By DAVID MENZIES
In which DAVID MENZIES learns, yet again, that when it comes to affinity points programs you gotta use 'em fast or lose 'em
Screwed again. Once more, another credit card-issuing bank operating a "loyalty" scheme has decided to change the rules. In the bottom of the ninth inning. With barely any notice.
And the bank can legally do so, don't you know. Says so right in the fine print of the cardholder agreement. Huh? You didn't spend two hours reading all that 3-point type with a magnifying glass? So sorry, sir/ma'am. F you and have a nice day.
This time around, the changes are to the TD Travel Gold Visa Card. I've racked up thousands of points on this card over the years. But now comes word that the card's annual fee is being jacked up (to $120 from $99.) Meanwhile, the interest rate- in this day and age of generational low mortgage rates-is also being increased. All of which is completely contrary to the card's original marketing pitch-that being, the card's fees are lower than competing gold travel cards.
Bait and switch, you say? Hey, who loves ya, baby?
In truth, I'm angrier with myself than with TD. As the saying goes, "Fool me once, shame on you; fool me twice, shame on me." (Who receives the shame when fooled for the 13th time?) Indeed, much like Charlie Brown-who unconditionally trusts Lucy to hold that pigskin stationary to facilitate a kickoff-when-oh-when will I ever learn?
Some background: My first loyalty card kick in the crotch came more than five years ago courtesy of the CIBC/Ford Visa Card. Throughout the '90s, I racked up nearly $3,000 in Ford dollars which could be put towards the purchase of any Ford/ Lincoln/Mercury product. Just one hitch: like a rusty '72 Pinto spewing blue smoke, the program was consigned to the scrap heap of obsolescence before I (and thousands of other cardholders) had a chance to purchase a car. No Fords in our future. And as one CIBC rep eloquently remarked at the time, "No skin off my nose."
This fiasco was followed up with changes to the TD/GM Visa card. When it first launched in the early '90s, the TD/GM card, just like the CIBC/Ford card, offered cardholders a 5% kickback on all purchases made with the blue-hued plastic. Those rebate dollars could be put toward the purchase of any GM vehicle and one could accumulate up to $3,500.
But in late 2002, new rules went into effect. For starters, the 5% kickback was slashed to 3%. Worse, the $3,500 maximum rebate now only applies to the purchase of a Cadillac; other GM cars feature a rebate cap of as little as $1,500. To add insult to injury, in a spectacular use of PR bafflegab, GM actually promoted these changes as good for cardholders.
Now the TD Travel Gold Card is being tweaked.
So, what's the deal? Robert McKinley, CEO of Cardweb.com Inc., a U.S.-based company that tracks the payment card industry, says the days of generous kickbacks on affinity credit cards are gone and they're not coming back. The problem, he says, is that most reward programs, which were launched in the early '90s, haven't quite gone according to plan.
For example, McKinley says banks anticipated that more than 70% of consumers would "revolve" their balances and pay hefty interest rates on their outstanding balances. But consumers got smart. It turns out the exact opposite transpired: Only about 30% of affinity credit cardholders carry an outstanding balance on their cards. Result: many affinity programs are being overhauled-or axed outright.
Yet, as much as the banks will cast cardholders adrift at the first sign of trouble, there's a different set of rules when it comes to a consumer terminating a relationship. To wit: I recently informed TD I wouldn't be renewing my Gold Travel Card. For having the temerity to call it quits, TD decided to economically discipline me: I was given just 90 days to use my points or they would be voided. Kind of reminded me of Fatal Attraction. But I can play hardball, too. And so, after threatening the bank with litigation, TD promised to surrender the cash value equivalent of my points. (Surely, TD will be as generous with its other cardholders...or am I merely the squeaky wheel getting some grease?)
Bottom line: As Cardweb's McKinley notes, when it comes to points acquired via credit card affinity schemes, consumers must "use 'em or lose 'em." Put another way, in the credit card business, loyalty is clearly a one-way street. It's a truism I shall keep in mind when my TD mortgage comes up for renewal in November.
DAVID MENZIES is a Toronto writer. His "Consumer Guy" column appears every two weeks.