I often wonder how Amex has been able to sustain the extraordinary reward structure on these Gold collection cards over the years, given the following:
1. They are very inexpensive and easy to obtain (esp MRCC through referral).
2. MRCC even has a low fee waiver threshold of just 1.5L, so there's mostly no money to be made from subscriptions also.
3. Most people (at least in our community) optimise their spends to milk them just enough but not go beyond the 6k/20k monthly thresholds.
4. At such small spends, chances of people defaulting on repayment is also pretty low, so Amex isn't earning much interest.
5. Furthermore, many people use them exclusively on Reward Multiplier to meet their monthly targets. I wonder whether MDR earnings there for Amex is just as high as on offline swipes/other online merchants (this is entirely an unknown to me), which could also affect the equation a bit.
I understand that most people opting for these cards may be redeeming against the Gold collection, or else for statement credits (which has really poor returns). But of course many people are also transferring points to MB, which makes them really rewarding even among Amex portfolio — Amex base reward rate is only 1MR on spend of every ₹50 (1% return), but highly optimised spending on these cards can easily fetch you 13.33% (as on the Gold card on Reward Multiplier).
Can someone (@BestBanker?) please explain the economics of MRCC/Gold cards? Are they really making money on them to continue offering such lucrative reward rates, or do they use them as baits to source targeted spend-based offers or for pushing people to upgrade to higher variant cards?
1. They are very inexpensive and easy to obtain (esp MRCC through referral).
2. MRCC even has a low fee waiver threshold of just 1.5L, so there's mostly no money to be made from subscriptions also.
3. Most people (at least in our community) optimise their spends to milk them just enough but not go beyond the 6k/20k monthly thresholds.
4. At such small spends, chances of people defaulting on repayment is also pretty low, so Amex isn't earning much interest.
5. Furthermore, many people use them exclusively on Reward Multiplier to meet their monthly targets. I wonder whether MDR earnings there for Amex is just as high as on offline swipes/other online merchants (this is entirely an unknown to me), which could also affect the equation a bit.
I understand that most people opting for these cards may be redeeming against the Gold collection, or else for statement credits (which has really poor returns). But of course many people are also transferring points to MB, which makes them really rewarding even among Amex portfolio — Amex base reward rate is only 1MR on spend of every ₹50 (1% return), but highly optimised spending on these cards can easily fetch you 13.33% (as on the Gold card on Reward Multiplier).
Can someone (@BestBanker?) please explain the economics of MRCC/Gold cards? Are they really making money on them to continue offering such lucrative reward rates, or do they use them as baits to source targeted spend-based offers or for pushing people to upgrade to higher variant cards?
