11 Comments
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Sarah's avatar

For real. Banks should be paying you for these ideas. I would so bite. Especially now that I'm about to have a baby and can't travel for a while.

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@essemharris's avatar

This would actually get me to sign up for a new credit card

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Will Suter's avatar

Interesting thesis. Do you think the logical jump from increased savings --> reduced monetary velocity --> deflationary cycle still applies here? Cognizant this is one of the "laws" of currency, but the unique dynamic here is our currency issuers have created ecosystems where they control the supply of the currency, they are the arbiters of "inflation" (i.e., the offer conversions), and the utilization of where/how individuals can use those points (at least to my knowledge, there's no black market). And, like you said, airlines would prefer to disincentivize points utilization, so don't see them dropping their prices (I may be missing something, out of my wheelhouse).

The savings account/rate concept could actually be a good sales tool for these issuers though. If I were them, I would implement it, then increase my inflation rate on the other side so I am net neutral.

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No Dumb Ideas's avatar

This is a really good point, the operators DO have strong levers to fight a deflationary spiral. In addition to increasing the redemption price of a ticket, they can change redemption behavior through product design (e.g. adding more boarding groups and letting you spend miles to board early, or changing prices to incentivize tickets vs upgrades). That said, there's a limit to this - Delta won't make all flights 200,000 points and risk losing frequent fliers to other airlines.

I think the counter to inflation - and why credit card companies are probably the right partner - is that airlines like to sell their miles to banks, typically at a $0.01 per point price. Before it enters an ecosystem, there is implicit competition between providers over whether I convert my points to Delta vs United vs a Hyatt. If there really are fewer dollars flowing out of Chase, there's probably some pressure to lower prices (especially for seats that are otherwise unsold or would require a price drop anyway).

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Dominic Ohai's avatar

NDI, stop giving me brilliant ideas like this, or I might cash in on them

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No Dumb Ideas's avatar

I will never stop dropping billion dollar ideas, I want to see the future NDI mafia

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Sol Hando's avatar

Yeah, this is a 5/5 idea. We can already transfer points between different institutions, so creating a "bank of credit card points" seems really feasible if the CC point issuers were on board with it.

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Logan Snodgrass's avatar

This exists!! The BILT card offers interest on points for certain status levels https://thepointsguy.com/loyalty-programs/earn-interest-on-points-bilt/

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Logan Snodgrass's avatar

Confirmed NOT a dumb idea

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h h j.'s avatar

Your fact checking is faulty. The Amex Gold card had been around for decades before the Sapphire pair. Ditto for the Amex Platinum card.

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No Dumb Ideas's avatar

Good catch! You’re right that they’ve been around for decades, but they only started offering sign-up bonuses at this scale in the 2010’s. I updated to clarify, thank you 🫡

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