What in the world is capital one doing – point me to the plane electricity outage austin


In a largely unexpected move, Capital One announced yesterday that as of a to-be-determined date in December, their Capital One “miles” currency earned from the Venture and Spark card products will become transferrable to a number of airline partners, à la those from Chase, Citi, and American Express. The twelve transfer partners Capital One will offer are largely a mix of those offered by Citi ThankYou Points and American Express Membership Rewards, and range from perennial and promiscuous partners like AirFrance/KLM Flying Blue to the esoteric and largely unusable (when was the last time anyone got excited about Hainan Airlines’ Fortune Wings Club)? For those who missed the memo, the full list of transfer partners is:

By adding airline transfer partners, Capital One is no doubt trying to add value to their rewards currency and to attract new customers. Notably, this move represents a significant shift in Capital One’s overall strategy, as miles/points hobbyists have never been the target market for the company. youtube gas pedal lyrics Rather, Capital One has always gone after those customers that the other large banks have traditionally eschewed. electricity word search answers The bank has long considered itself a “bank of refuge” for traditionally undesirable demographics and has become quite good at carving out a profitable niche among those customers. Capital One at one point (and perhaps may still) promoted an internal company motto and focus of “banking for good”, i.e., having strong underwriting and providing services to clients who otherwise wouldn’t be able to obtain lines of credit or other personal banking services due to their perceived unprofitability.

Capital One, as such, has never been about competing with other banks on the value proposition of their products. To be sure, its admirably strong and widespread marketing suggests otherwise, but pretty much all of us in the know have ignored the bank’s products mostly in part due to their weak rewards structures. I’d venture to say that any blogs promoting Capital One products over other points currencies up until yesterday’s announcement were clearly not working in the interests of its readers, and indeed even affiliate bloggers rarely pimp Capital One cards.

The addition of 12 airline transfer partners, undoubtedly, is to increase the value proposition of Capital One “miles”. The apparent contradiction herein, however, is that Capital One’s traditional customer base and even most “average” credit card customers will derive zero value from these transfer partners. gas jet Ask five people who hold Amex cards what the value of Asia Miles or Etihad Guest miles are, and you’ll likely be met with 3-4 blank stares. f gas logo What are the chances, then, that someone who signed up for a Venture card because Jennifer Garner convinced them of the value of a “miles”-earning credit card is going to be able to successfully find award space and subsequently book flights using a program even as easy-to-use (for us hobbyists, at least) as Aeroplan?

Of course, the overall value of Capital One’s transfer partners is dubious as well, particularly when compared to that of competitor banks. LifeMiles, Flying Blue, Asia Miles, Etihad Guest, MilleMiglia, Aeroplan, EVA Infinity MileageLands, Aeromexico Club Premier, Qantas Frequent Flyer, and Qatar Privilege Club (10/12) all partner with at least one other transferrable points currency, and all of those other currencies have more favorable transfer ratios when compared to Capital One’s 2:1.5 or 1000:750 ratio. Why pay an annual fee on the Venture card when one could pay no annual fee with a card that offers a better transfer ratio like the Amex Everyday or even better 2x earn with no fee on the Blue Business Plus? If Capital One is really trying to go after those knowledgable about points and miles, it doesn’t make a compelling argument at all.

Not only does Capital One’s transfer scheme offer less value than already existing products, the bank has historically been very good at identifying and automatically declining customers that it perceives to be unprofitable, including us “gamers”, as the company refers internally to miles/points hobbyists. Indeed, a not insignificant amount of resources and person-hours in the company go to working on ways to detect, deter, and reject potential customers who are believed to be in it only for the miles; an example of this is Capital One’s tendency to pull reports from all 3 credit bureaus when reviewing applications — even if they did offer a strong product lineup, this alone would still be a barrier for some to apply. There is a growing concern among card issuers about the unprofitability of “churners”/”gamers”/whatever you want to call it; one needs to look no further than Chase’s widely publicized losses after the launch of the CSR, or Amex’s increasingly aggressive RAT and recent move to limit bonuses to people who are perceived to be unprofitable churners. In light of all of this, it’s a bit of a head-scratcher that Capital One has suddenly (admittedly, I’ve been told transfer partners have been in the works at the bank for ~2 years) decided to go after miles/points enthusiasts, given that it was likely not a cheap move to partner with those twelve programs.

Ultimately, Capital One’s strategy shift is a bit confusing. The bank has traditionally shunned miles/points hobbyists but now seems to be targeting them. Yet the value proposition the bank offers is likely not strong enough to sway true hobbyists, while the transfer partners are likely too abstruse for the average credit card holder. Is this a paradigm shift (there are lots of internal rumors about an upcoming partnership with TPG, suggesting the bank may be interested in going further down the path of competing on travel rewards) or simply misguided corporate decision making? If the former, maybe we can hope for a loosening of their application and approval restrictions. gas 2016 Only time will tell how this all goes for Capital One, but for now at least I won’t be rushing to sign up for any Capital One cards.