best" cards have annual fees, which more or less offset any of the costs of the perks for a typical traveler.
you have to be a pretty hardcore, big spender to really churn the shit out of those programs to make your money back... and at that point, you're probably exactly the kind of customer the airline wants to lock in. not to mention, you'll push others who travel with you be on your flight, probably, if its family etc.
thanks for the explainer. do you think the average person is supposed to understand this? or is the whole idea to confuse people so they get ripped off?
revolving lines of credit are generally rigged so that the user pays extra for the convenience or the perception of convenience. for every one user that is getting the most out of the deal, there are probably 9+ that are getting screwed.
especially in an economic downturn when more people tend to start carrying balances of unsecured debt at high interest.
it's so easy to slip off of good discipline and end up in crazy debt with these credit lines.