Recently, a reader sent me an article called “What is Credit Card Churning” that was published on Experian’s blog and sent out to their email list. It’s full of pretty good advice, like that you shouldn’t go into debt chasing sign-up bonuses, shouldn’t overspend, and shouldn’t run around pants-less inside a bank branch daring them to shut you down. However, the article kind of posits that opening a card you have no intention of keeping long term may be unethical, so let me just say… it’s not. There’s also an analogy of a supermarket that I can’t not respond to:
Okay, so imagine you visit a supermarket that is offering a five-course meal by a Michelin-starred chef in exchange for buying your normal groceries. Most people would happily sit down for that meal, and some might even ask if they could come back tomorrow and have another meal in exchange for another round of groceries. And pretty much everyone would try to do it every day of the week, since five-course meals by Michelin-starred chefs are fucking awesome and buying groceries is something most people do anyway.
Or, more accurately, imagine you visit a supermarket that has a separate door for poor people and for rich people. In the poor people door, you have to pay to get in line, you have to pay a surcharge if you can only buy a few groceries, and the groceries you get are mostly bruised or spoiled. In the rich people door, you get money back for every item you purchase, you get the highest quality food, and instead of waiting in line for a half hour, you can walk right in and get waited on hand and foot. Now imagine that there’s a magic way for anyone to enter the rich people door, and it’s just sitting there in plain sight. Of course, management frowns on people using this door, because the supermarket is existentially dependent on using its service as a provider of food to maintain separate economic classes.
However, the Experian article cautions that taking advantage of this loophole-in-plain-sight is potentially unethical, because you’re pretending to be interested in the bank, when in reality you’re only interested in financial gain…
“Some would argue.” I’ve seen this line before, that sign-up bonuses are meant to encourage long-term business, and opening a card for the sole purpose of getting a bonus and then closing it is unethical. Let me be very clear: this argument is 100% horseshit, in every respect, from every angle. (Note that I’m not criticizing the author of the Experian piece, since he’s not the one making the argument. I’m railing against the “some” that “would argue” this point.)
First, let’s not forget that we’re talking about BANKS! You know, those financial institutions who have a nasty habit of doing things like expropriating people by force, opening credit card accounts in their customers’ names without permission, oh and developing financial products so exotic that they crash the entire financial system. Back when I worked a shitty job for shitty pay and my employer announced a 2-year wage freeze due to the financial crisis, I felt like I had no other choice but to go into credit card debt. Sure, it was my fault that I went into debt (it’s not as if elves took my credit card to Baby Gap every night to buy new elf clothes), and I’m pretty sure that Chase didn’t sit around wringing their hands wondering if it was ethical to collect thousands of dollars in interest from me. That’s the game, and I was on the losing side for a LONG time.
Second, in theory a bank could always require you to remain loyal in the long term… That’s why years ago Citi waited until your cardmember anniversary to give you the other half of your sign-up bonus on the Premier card. (But then they stopped, because they were getting lapped by other card issuers.) That’s why Barclays introduced a card with no sign-up bonus and instead rewarded you for meeting spending targets throughout the year. (But then they discontinued that card after only a few months because it was a wet turd, and they raised the sign-up bonus (and waived the first year’s fee) on the Arrival+.) It sure seems like banks feel like they have to offer cards with attractive sign-up bonuses in order to be competitive, which means that they have evaluated the costs of evil churners like me cockteasing them and decided that it’s still worth playing the sign-up bonus game.
I get why Experian would take the banks’ side… after all, those banks are their biggest customers. And like I said, for the majority of consumers it’s good advice to remind them that credit cards are like edibles — you can always eat more, but you can’t eat less, and when you’re in over your head, it’s going to be a shitty ride. I realize I’m probably reading WAY too much into this, but I really chafe at the idea that giant mega-banks are equivalent to corner grocers just trying to make ends meet. Or that consumers are the ones with the ethical duty not to take advantage of what banks give them, rather than the ethical burden being on the banks themselves to not drive people into neverending debt spirals and bankruptcy (and then offering them horrible secured cards with downright usurious fees so those folks can build up their credit again).
There’s no such thing as “the spirit of the offer” when it comes to banks. They exist to make money off of my money, either by siphoning fees out of it or lending it to someone else. If they don’t have any of my money, they’ll try to get it by enticing me to borrow someone else’s money. This idea that a bank is a loyal financial partner through all the stages of my life is, to put it politely, a steaming crock of fetid dog diarrhea. A bank is going to offer me rewards because they’re hoping to trap me into a situation where they can earn more money off me. This and only this is the spirit of any offer they make me, regardless of what their marketing department may try to insinuate. If I can accept an offer, avoid the debt trap, and cost the bank more money than they earn from me, then they made a poor financial calculation in extending that offer to me. However, I’m just some douchebag with a comparative literature degree, so if they lose money on me, that’s on them. Sorry brah, that’s the game, but I’m not on the losing side anymore.
EDITED TO ADD… I totally left out the fact that it’s EXTREMELY rich for Experian to mention ethics at all, given that their entire business model is to vacuum up all my data and sell it to banks without my consent or ability to opt out. At least they haven’t handed my social security number to Russian hackers on a flash drive (yet), but I’d sooner drink turpentine than take ethical advice from a credit bureau.
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Windbag Miles 