Niche Credit Cards Being Dropped

Niche credit cards are the credit cards that are issued in conjunction with another company, such as Starbucks, Home Depot and other large companies. Credit card companies are offering fewer and fewer of them these days.

Do you have any credit cards from companies like Starbucks, Geico or other companies that you don’t see in the credit card business? If so, you may not have those cards for long.

Credit card companies are starting to do away with specialized niche cards that they once pitched to customers when the credit market was much better than it is now. The latest niche card to get the ax is the Starbucks Duetto Visa Card which was launched by J.P. Morgan Chase in 2003. However, it did not attract enough customers to make the card worth keeping so now it is getting the booth. Chase has recently nixed other specialized credit cards for companies like Avon, New Jersey Devils, the University of Maryland, the NHL, Detroit Pistons, NBA and the Orlando Magic. Other credit card issuers are doing the same thing due to the lack of popularity among the niche credit cards. Bank of America only issues about 4,400 affinity cards which are sold through various channels like social groups, college alumni associations and charities. BofA typically issues about 5,000 of those cards. Citigroup has also cut back on the cards that it offers. It recently stopped offering the co-branded Home Depot Rewards card and the company is currently debating with its contract with the Zale Corporation because Zale wants out of the contract early and Citigroup wants to charge a $6 million early termination fee.

According to Megan Bramlette, a managing associate with the Auriemma Consulting Group, credit card issuers are focusing on the cards that make the most money and work best in the hands of customers. When the economy was good, card companies wanted to fill the pockets of consumers with as many credit cards as they could with various logos to make them fun. These cards offered rebates, rewards and discounts to consumers, but they have now become to expensive as credit card companies have tried to reduce costs due to the recent number of huge delinquencies and other problems.

But you won’t see all of those co-branded cards come to an end just yet. Chase is keeping some of its more profitable niche cards, like the Continental Airlines and Marriott International ones as well the one recently offered in conjunction with the Hyatt Hotels. These types of cards tend to be the most profitable because customers use them frequently for their opportunities for free trips and hotel stays.

Do you have several credit cards that are co-branded with other companies? If so, are you affected by any of these changes? Will these new developments change any of your spending habits?

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